Week Ending May 14, 2021

May 14, 2021

Remember to vote on primary election day on Tuesday, May 18, 2021. Pennsylvania voters will determine who will vie for positions in the county courthouse, townships, boroughs, and school boards, but they will also vote on proposed amendments to the state constitution. Read this CPA Now blog for more on what’s on the ballot this year.

IFO Report Looks at Economic Impact of Federal Stimulus in Pa.

An Independent Fiscal Office (IFO) analysis estimates that the federal government’s response to the COVID-19 pandemic will have funneled nearly $80 billion in direct assistance to Pennsylvanians between April 2020 and April 2022. The comprehensive report provides a picture of the impact of federal stimulus programs enacted in response to the COVID-19 pandemic on Pennsylvania residents and the economy.

According to the report, since March 2020, at least four pieces of federal legislation and one executive action provided direct economic support to individuals during the COVID-19 pandemic. IFO notes that funding came from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Lost wage assistance (LWA) program, the Consolidated Appropriations Act (CAA), 2020, and the American Rescue Plan (ARP) Act.

For calendar year 2020, IFO estimates that $38.4 billion of direct federal stimulus flowed to individuals via these programs, with an estimated $39.6 billion disbursed in 2021.

Additionally, IFO estimates that 32% ($10.4 billion) of all economic impact payments (EIPs) flowed to residents (and any dependents) with adjusted gross income under $25,000. For filers reporting less than $100,000 in 2019, the recipient share increases to 85% ($27.7 billion) of the total value.

More than 85% of total payments flowed to residents who earned less than $50,000 annually, IFO estimates. This was heavily influenced by the Pandemic Unemployment Assistance (PUA) program, in which nearly 80% of claimants were in the lowest income bracket based on self-reported income.

An increase in in-state consumption of $52.5 billion from April 2020 to April 2022 supports an annual average of 201,400 jobs, $12.8 billion of labor income, and $36.0 billion of output or spending that would have otherwise been eliminated or not created in the absence of federal stimulus. Approximately 40% of the jobs and earnings gains are due to spending by households with incomes of less than $25,000.

The report concludes that the federal response likely raised wages for lower-income workers permanently by some degree, and that many employers may be less sensitive to a higher minimum wage relative to the situation prior to the pandemic because lower-wage workers are currently closer to any proposed higher minimum wage. Many employers also have already streamlined operations to reduce labor costs.


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Sheri Risler Confirmed to State Accountancy Board

Sheri L. Risler, CPA, was unanimously approved by the Pennsylvania Senate for a second term on the State Board of Accountancy after being renominated by Gov. Tom Wolf. Risler currently serves as vice chair and has been a member of the board since 2017.

Risler, of Lafayette Hill, Pa., is an associate professor of practice in the accounting department at the Fox School of Business and Management at Temple University in Philadelphia. Prior to joining the faculty, Risler was an audit partner in the Philadelphia office of Ernst &Young, where she provided a broad range of services to entrepreneurial, middle market, and public companies.


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Senate Wraps Up Week of Voting

The state Senate concluded a week-long voting session having approved several bills. House lawmakers were not in session.

The Senate voted in favor of legislation giving parents the option to allow their children to repeat a grade level due to the learning disruptions created by COVID-19. Under Senate Bill 664, sponsored by Sen. Jake Corman (R-Centre), parents will have the option to make that decision for the 2021-2022 school year since they are in the best position to gauge their child’s development and educational needs after students have spent much of the past year learning at home. It would also allow parents to extend enrollment in special education programs for an extra year, preventing students with special needs from aging out of the system at age 21.

Legislation allowing thousands of older Pennsylvanians to retain eligibility for prescription drug assistance was also approved by the Senate. Senate Bill 323 extends the current moratorium on increases in income due to a Social Security cost-of-living adjustment for PACE and PACENET enrollees for two additional years until Dec. 31, 2023. PACE and PACENET are the state’s prescription drug assistance programs that provide life-sustaining medications to 257,000 seniors. Eligibility for the programs is based on income. The Social Security cost-of-living adjustment for 2021 is estimated to result in almost 5,100 PACE and PACENET cardholders exceeding the income eligibility limits, meaning those seniors will lose their benefits.

Both measures will be sent to the state House for consideration. House and Senate lawmakers return to session on May 24.


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Senate Leader Ward Announces Her Battle with Cancer

Pennsylvania Senate Majority Leader Kim Ward (R-Westmoreland) revealed this week that she is battling stage-one breast cancer. Ward made the announcement on Pittsburgh’s KDKA.

