Democrats Make Gains in State House, Senate
Democrats made inroads in the Pennsylvania General Assembly as a result of the Nov. 6 election. House and Senate Democrats netted 11 and 5 seats, respectively, but Republicans still maintain majorities in both chambers. The House Republican majority slips from 121 to 110, while the Senate Republican supermajority of 34 ends as their total will be 29 seats at the start of the 2019-2020 session on Jan. 1.
Notable to CPA-PAC, the political arm of the PICPA, is the return of all five members of the “CPA Caucus.” Sen. Pat Browne (R-Lehigh), Rep. Mike Peifer (R-Pike), Rep. George Dunbar (R-Westmoreland), Rep. Keith Greiner (R-Lancaster), and Rep. Frank Ryan (R-Lebanon) were all reelected for another term. All five legislators are critical to PICPA’s legislative agenda in Harrisburg.
In the state House, incumbent Republicans who lost their seats were Reps. Alexander Charlton (R-Delaware), Rebecca Corbin (R-Chester), Kate Harper (R-Montgomery), Warren Kampf (R-Chester), Duane Milne (R-Chester), Tom Quigley (R-Montgomery), Eric Roe (R-Chester), and Jamie Santora (R-Delaware). Democrats lost two current members— Reps. Bryan Barbin (D-Cambria) and Helen Tai (D-Bucks)—plus the open seat of retiring Rep. Mike Hanna (D-Clinton). Democrats also picked up six open seats previously held by Republicans, bringing the party’s total to 91. There are already two vacancies in the House due to the death of Rep. Sid Kavulich (D-Lackawanna) in October and the indictment of Rep. Vanessa Brown (D-Philadelphia), who was convicted in recent weeks of crimes related to accepting a bribe.
In the state Senate, the Republican total will be 29. Democrats gained five seats—four in the southeast and one in the western part of the state. The new faces in the state Senate from both parties will be Maria Collett (D-Montgomery), Rep. Kristin Phillips-Hill (R-York), Timothy Kearney (D-Delaware), Katie Muth (D-Berks, Chester, and Montgomery), former state Rep. Steve Santarsiero (D-Bucks), Rep. Judy Ward (R-Blair, Fulton), and Lindsay Williams (D-Allegheny).
You can view state Senate results here and House results here.
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Wolf, Casey Win Another Term; Dems Pick Up Congressional Seats
In statewide election results, Gov. Tom Wolf (D) and his new running mate, John Fetterman, defeated their Republican challengers, former state Sen. Scott Wagner and Jeff Bartos, by 17 points, 58 percent to 41 percent. This will be Wolf’s second and final term as the commonwealth’s chief executive.
Bob Casey (D) will represent Pennsylvania in the U.S. Senate for a third term after voters gave him a 13-point victory (55 percent to 42 percent) over U.S. Rep. Lou Barletta (R).
Pennsylvania’s congressional delegation in Washington will look significantly different next year. Democrats picked up four newly configured seats (4th, 5th, 6th, and 7th districts), while Republicans won the 14th. The delegation will include its first female members—Madeleine Dean (4th, Montgomery), Mary Gay Scanlon (5th, Delaware), Christina Houlahan (6th, Chester), and Susan Wild (7th, Lehigh). The Pittsburgh-area 17th district pitted two sitting members of Congress, where Rep. Conor Lamb (D) defeated Rep. Keith Rothfus (R).
The Pennsylvania Congressional delegation now has a 9-9 split party representation. It was a 13-5 Republican majority going into Tuesday’s election.
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PICPA Legislative Update Webinar Registration Now Open
Join Peter Calcara, PICPA vice president of government relations, for a Legislative Update Webinar on Nov. 21 at 9:00 a.m. This 50-minute webinar recaps the 2017-2018 legislative session, reviews November’s election results and what it means in Harrisburg next year, and previews the 2019-2020 Pennsylvania General Assembly and PICPA’s legislative agenda.
Registration is now open.
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Finance and Revenue Board Unveils New Policy on Public Hearings
The Pennsylvania Board of Finance and Revenue (BF&R) issued new guidance regarding its intention to audio and video record public hearings. BF&R is a statutorily established quasi-judicial administrative board responsible for the consideration and resolution of final tax determinations from the Department of Revenue. The guidance was developed, in part, with input from members of the PICPA Committee on State Taxation and other outside stakeholders.
