As Budget Deadline Nears, State Lawmakers Return to Session
The state budget deadline is June 30, and House and Senate lawmakers return to session June 4. During the lead up to a final budget agreement, the PICPA government relations team’s presence in the Capitol is heightened so that we can serve as a technical resource to policymakers. High-level negotiations on a spending plan have yet to take place, but the General Assembly will be busy with other legislative matters. Here’s a quick look at the week ahead.
The assessment task force of the Local Government Commission meets June 4. Other House committees meeting that day include Education, Human Services, Insurance, and Judiciary. Later in the day, the House Labor and Industry Committee will meet to consider two workers compensation issues—House Bill 1840 and Senate Bill 676.
On June 5, the Senate Republican Policy Committee holds a briefing on welfare reform efforts featuring Sam Adolphsen, senior fellow at the Foundation for Government Accountability and vice president of Rockwood Solutions. In the House, the Agriculture and Rural Affairs, State Government, and Health committees will convene voting meetings.
The Senate Finance Committee will hold two meetings on June 6. The first is a public hearing on Senate Bill 512, sponsored by Sen. Wayne Fontana (D-Allegheny), which amends the Neighborhood Assistance Tax Credit Program. The second will be to consider House Bill 1460, sponsored by Rep. Brett Miller (R-Lancaster), which imposes new administrative duties on the state’s two pension systems. The Joint Legislative Budget and Finance Committee also meets to release four reports: Feasibility of Establishing a Water Use Fee in PA, Interim Report on the Northern PA Regional College, PA Game Commission Compliance with Strategic Plan, and the Impact of Tavern Gaming on the PA State Lottery.
For a complete listing of committee meetings, visit www.legis.state.pa.us.
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DOR Launches New R&D Electronic Application Website
The Pennsylvania Department of Revenue is launching a new Research and Development Tax Credit electronic application system effective June 1. The PICPA received a demonstration of the new system at its quarterly meeting with the department on May 22. The online system replaces the old REV-545 paper application.
This new procedure allows users instant access to the application submitted during the open submission period. Users can periodically check the status of the application for notifications and complete action items required for the department’s credit review. A single user may file the R&D application for one or more businesses, and there are no limits to the number of applications a user may file.
The R&D application is accessible annually from June to Sept. 15 at www.revenue.pa.gov by selecting the R&D Electronic State Application link. All R&D tax credit applicants must use the online platform. The department will not accept applications in any other format. The deadline for submission is Sept. 15, 2018.
Contact RA-RVPACORPRD@pa.gov or (717) 705-6225 with any questions concerning this application.
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Wagner Resigns from Senate to Focus on Gubernatorial Bid
State Sen. Scott Wagner (R-York), the Republican candidate for governor, shocked the Harrisburg political establishment this week by announcing that he is resigning his seat in the state Senate to focus his energies on his gubernatorial campaign. His resignation will take effect June 4.
“Senator Wagner’s decision to resign and focus fully on the race for governor is laudable. While a member of the Senate, Sen. Wagner was a tireless advocate for taxpayers and worked every day to help create jobs,” said Senate President Pro Tempore Joe Scarnati (R-Jefferson) and Senate Majority Leader Jake Corman (R-Centre).
Wagner was elected to his first term in the state Senate in March 2014, winning a special election to represent the York County 28th District.
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Legislation Proposes to Increase EITC, OSTC, and Expand Eligibility
State lawmakers are planning to introduce legislation that will significantly expand two popular education tax credit programs. House Speaker Mike Turzai (R-Allegheny) and Rep. Jim Christiana (R-Beaver) hope to have their legislation considered as part of the 2018-2019 budget plan.
The lawmakers’ proposal will increase the amount of tax credits available under the Educational Improvement Tax Credit (EITC) program by $25 million (to $160 million) with the increase allocated to scholarship organizations for K-12 students, and will increase the amount of tax credits available under the Opportunity Scholarships Tax Credit (OSTC) program by $5 million (to $55 million). The bill will also increase the maximum annual household income threshold by about $10,000 (to $85,000) to increase educational opportunities and assist more parents and students with choosing a school that best fits their needs.
According to the most recent numbers available through the Pennsylvania Department of Education, over 250,000 students attend nonpublic schools in Pennsylvania, which is 12.5 percent of the total student population. The sponsors believe there are more students who might choose to attend a non-public school if their families could afford the option.