“I was diagnosed with breast cancer the first week of December,” Ward told listeners, just a few weeks after being elected the first woman majority leader of the Pennsylvania Senate.

Ward said that five weeks ago she completed four treatments of chemotherapy and will be getting a mastectomy and reconstruction. Ward encourages women to get a 3-D mammogram, and said she plans to use her position to improve health care in the state.

The PICPA wishes Sen. Ward a speedy and healthy recovery. 

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House and Senate Finance Committee Meetings

Reps. Aaron Kaufer (R-Luzerne), chair of the House Finance Tax Modernization and Reform Subcommittee, and Mike Peifer (R-Pike, Wayne), chair of the House Finance Committee, hosted a subcommittee hearing on Kaufer’s House Bill 1177.

House Bill 1177 would address a practice deemed unfair by developers within Pennsylvania. The issue, commonly referred to as “Fair-Share” or “Last-Man In,” typically arises when a new development or commercial facility is the last to be built along a state road. PennDOT may not have upgraded the road, intersections, or berms, and prospective developers are the ones often left to upgrade the neglected state-owned infrastructure around them, sometimes for tens of millions of dollars.

Kaufer’s proposal calls for a “Proportional Fair-Share” that will make the developer, or puller of the building permit, responsible for 20% of the cost of the infrastructure improvement, with the remaining 80% taken care of by PennDOT.

During the committee meeting, House Finance Committee members heard from project leaders at PennDOT, developers, and various community stakeholders. House Bill 1177 is pending in the House Finance Committee.

The Senate Finance Committee met to consider Senate Bills 279 and 568. Senate Bill 279, sponsored by Sen. Patrick Stephano (R-Fayette), provides financial relief to firefighters by amending the tax reform code to exempt firefighters from sales and use tax when purchasing protective equipment and accessory communications equipment with their own personal funds.

Senate Bill 568, sponsored by Sen. David Argall (R-Schuylkill), would formalize an interpretation being used by the Pennsylvania Department of Revenue related to the exemption of traffic signals to include all component parts of a traffic signal, foundation, pole, and mast arms. Only the parts affixed to the ground including bolts, foundation, and wiring are to be subject to Pennsylvania’s sales and use tax.

Both bills were unanimously reported as amended and are pending consideration in the Senate.


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Property Tax Relief and Municipal Assistance Legislation Introduced

Rep. Mike Sturla (D-Lancaster) introduced House Bill 1322, legislation that would provide substantial property tax relief and give municipalities an additional revenue tool to improve core services beneficial to Pennsylvania communities.

This proposal would provide counties the option of levying a 1% sales tax (similar to Allegheny and Philadelphia’s current Regional Assets District tax). Revenues would be directed to municipalities to be used toward pension obligations and core services, including, but not limited to, police, fire, public works, and administrative services. Funds would be allocated based on an offset of a municipality’s taxes that would otherwise be received from tax-exempt properties if those properties paid municipal taxes.

Because tax-exempt properties are located in every municipality and are, by definition, community assets, this allows for a fair distribution to local communities that may have a disproportional number of tax-exempt properties that serve an entire region. Every municipality, however, would benefit proportionally by the revenue generated.

The legislation has been referred to the House Local Government Committee.

Sen. Mario Scavello (R-Monroe) once again introduced two measures to provide school property tax relief for senior citizens.

Senate Bill 590 would provide a property tax rebate of up to $5,000 for all seniors age 65 and older who have an annual household income of $60,000 or less. This legislation expands upon the existing Property Tax Rent Rebate Program.

To fund this tax relief, Senate Bill 591 provides for a 0.5% increase in the sales and use tax. This legislation does not expand the sales and use tax to other items and all currently taxable items would remain the same.

Both of Scavello’s bills have been referred to the Senate Finance Committee.


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New PA UC System Instructional Workshops

The Pennsylvania Department of Labor and Industry’s unemployment compensation system will transition to an improved software platform from May 30 through June 7, with the new version going live June 8. The system will be offline for several days during the transition. Department officials say the planned timeline has been positioned to allow most individuals to file their biweekly claims as scheduled. Find out more about disruptions this will cause and access user guides. 

The department also is providing instructional workshops to help claimants and employers prepare for the launch. Topics to be covered include:

  • How to Login
  • Payment Information
  • Status Updates
  • Appeals
  • Fact-Finding
  • Frequently Asked Questions (FAQs) and more!

You can submit general questions online to the UC Workshop Question Submission Form.   


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