State Budget Hearings Resume in Senate
The state House of Representatives took a break this week from budget hearings, but the Senate Appropriations Committee convened its first week of hearings. On Tuesday, the committee heard from the Department of Revenue (DOR), the Independent Fiscal Office (IFO), and the Public Utility Commission.
Dan Hassel, Department of Revenue Secretary, testified and fielded questions from committee members related to modernization of DOR’s IT systems, additional revenues from video gaming terminals (VGTs) and iLottery, and potential revenue related to the legalization of recreational marijuana.
Proposed changes to the corporate net income (CNI) tax and combined reporting were discussed at both the DOR and IFO hearings. Matthew Knittel, director of the IFO, mentioned that combined reporting was examined previously during analysis of revenue proposals and IFO would be updating the legislature in the near future.
The state Senate Appropriations Committee finished up its week of budget hearings on Thursday with visits from the State System of Higher Education, the Pennsylvania State Police/Office of Homeland Security, and the Pennsylvania Emergency Management Agency/Fire Commissioner.
Both the House and Senate appropriations committees will convene more budget hearings the week of Feb. 25. House budget hearings will resume with the Pennsylvania State Police/Office of Homeland Security, the Department of Corrections and other criminal justice agencies, and the Department of Health/Department of Drug and Alcohol Programs. Senators will hear from the Department of Labor and Industry, the Department of General Services, and the Department of Transportation.
For a more in-depth discussion on Gov. Tom Wolf’s 2019-2020 budget proposal and what legislation is under consideration in Harrisburg, listen to the most recent quarterly Legislative Update Webinar from Peter Calcara, PICPA vice president of government relations.
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Wolf Creates Economic Development and Workforce Command Center
Gov. Wolf signed an executive order to create the Keystone Economic Development and Workforce Command Center, which is intended to expand the collaboration between government and the private sector to address the skills gap and worker shortages.
“Our commonwealth is on the comeback and more people are working than ever before,” Wolf said. “Businesses are hiring and cannot find the trained workers to fill open jobs. And too many people are stuck in low-wage jobs without the training to advance.”
The governor appointed three leaders from the private sector and three cabinet secretaries to lead the command center:
- Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry
- Tony Bartolomeo, co-chair of Team Pennsylvania
- Rick Bloomingdale, president of the AFL-CIO
- Acting Secretary Kathy Boockvar, Department of State
- Secretary Dennis Davin, Department of Community and Economic Development
- Secretary Jerry Oleksiak, Department of Labor and Industry
The command center will recommend ways to better coordinate workforce and economic development programs across state agencies and identify barriers that may prevent someone from working or prevent businesses from hiring skilled workers. Examples include lack of child care or transportation, as well as outdated professional licensure, certification, and continuing education requirements.
The command center also will monitor implementation and progress of the various workforce and education proposals outlined in the governor’s Statewide Workforce, Education, and Accountability Program (SWEAP) proposal.
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House Advances Homebuyer Savings Account Bill
The Pennsylvania House of Representatives considered for a second time a bill that would allow first-time homebuyers to deduct from their taxes any money that they save for the purchase of that home.
House Bill 128, sponsored by Reps. Rosemary Brown (R-Monroe) and Ryan Bizarro (D-Erie) passed the House on Feb. 21 by a vote of 188-1. A similar bill passed the House during the last legislative session by a vote of 189-1 before halting in the state Senate.
The bill would apply to first-time homebuyers and homebuyers who have not owned or bought a home within three years prior to purchase. It would allow them to claim tax deductions totaling $50,000 over a 10-year period. Annual contributions would be capped at $5,000 for single taxpayers and $10,000 for those filing a joint return.
According to the bill’s sponsors, the bill could lead to an increase of 4,000 annual home purchases and have an economic impact of $68.8 million. The bill will now go to the state Senate for consideration.
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Lawmakers Unveil Career and Technical Education Package
A bipartisan group of state lawmakers led by Rep. Curt Sonney (R-Erie), chair of the House Education Committee, unveiled a package of eight bills designed to improve career and technical education (CTE) in Pennsylvania. Sonney said the bills are the result of a report issued by the former Select Subcommittee on Technical Education and Career Readiness.
Bills in the package include the following:
- House Bill 265 – Would expand the online database that allows students and potential students to check where courses, programs, certificates, and diplomas are able to be transferred among public schools and institutions of higher education. The bill is authored by Rep. Craig Staats (R-Bucks).
