Legislative Update - Week Ending Nov. 11, 2022

Legislative Update - Week Ending Nov. 11, 2022

Nov 11, 2022




Control of Pa. House in the Balance

Election night surprises are not uncommon, but the 2022 state elections may have provided one of the biggest surprises in decades. Entering Nov. 8, Republicans held a comfortable 113 to 88 majority (with two vacancies) in the Pennsylvania House. Most political pundits expected Republicans to maintain the majority but with a smaller margin after the election. As of Nov. 11, the results were still being counted and verified, but it seems House Democrats may be on the verge of capturing the majority for the first time in more than a decade.

With all 203 state House seats on the ballot, as of this writing the unofficial projections show Democrats winning about 101 House seats to the Republicans’ 100. Two races in the southeast were still too close to call: House District 142, an open seat in Bucks County being contested by Republican Joe Hogan and Democrat Mark Moffa; and House District 151 in Montgomery County that has Republican incumbent Rep. Todd Stephens squaring off against Democrat challenger Melissa Cerrato. The outcome of these two races will determine which party will be in the majority in the state House.

Complicating matters is the fact that there are three seats won by Democrats on Nov. 8 but will require special elections next year. State Rep. Summer Lee was elected to Congress, State Rep. Austin Davis was elected lieutenant governor; and State Rep. Tony Deluca passed away last month but was reelected.

While seismic shifts are shaking the Pennsylvania House, Republicans retained control of the state Senate. Twenty-five of the 50 senate seats were on the ballot this year. Republicans held a functional 29-21 majority prior to the election (Independent Sen. John Yudichak caucused with the Republicans). Republicans will hold a 28-22 majority going into the new legislative session beginning in January 2023. The only seat to change hands was Yudichak’s 14th Senatorial district, which was won by Democrat Nicholas Miller. Yudichak did not seek re-election.

CPA-PAC, the political action committee for Pennsylvania CPAs, is pleased to report that all four CPA legislators seeking reelection in November were victorious: Reps. George Dunbar (R-Westmoreland), Keith Greiner (R-Lancaster), Ben Sanchez (D-Montgomery), and Nick Pisciottano (D-Allegheny). The PICPA looks forward to continuing our work with them on behalf of the profession. In the upper chamber, however, for the first time in more than a decade there is no CPA in the Pennsylvania Senate.

Of the 115 candidates supported by the CPA-PAC in the Nov. 8 General Election, 90 won their bids for reelection and six lost (one race has yet to be called). The CPA-PAC also supported two candidates in the primary who are retiring and 16 senators who were not on the ballot this year.

Read complete state Senate election results and House election results.

Senators return to Harrisburg on Tuesday, Nov. 15, to elect each caucus’s leadership team. The House is scheduled to be in session for three days the week of Nov. 14, but Republicans have postponed their leadership elections because of the election uncertainty.

 

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Shapiro, Fetterman Win High-Profile Contests

Democrat Josh Shapiro will be Pennsylvania’s 48th governor after a resounding defeat of Republican state Sen. Doug Mastriano. Shapiro garnered nearly 3 million votes, or 56%, compared with Mastriano’s 2.2 million (42%).

Shapiro, the current state attorney general, campaigned on a platform of securing abortion and voting rights, creating more jobs, strengthening public safety, raising the minimum wage, and investing in the state’s infrastructure. For more on Shapiro’s campaign platform, read "Pennsylvania’s General Election: Big Deal Statewide and Nationally" in the Pennsylvania CPA Journal.

According to NBC News, at his election night party Shapiro commented on his victory stating, "We showed in this campaign that no matter what you look like, where you come from, who you love or who you pray to, you are valued here in Pennsylvania, and we hear you.” Shapiro will replace Gov. Tom Wolf, a Democrat who served two consecutive terms in the state’s highest office.

State Rep. Austin Davis, Shapiro’s running mate, will make history as the first African American to serve as Pennsylvania’s lieutenant governor.

In the other high-profile race, Lt. Gov. John Fetterman defeated Republican Mehmet Oz in a close race to succeed U.S. Sen. Pat Toomey who is retiring. Fetterman captured nearly 51% of the vote to Oz’s 47%. The contest was seen nationally as crucial for Democrats to have a chance at maintaining control of the Senate. With Fetterman's victory, Pennsylvania will have two Democrats in the U.S. Senate, Fetterman and Sen. Bob Casey.

 

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Pa. Congressional Delegation Results

Pennsylvania’s 17 congressional seats were all up for election on Nov. 8. Of the 17 races, 15 were occupied by incumbents (eight Republicans and seven Democrats). Only two races, the 12th and 17th Districts, were open. Going into the new Congress, Democrats now hold a 9-8 edge in the state delegation.

Here’s a rundown of the results all 17 races as provided by the Associated Press:

