Wolf to Unveil 2019-2020 State Budget
Gov. Tom Wolf will unveil his 2019-2020 fiscal year budget to a joint session of the Pennsylvania General Assembly on Feb. 5. In advance of the official announcement, Wolf outlined two major initiatives that will be a focus for his administration in the new legislative session.
Wolf proposed to raise the state’s minimum wage to $12 an hour. Pennsylvania’s minimum wage has been $7.25 an hour since 2009. Twenty-nine states, including neighboring states, have raised the wage floor for their workers since then, Wolf noted. The governor’s proposal would raise the wage to $12 an hour on July 1, 2019, with gradual 50 cent increases until reaching $15 an hour in 2025.
Wolf also outlined a massive infrastructure rebuilding plan funded by a severance tax. The initiative is called Restore Pennsylvania. It will invest $4.5 billion over the next four years in high-impact projects throughout the state to better position Pennsylvania in terms of technology, development, and infrastructure.
“Over the past four years my administration has worked hard to improve our infrastructure and build strong, stable communities across the commonwealth,” Wolf said. “We’ve made progress, but we still have more work to do.”
Other initiatives likely to be included in Wolf’s budget proposal are increased funding for K-12 public education, more resources to fight the ongoing opioid crisis, and a mix of state tax reform changes that include lowering the corporate net income tax and mandatory combined unitary reporting.
To learn more about the happenings in Harrisburg, join Peter Calcara, PICPA’s vice president of government relations, on Feb. 13 for his quarterly PICPA Legislative Update Webinar. He will discuss the new legislative session, Wolf’s 2019-2020 state budget proposal, and PICPA’s legislative plans. Register today!
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PICPA Members Nominated to State Accountancy Board
David W. Stonesifer, CPA, and Michael Rollage, CPA, were recently renominated by Gov. Wolf to the Pennsylvania State Board of Accountancy. Both have been members of the board for four years. The nominations must be confirmed by the state Senate.
Stonesifer is a partner with Herbein + Company Inc. in Reading. He specializes in providing consulting services to clients in the dairy and food processing industries. He is a member of the Albright College Business Advisory Council and a past president of the PICPA Reading Chapter, among other activities.
Rollage is a retired partner from Baker Tilly in Pittsburgh. He has more than 30 years of experience in the construction industry, including more than a decade as a controller and CFO for two major construction companies.
The State Board of Accountancy regulates the accounting profession in the state. It promulgates, amends, and enforces requirements for continuing education and standards of professional conduct.
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State House Leaders Call on Court to Reject Venue Rules Change
House Republican leaders stood with health care providers and called for a public hearing to examine the negative impact that could result from the state court system looking to repeal one of its rules on medical malpractice lawsuits.
In the early 2000s, medical malpractice civil lawsuits from all over Pennsylvania were being steered to Philadelphia for trial, even if none of the alleged malpractice actually took place there. This was because Philadelphia juries routinely awarded substantially higher payouts compared with other counties. Doctors – including family practice, OB-GYNs, orthopedists, neurosurgeons, and other specialists – were retiring early, closed entirely, or moved to other states. That led to higher health care costs overall and patients losing their physicians and specialists. Access to health care suffered statewide.
The legislative and judicial branches acted together to address this crisis. In 2002, the legislature enacted a series of legal reforms relating to medical malpractice liability insurance. One of those reforms prevented plaintiffs’ lawyers in medical malpractice cases from shopping around for a court venue. Then in 2003, the Pennsylvania Supreme Court adopted a rule that mirrored one of those reforms by requiring medical malpractice cases to be brought in the county where the alleged malpractice occurred.
Since its enactment, the number of medical malpractice lawsuits dropped 66 percent in Philadelphia, giving a sense of how many malpractice cases from other counties had been directed there.
If the court’s rule is reversed, experts believe medical malpractice premiums will skyrocket again. That could again lead to physicians leaving the marketplace or patients having to travel farther for care. Additionally, recruiting physicians and specialists would be difficult, and medical innovations may be halted. Overall, patient care would suffer and everyone would face higher health care costs.
Comments on the proposed change are due Feb. 22.
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Taxpayers Need More Penalty Relief, AICPA Tells IRS
When the federal Tax Cuts and Jobs Act (TCJA) was passed in late 2017, it affected millions of individual taxpayers and tax preparers. As part of its implementation, the IRS adjusted its withholding tables.
However, the adjusted tables did not account for factors such as the elimination of personal and dependency exemptions or reduced itemized deductions. The result: many taxpayers have been unable to accurately calculate their tax liability for 2018, and they may have inadvertently underwithheld their taxes.
