Legislative Update

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  • Week Ending Feb. 15, 2019

    by PICPA Government Relations | Feb 15, 2019


    Pennsylvania Supreme Court Delays Venue Decision 

    The Pennsylvania Supreme Court announced that it will delay taking any action on the proposed medical malpractice venue rule change until after the Legislative Budget and Finance Committee (LBFC) completes the impact study commissioned in Senate Resolution 20. The Pennsylvania Coalition for Civil Justice Reform (PCCJR), of which PICPA is a member, applauded the move.

    “The decision by the Supreme Court is a welcome development. A change of this magnitude should not be made without due diligence,” said Curt Schroder, PCCJR executive director. “Senate Resolution 20, introduced by Sen. Lisa Baker, was an attempt to steer consideration of any change in medical malpractice venue in a thoughtful direction.”

    The court was considering whether to unilaterally repeal a rule that prevents medical malpractice plaintiffs from filing civil lawsuits in counties with more favorable jury payouts, namely Philadelphia. The rule was initially adopted as part of a series of reforms – developed by all three branches of government in 2002 and 2003 – to help stabilize the insurance market. This was necessary to alleviate skyrocketing malpractice insurance, particularly in high-risk specialties such as obstetrics, orthopedics, and neurosurgery.

    Since the rule was implemented in the early 2000s, medical malpractice insurance rates stabilized. In fact, the average number of medical malpractice cases filed statewide since the high of 2,094 in 2002 is 1,599.

    SR 20 passed the Senate by a bipartisan vote of 31-18. The resolution asked the Supreme Court to take no action until the impact of the venue change proposal could be studied. The LBFC has until Jan. 1, 2020, to complete its report.

     

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    AICPA Seeks Key Contacts for 116th Congress

    While PICPA’s policy role is generally limited on the federal level because we are a state-based organization, the AICPA works closely with the members of Congress and seeks CPA volunteers to act as key contacts for those members.

    This past election cycle resulted in a much different Pennsylvania delegation than in years past. The state's voters elected a record four women to the House, all Democrats from the Philadelphia suburbs and Lehigh Valley. In all, Democrats picked up three seats in the group, turning it from 12-6 Republican advantage to 9-9 split. You can find your member here.

    New faces are new opportunities to influence public policy. Leveraging our members’ existing relationships is important to advocacy efforts. If you have a relationship with any of the newly elected members, PICPA’s government relations team would like to know about it.

    Please contact Peter Calcara or Alex Fabian.

     

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    Wolf Unveils Historic Funding Proposal for Agriculture

    Gov. Tom Wolf unveiled the PA Farm Bill, a proposal to provide support for and continued investments in the commonwealth’s agriculture industry. The proposal, which is included in Wolf’s 2019-2020 fiscal year budget, was modeled after the governor’s six-point plan to cultivate future generations of Pennsylvania’s agriculture industry.

    “Pennsylvania has a long, proud history of agriculture, and this comprehensive package of funding opportunities and resources will help expand this important industry,” Wolf said. “The PA Farm Bill allocates $24 million in additional funding to chart a real path for a dynamic and prosperous farming economy in Pennsylvania.”

    The PA Farm Bill will provide for business development and succession planning, create accommodations for a growing animal agriculture sector, remove regulatory burdens, strengthen the agricultural workforce, protect infrastructure, and make Pennsylvania the nation’s leading organic state.

    The governor’s proposal also includes increased funding for the PA Preferred program, support for urban agriculture initiatives, and a newly created state-level specialty crop block grant program to support growing industries like hemp, hops, and hardwoods.

     

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    First Week of State Budget Hearings Wrap Up

    The first week of public hearings on Gov. Wolf’s proposed $34.1 billion 2019-2020 fiscal year budget is in the books. The House Appropriations Committee heard from the Department of Revenue, the Independent Fiscal Office, Pennsylvania State System of Higher Education, and the departments of Aging and Conservation and Natural Resources. Hearings are designed to give lawmakers the opportunity to question state officials about their funding requests and ensure state government is accountable for how it spends taxpayer dollars.

    Questions concerning Wolf’s proposals to increase the state’s minimum wage law from $7. 25 per hour and to lower the state’s corporate net income tax rate by implementing unitary combined reporting dominated the discussion for both Revenue Secretary Dan Hassell and Matt Knittel, director of the Independent Fiscal Office (IFO).

    Hassell told lawmakers that the department took a big step in its computer modernization project by successfully launching myPATH, which stands for My Pennsylvania Tax Hub. This is a new online system that will be a great benefit for taxpayers. The secretary also noted the success of the department’s remote sellers compliance initiative. Hassell said the Department estimates the revenue from the marketplace sales requirements in Act 43 of 2017 to be $111.5 million from May 2018 through Dec. 2018, and could approach $200 million by the end of the fiscal year.