The bill will be referred to a House committee for consideration.
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State Pension Oversight Commission Starts
The newly created Public Pension Management and Asset Investment Review Commission (PPMAIRC) conducted an organizational meeting to initiate a review of the Public School Employees’ Retirement System (PSERS) and the Pennsylvania State Employees’ Retirement System (SERS) this week. State Rep. Mike Tobash and Pennsylvania Treasurer Joe Torsella will serve as chair and vice chair, respectively, of the commission.
The commission was established under the pension reforms of Act 5 of 2017 to conduct a comprehensive review of PSERS and SERS investment management. As part of its evaluation, the commission will do the following:
- Recommend improvements to SERS and PSERS stress testing and fee reporting transparency
- Analyze SERS and PSERS assets, investment strategies, investment performance, fees, costs, and procedures against established benchmarks
- Develop a plan to identify $1.5 billion in cost savings over 30 years for each of the two systems
The commission has six months to complete its review of PSERS and SERS and to report its findings and recommendations to the governor and the General Assembly. Dr. Ashby Monk, executive director of the Stanford University of Global Projects Center, has been retained by Treasury to assist with the review.
In addition to Tobash and Torsella, other commission members include James Bloom, Michael Torbert, and Bernie Gallagher.
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Natural Gas Production Report
The Independent Fiscal Office published its Natural Gas Production Report for the first quarter of 2018.
Using data compiled by the Department of Environmental Protection (DEP), the report presents the volume of gas produced and the number of producing and nonproducing wells. In addition, the report shows the top 10 counties by volume of production. For the first quarter of 2018, compared with the same quarter in 2017:
- The volume of natural gas produced increased by 9.9 percent.
- The number of producing wells increased by 9.1 percent.
- The number of nonproducing wells increased by 4.9 percent.
Other highlights from the report include the following:
- Quarterly production gains were driven by wells spud in 2017 and 2016, comprising 31.0 percent of production for the quarter. Wells spud in 2015 showed the largest decline in production (-30.3 percent), while production for wells spud in 2014 or earlier declined by 19.1 percent.
- The 10 highest producing counties accounted for 92.0 percent of horizontal well production and 86.6 percent of producing wells for the first quarter of 2018. Seven of the top 10 counties (Susquehanna, Washington, Greene, Wyoming, Tioga, Butler, and Sullivan) registered production gains, while three counties (Bradford, Lycoming, and Fayette) registered production declines.
- There were 197 new horizontal wells spud in the first quarter of 2018, an increase of 18 wells compared with the first quarter of 2017, but a 13 well decrease from the fourth quarter of 2017.
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Sports Betting in Pennsylvania a Step Closer
The Pennsylvania Gaming Control Board this week approved a first set of regulations for sports betting. These temporary regulations—which could be in place for up to two years until permanent ones are installed—outline how casinos are to petition the board for a state certificate to offer betting on professional sports teams.
A U.S. Supreme Court ruling paved the way for states to permit sports betting. Act 42 of 2017 gives the board the authority to establish standards and procedures to govern sports wagering in the state. A sports wagering license fee is $10 million, with a renewal fee of $250,000. The tax rate is 34 percent, with a local share of 2 percent: 1 percent to the host county and 1 percent to the host municipality.
The board expects to consider additional sets of more detailed temporary regulations during the next several months covering areas such as public participation and problem gambling.
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School Safety Task Force Hears Concerns, Ideas in Erie
Pennsylvania’s School Safety Task Force stopped at Erie High School last week. The task force met with students, parents, school officials, law enforcement, health care experts, and residents to hear suggestions about how to make schools safer and improve security.
This is the fifth of six task force meetings in Pennsylvania to gather perspectives from local communities before issuing a final report by the end of June.
The task force priorities are as follows:
- Identify recommendations to improve school safety
- Determine funding needs
- Examine the effectiveness of student supports
- Improve information sharing
- Seek tools for anonymous reporting of suspicious activity
Supporting the work of the task force are Homeland Security Director Marcus Brown, Education Secretary Pedro Rivera, Health Secretary and Physician General Dr. Rachel Levine, Labor and Industry Secretary Jerry Oleksiak, and Acting Colonel Robert Evanchick of the Pennsylvania State Police.
The public is invited to share their recommendations for improving schools security. The task force will use the feedback when preparing a final report.
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