In 2013, the General Assembly passed legislation, supported by the PICPA, to establish a greater level of independence from the Department of Revenue and to formalize the appeals process. Since that time, a series of reforms have been initiated to provide greater transparency into BF&R’s operations and to make the appeals process more accessible to taxpayers.
Consistent with this purpose, according to the new guidance, and following the best practices of other administrative agencies and boards, the public sessions of BF&R meetings will be recorded and made available on its website to permit individuals and tax professionals throughout Pennsylvania to view proceedings without having to physically attend.
The guidance is intended to increase and promote public access and transparency in the administrative appeals process.
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State Revenue Picture Strong in October
Pennsylvania collected $2.5 billion in General Fund revenue in October, which was $28.3 million, or 1.2 percent, more than anticipated. Fiscal year-to-date General Fund collections total $10 billion, which is $238 million, or 2.4 percent, above estimate.
Read IFO’s Monthly Trends Report here.
Since the start of the 2018-2019 fiscal year, overall tax revenue is $893.2 million, or 9.9 percent, more than collected in the same period of the last fiscal year.
Sales tax receipts totaled $959.4 million for October, $26.8 million above estimate. Year-to-date sales tax collections total $3.8 billion, which is $94.5 million, or 2.6 percent, more than anticipated.
Personal income tax (PIT) revenue in October was $1.1 billion, $5.4 million below estimate. This brings year-to-date PIT collections to $4.1 billion, which is $40.8 million, or 1 percent, below estimate.
October corporation tax revenue of $111.2 million was $10.5 million above estimate. Year-to-date corporation tax collections total $941.5 million, which is $179.8 million, or 23.6 percent, above estimate.
Inheritance tax revenue for the month was $90.3 million, $3.1 million above estimate, bringing the year-to-date total to $348.9 million, which is $9.1 million, or 2.7 percent, above estimate.
Realty transfer tax revenue was $51 million for October, $0.2 million above estimate, bringing the fiscal-year total to $182.4 million, which is $4 million, or 2.1 percent, less than anticipated.
Other General Fund tax revenue, including cigarette, malt beverage, liquor, and gaming taxes, totaled $144.5 million for the month, $18.4 million below estimate. The year-to-date total is $592.1 million, which is $20.5 million, or 3.5 percent, below estimate.
Nontax revenue totaled $29.7 million for the month, $11.4 million above estimate. It brings the year-to-date total to $104 million, which is $19.9 million, or 23.7 percent, above estimate.
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IFO Economic and Budget Outlook
On Nov. 15, the Independent Fiscal Office (IFO) will present the results of its annual fiscal outlook for Pennsylvania for the next five fiscal years, including the impact of demographic and economic trends on that outlook.
In addition to IFO’s presentation, Dr. Kent Smetters, Boettner professor in the department of business economics and public policy at the Wharton School, will discuss the current and future impact of the Tax Cuts and Jobs Act on the federal budget and U.S. economy. Also, Mark Hadley, deputy director of the Congressional Budget Office, will discuss CBO’s recent efforts to increase transparency to enhance office credibility and facilitate an understanding of how CBO makes projections and performs analyses.
The presentation is scheduled to begin at 1:30 p.m. at the Harrisburg University of Science and Technology in Harrisburg.
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Pension Commission Hears Testimony on Savings Opportunities
The Public Pension Management and Asset Investment Review Commission (PPMAIRC) recently convened the last of three informational hearings to examine the need for improvements in transparency around investment expenses and returns of the Public School Employees’ Retirement System (PSERS) and the Pennsylvania State Employees’ Retirement System (SERS).
The commission heard testimony from Dr. Marcel Staub, founding partner and CEO of Novarca Group, an independent cost specialist manager for institutional investors. Staub shared the results from a costs and fees analysis, along with a presentation on best-practice recommendations to achieve cost reductions while keeping the existing risk/return exposure.
The commission was established in 2017 under the broader pension reforms of Act 5 of 2017 to conduct a comprehensive review of PSERS and SERS investment management. The commission will now complete its review of PSERS and SERS, and report findings and recommendations to the governor and the General Assembly.
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