The AICPA recently sent a letter to the Department of Treasury and the IRS urging them to provide more extensive relief to taxpayers. The letter cites five recommendations that would benefit taxpayers:
- Taxpayers should receive relief from underpayment penalties if they paid at least 80 percent of the tax due for the current year or 80 percent (100 percent if their adjusted gross income (AGI) exceeds $150,000) of the amount of tax shown on their U.S. income tax return for the prior year.
- Taxpayers should receive relief from late payment penalties if they make a timely request for an extension of time to file their income tax return and pay at least 80 percent of the taxes owed with the request.
- The IRS should establish an expedited process to grant payment penalty relief for reasonable cause due to the considerable uncertainty surrounding the TCJA.
- The IRS needs to identify specific circumstances for which automatic relief of penalties for the 2018 taxable year is appropriate, thus relieving taxpayers of the administrative burden of requesting a waiver of penalties.
- The IRS should also provide businesses and tax-exempt organizations relief from underpayment and late payment penalties.
To stay on top of developments and the profession’s advocacy efforts, visit the AICPA’s Tax Reform Resource Center.
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House and Senate Committee Rosters Complete
House and Senate standing committee seats for the 2019-2020 legislative session have been assigned.
The roster for the House Finance Committee includes four CPAs: Chair Rep. Mike Peifer, CPA (Inactive) (R-Pike), Rep. George Dunbar, CPA (Inactive) (R-Westmoreland), Rep. Keith Greiner, CPA (R-Lancaster), and Rep. Frank Ryan, CPA (R-Lebanon).
Sen. Pat Browne, CPA (R-Lebanon), is the only CPA member of the Senate Finance Committee. Browne also serves as chair of the Senate Appropriations Committee.
You can view all the House assignments here and and all the Senate assignments here.
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Pension Forfeiture Bill Passes in Key Committee
Legislation introduced by Sen. John DiSanto (R-Dauphin/Perry) to ensure that public employees who commit job-related felonies are stripped of their taxpayer-funded pension was approved by the Senate Finance Committee in a unanimous, bipartisan vote. The bill now moves to the entire Senate for consideration.
Senate Bill 113 closes the loophole used by unscrupulous public officials whereby they plead guilty to nonforfeiture crimes so they can keep a pension. Currently, the Public Employee Pension Forfeiture Act requires a public employee to forfeit his or her pension only for certain crimes listed in the act. In practice, this law allows public employees charged with a forfeiture crime to plead guilty to a different, nonforfeiture crime to avoid pension loss.
DiSanto’s legislation would require pension forfeiture if a public employee or public official is convicted, pleads guilty, or pleads no contest to any felony offense related to his or her employment.
In addition, the legislation ensures that such criminal convictions are reported to state pension boards. Current law does not require the employee, courts, or state agencies to send copies of court records upon conviction. Instead, pension boards learn of pension forfeiture cases through agency websites and newspaper articles. Under DiSanto’s bill, courts would be required to notify state pension systems of all pension forfeiture cases.
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Wolf Seeks Overhaul of Work, Housing Programs
Gov. Wolf announced a proposed overhaul of state programs to help Pennsylvanians receiving public benefits to earn career-building skills, find good jobs, and access affordable, permanent housing.
The overhaul would create greater accountability for programs aimed at getting people into the workforce, increase collaboration between benefit agencies and workforce development, and transition funding used for General Assistance to increase access to housing.
The overhauls were developed after Wolf charged the Department of Human Services (DHS), which administers various employment and training programs, to better understand the clients served by the department, the barriers they face to employment, and the reasons why current programs are not working.
Part of the plan includes supporting access to affordable housing for low-income individuals through reallocating $50 million from the General Assistance program to invest in housing for extremely low-income individuals who may be eligible for General Assistance cash assistance through the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund.
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White to Retire from State Senate
State Sen. Don White (R-Indiana) announced he will be retiring effective Feb. 28. He was first elected in 2000. He is the third Republican to announce early retirement this year.
The 69-year-old White currently serves as chair of the Senate Banking and Insurance Committee. He also serves as a member of the Environmental Resources and Energy, Game and Fisheries, Law and Justice, Rules and Executive Nominations, and State Government committees.
State Sen. Richard Alloway (R-Adams/Cumberland/Franklin/York) announced his last day will be on Feb. 28, and former State Sen. Guy Reschenthaler (R-Allegheny) stepped down from his seat at the beginning of the year due to his victory for U.S. Congress in Pennsylvania’s 14th District.
White’s resignation will result in another special election to be called by Lt. Gov. John Fetterman.
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