  • 1st Congressional District: Republican incumbent Brian Fitzpatrick held off Democratic challenger Ashley Ehasz.
  • 2nd Congressional District: U.S. Rep. Brendan Boyle, the Democratic incumbent, soundly defeated challenger Aaron Bashir, an accountant and adjunct professor.
  • 3rd Congressional District: U.S. Rep. Dwight Evans cruised to victory against Socialist Workers Party candidate Chris Hoeppner.
  • 4th Congressional District: Incumbent Madeleine Dean, Democrat, defeated Republican challenger Christian Nascimento.
  • 5th Congressional District: Democratic incumbent Mary Gay Scanlon dispatched Republican challenger David Galluch.
  • 6th Congressional District: Incumbent Chrissy Houlahan, Democrat, fended off Republican challenger Guy Ciarrocchi.
  • 7th Congressional District: U.S. Rep. Susan Wild, the Democratic incumbent, won a nail-biter against Republican challenger Lisa Scheller.
  • 8th Congressional District: Democratic incumbent Matt Cartwright squeaked by Republican challenger Jim Bognet.
  • 9th Congressional District: U.S. Rep. Dan Meuser, Republican incumbent, beat Democratic challenger Amanda Waldman by double digits.
  • 10th Congressional District: Republican incumbent Scott Perry defeated Democratic challenger Shamaine Daniels.
  • 11th Congressional District: Incumbent Lloyd Smucker, Republican, dispatched Democratic challenger Bob Hollister.
  • 12th Congressional District: Democratic candidate Summer Lee beat Republican candidate Mike Doyle to win an open seat vacated by the retirement of longtime Democratic Rep. Mike Doyle (no relation to GOP candidate Doyle).
  • 13th Congressional District: Republican incumbent John Joyce won with no competition.
  • 14th Congressional District: U.S. Rep. Guy Reschenthaler, Republican incumbent, won with no competition.
  • 15th Congressional District: Incumbent Glenn Thompson, Republican, handily defeated Democratic challenger Michael Molesevich.
  • 16th Congressional District: Republican incumbent Mike Kelly dispatched Democratic challenger Dan Pastore.
  • 17th Congressional District: Democratic candidate Chris Deluzio beat Republican candidate Jeremy Shaffer for the seat vacated by Conor Lamb. 

 

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Upcoming PICPA Advocacy Webinars

There is still time to register for several important PICPA advocacy webinars.

Nov. 30, 2022 - Legislative Update - Election Results & Year-End Wrap-up Webcast
In this post-election session, Peter Calcara, PICPA vice president of government relations, provides an insider’s perspective on the year-end legislative and regulatory landscape in the state capital. In this session, you will receive analysis of the 2022 general election, a recap of the fall session, and an update on PICPA’s proposals and how we’ll move them forward in the new year.

Jan. 5, 2023 - Federal Taxation: End-of-the-Year Update Webcast
Join Edward R. Jenkins Jr., CPA, CGMA, of Jenkins & Co. LLC, a member of the PICPA Federal Taxation Committee and the AICPA Tax Executive Committee, as he presents a webinar on year-end federal tax issues. This is a must-attend webcast for accounting professionals looking for insights on new developments at the IRS, changes resulting from the newly enacted Inflation Reduction Act, and other key statutes, regulations, rulings, and trends that may impact your 2023 tax season. Jenkins will have just returned from the AICPA National Tax Conference and AICPA committee meetings with key players in the tax world and will have the most up-to-date information for PICPA members.

Jan. 12, 2023 – Pa. DOR: Business Tax Updates to the myPATH System Webcast
Please join the PICPA and the Pennsylvania Department of Revenue (DOR) for an update on business taxes and the myPath system. Alicia Gonse, chief of the DOR Customer Experience Center, will cover changes affecting business taxpayers and provide an overview of updates to the myPath system. 

 

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IFO to Release Economic and Budget Outlook

The Independent Fiscal Office will release its long-term demographic, economic, and budget outlook for fiscal years 2022-2023 to 2027-2028 on Tuesday, Nov. 15.

The presentation includes a revenue update for the current fiscal year and considers the impact of recent demographic and economic trends for future budget surpluses or deficits. Also, Congressional Budget Office Director Phillip Swagel will discuss the economic and budget outlook for the United States and take questions following his presentation.

Members can register to attend virtually here. Look for Legislative Update’s coverage of this event in next week’s email.

 

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Report Highlights Pa.’s Dire Legal Climate

Pennsylvania’s legal climate received another notorious distinction – this time as one of the country’s worst environments for large personal injury verdicts, or what the U.S. Chamber of Commerce calls “nuclear judicial verdicts.” The negative designation can be found in the Chamber’s Institute for Legal Reform Nuclear Verdicts: Trends, Causes, and Solutions report.

The report defines a nuclear verdict as a jury verdict of $10 million or more in personal injury and medical malpractice lawsuits and covers the period between 2010 and 2019. The data show that during the period analyzed there were 78 nuclear verdicts in Pennsylvania, totaling $11 billion in awards. The median verdict was $20 million.

“The scales of justice in Pennsylvania are unfairly tilted to the benefit of plaintiffs’ attorneys…With forum shopping once again allowed in the state, trial lawyers will be flocking to Philadelphia and other high-verdict jurisdictions in an attempt to score jackpot paydays,” notes Curt Schroder, executive director of the Pennsylvania Coalition for Civil Justice Reform.

More than half of Pennsylvania’s nuclear verdicts took place in the Philadelphia Court of Common Pleas, which has routinely been ranked as a top “Judicial Hellhole” by the American Tort Reform Foundation in its annual report of the country’s most unjust courts and state civil justice systems that are ripe for lawsuit abuse.

Schroder urges state lawmakers to address venue once and for all to bring fairness and balance back to the state’s legal environment.

 

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Request for Electronic Dissemination of S Corp K-1s

The AICPA recently submitted to the IRS and the U.S. Treasury Department a request to provide for the electronic dissemination of S corporation Schedule K-1s to shareholders. Revenue Procedure 2012-17 granted this ability to partnerships, but S corporations have not yet been extended the same permission.

The letter states that, “Per Revenue Procedure 2012-17, partnerships are permitted to electronically provide Schedules K-1 to their partners … [and] that the new rules can make it easier for partnerships to provide this necessary information to their partners, and will reduce the expense associated with printing and mailing K-1s to partners who elect to receive them electronically.”

The AICPA recommends that the Treasury and the IRS issue a revenue procedure that allows S corporations to provide K-1s to their shareholders electronically. The letter points out that issuing guidance in the form of a revenue procedure will offer the most efficient means by which to extend the benefits of Revenue Procedure 2012-17 to S corporations in time for the next filing season.

 

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