- House Bill 297 – Would help improve career information and recruitment. The bill is authored by Rep. Zach Mako (R-Lehigh/Northampton).
- House Bill 334 – Would deal with the Commission for Agriculture Education Excellence, the use of course credits, and the classification of program codes. The bill is authored by Rep. Seth Grove (R-York).
- House Bill 522 – Would create a CTE investment incentive program, including tax credits for businesses that contribute CTE programs and enrollment expansion programs. The bill is authored by Rep. Mike Tobash (R-Schuylkill/Dauphin).
- House Bill 393 – Would create an online career resource center. The bill is authored by Rep. Patrick Harkins (D-Erie).
- House Bill 394 – Would require the Pennsylvania Department of Education to create an inventory of workforce development programs offered at secondary and post-secondary institutions. The bill is authored by Rep. Gerald Mullery (D-Luzerne).
- House Bill 395 – Would require CTE programs to establish occupational advisory committees. The bill is authored by Rep. James Roebuck (D-Philadelphia), minority chair of the House Education Committee.
- House Bill 396 – Would add at least one administrator from a career and technical center to each Workforce Development Board. The bill is also authored by Roebuck.
Each of the bills in the package will go before the House Education Committee for consideration.
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Family Medical Leave Reform Introduced in Senate
State Sens. Tom Killion (R-Delaware) and Andy Dinniman (D-Chester) introduced a bill to substantially extend family medical leave provisions in Pennsylvania. The bipartisan legislation would expand family medical leave rights to siblings, grandparents, and grandchildren for the first time in the state.
Under Senate Bill 140, up to six weeks of protected, unpaid leave would be provided to an employee to care for a terminally ill sibling, grandparent, or grandchild. This would only apply if the ill relative does not have a living spouse, child over the age of 17, or parent under the age of 65 to care for them.
The bill has been referred to the Senate Labor and Industry Committee.
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Grove to Lead New Oversight Committee
Rep. Seth Grove (R-York) was selected to serve as chair of the newly created House Oversight Committee for the 2019-2020 Legislative Session.
“The goal of this committee is to create a culture of oversight in the House,” Grove said. “Specifically, we will ensure laws passed by the legislature meets their legislative goals.”
The nine-member committee will investigate matters referred by the speaker, majority leader, or minority leader. The majority party is tasked with appointing five members and the minority party appoints the remaining four.
The House Oversight Committee stems from House Bill 2026, which Grove introduced last session. The aim of the committee is to provide better legislative oversight on how tax dollars are spent and how state agencies operate. The committee mirrors the House Committee on Oversight and Reform in the U.S. Congress.
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AICPA Comments on Proposed TCJA Estate and Gift Tax Regulations
The American Institute of CPAs (AICPA) has written to the U.S. Department of the Treasury and the IRS commenting on proposed regulations (REG-106706-18) regarding the increased basic exclusion amount (BEA) for estate and gift taxes that was enacted in the Tax Cuts and Jobs Act (TCJA). The proposed regulations affect donors of gifts made after 2017 and estates of decedents dying after 2017.
The AICPA recommended that Treasury and the IRS “provide guidance clarifying that if the BEA is lower in future years (either because of the 2026 expiration of the provision in the TCJA or other Congressional action), a taxpayer is allowed a deceased spousal unused exclusion (DSUE) that is not lower than the DSUE on the filed tax return of the first spouse to die (and not a lower BEA when the second spouse dies).”
Without clarification, the AICPA stated, an individual could arguably interpret the language of Internal Revenue Code Section 2010(c)(4) to “provide that the DSUE available to the second spouse’s estate is not a larger $10 million, but a smaller amount of $5 million, which is the BEA then in effect.” The AICPA requested that “Treasury and IRS should confirm that the DSUE is $10 million.”
The TCJA amended the current law so that for decedents dying and gifts made after Dec. 31, 2017, and before Jan. 1, 2026, the BEA is increased by $5 million to $10 million as adjusted for inflation (increased BEA). On Jan. 1, 2026, the BEA base will revert to $5 million. Thus, an individual or the individual’s estate may use the increased BEA to transfer an additional $5 million without paying a transfer tax during the eight-year period beginning on Jan. 1, 2018, and ending on Dec. 31, 2025 (increased BEA period), the AICPA wrote.
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