    IFO’s Knittel alerted legislators to a potential economic downturn in the coming months. While state General Fund revenues are strong through the first half of the 2018-2019 fiscal year – a surplus of $290 million, or 1.6 percent – Knittel told committee members, “We do expect, over the next year or two, that we could encounter a downturn – most economists expect one next year.”

    Next up, the Senate Appropriations Committee will begin its first week of hearings. The PICPA will be there covering the hearings.

     

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    Municipal Pension Problems Drive Demand for State Police Coverage

    State Auditor General Eugene DePasquale drew a link between helping struggling municipal pension plans get out of debt and easing the demand for state police coverage in additional parts of Pennsylvania.

    Municipalities are closing police and fire departments due to the cost of providing pensions to police officers and fire fighters, DePasquale told the House Appropriations Committee, and the state is providing police coverage for these communities. This state police coverage is part of the 2019-2020 budget debate. Gov. Wolf has proposed a sliding, per-capita fee scale for municipalities receiving state police coverage that would generate nearly $104 million to pay for state police operations. The per capita fee would depend on the size of the municipality, but officials estimate the average fee could be around $40 per capita. The largest municipalities (populations of 20,000 or more) without police forces would face a maximum per capita fee of $166.

    At the hearing, DePasquale and Rep. Keith Greiner (R-Lancaster) discussed efforts to revive legislation to tackle municipal pension debt. Greiner was involved in drafting municipal pension legislation last session while DePasquale chaired a gubernatorial task force on municipal pension debt in 2015.

    One provision discussed in previous legislative sessions would put severely distressed municipal pension plans under control of the Pennsylvania Municipal Retirement System. The more plans that are under PMRS the better off taxpayers will be, DePasquale said.

     

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    Senators Reintroduce Reforms to Hold State Regulators Accountable

    State Sens. John DiSanto (R-Dauphin) and Michele Brooks (R-Mercer) reintroduced bills to put the brakes on excessive state regulations.

    Under Senate Bill 5, no regulation with an economic impact or cost to the commonwealth, to its political subdivisions, and to the private sector exceeding $1 million could be imposed without approval of the General Assembly. This change would help protect businesses, nonprofits, educational institutions, and individuals from costly, burdensome regulations.

    Senate Bill 119 seeks to count, cap, and cut the number of regulations in Pennsylvania. The bill institutes a “one-in, two-out” regulatory model. For every new requirement in a Pennsylvania regulation, two must be eliminated. After six years, this would be replaced by “one-in, one-out.” The senators point to the success of similar policies in both Canada and the United Kingdom as evidence this proposal can control bureaucratic growth and benefit the economy.

    Both bills have been referred to the Senate Intergovernmental Operations Committee for review.

     

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    Department Urges Caution with Tax Refund Anticipation Loans

    With the tax filing season underway, the Department of Revenue is reminding Pennsylvanians to use caution and look at all their options when considering tax refund anticipation loans.

    A refund anticipation loan (RAL) is a loan made by a lender or business to a taxpayer in anticipation of a taxpayer’s state or federal income tax refund. RALs are often advertised as a quicker option for taxpayers to get their money, but they often reduce taxpayers’ refunds because of high interest rates and substantial service fees charged by the lender.

    RALs are typically offered around the start of tax filing season through the filing deadline to submit tax returns, which is April 15, 2019. They are often obtained through tax preparation businesses that prepare personal income tax returns. However, car dealerships, check cashing services, and other businesses have been known to offer RALs.

    The Department of Revenue is reminding taxpayers that lenders of RALs are required to do the following:

    • Advise taxpayers of all fees, interest, and other known deductions paid from their refunds, as well as the remaining amount the taxpayers will actually receive.
    • Ensure taxpayers understand they will not receive their refunds from the Department of Revenue or the IRS. Instead, their refunds will be sent directly to the lender.
    • Advise taxpayers they may be liable to the lender for additional interest and other fees if the lender does not receive the refund within the expected timeframe.
    • Secure taxpayers’ written consent to disclose tax information to the lending financial institution in connection with an application for a refund-related financial product.
    • Adhere to advertising standards and fee restrictions, which state lenders may not base fees on a percentage of the refund amount or compute fees using any figure from tax returns.

    Secretary of Revenue Dan Hassell encourages taxpayers who are considering a refund anticipation loan to read the fine print and ask questions to identify what fees are being charged and what happens if the refund is less than anticipated before signing off on the loan.

    As an alternative, the department is urging taxpayers to consider filing their Pennsylvania personal income tax returns electronically, and opting for an electronic deposit of their refunds. 

     

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Contact Government Relations

governmentrelations@picpa.org
Peter Calcara | 717-232-1821
Alexandra Fabian | 717-232-1821
Annette Knapp | 717-232-1821

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2018 Q&A with the DOR

The PICPA met with the Pennsylvania Department of Revenue on Oct. 24, 2018. View the full transcript or watch the recording.

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