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Legislative Update - Week Ending July 26, 2024
In this issue: PICPA Legislative Update webcast this week; Review commission comments on Pa. DOR regs; Pennsylvania cyber charter funding; and more.
by PICPA Government Relations
Jul 26, 2024, 08:55 AM
With the July passage of the state budget, Pennsylvania legislators are now in recess. PICPA’s Legislative Update will take a break from publishing until the General Assembly returns in September. Thank you for your support of PICPA’s advocacy efforts.
- PICPA Quarterly Legislative Update Webcast Focuses on Budget
- Review Commission Comments on Proposed DOR Regs
- Cyber Charter Funding Issue Partly Addressed
- IFO Report Shows Revenues, Spending Surged During Pandemic
- Pittsburgh Jock Tax to be Heard by Pa. Supreme Court
- Chancellor Greenstein to End Service with the State System
PICPA Quarterly Legislative Update Webcast Focuses on Budget
With Pennsylvania’s new $47.6 billion spending plan for fiscal year 2024-2025 in place and the General Assembly in recess until mid-September, join Peter Calcara, PICPA vice president – government relations, and Drew VandenBrul, CPA, Grant Thornton Advisors, on Aug. 1 as they examine what's new in this year’s budget, what lawmakers and the Shapiro administration excluded, and what tasks remain for the General Assembly when it returns to Harrisburg in the fall. The webcast starts at 9:00 a.m. and is complimentary for PICPA members.
Review Commission Comments on Proposed DOR Regs
The Independent Regulatory Review Commission (IRRC) released its preliminary comments on two proposed regulations from the state Department of Revenue (DOR). The PICPA State Taxation Steering Committee reviewed both proposed regulations and submitted comments.
In May, the DOR proposed a new regulation to more clearly define what constitutes business and nonbusiness income for state tax purposes. The initiative aims to provide clearer guidelines for taxpayers and reduce the ambiguity that often leads to disputes and legal challenges. The proposal delineates the criteria for categorizing various types of income, intending to align state tax codes with contemporary economic realities and business practices. The DOR believes this regulation will enhance compliance, streamline the tax filing process, and ensure a fairer tax system for businesses and individuals.
Read PICPA’s comment letter.
The IRRC’s comments on the proposed regulation emphasizes the need for a balanced approach. The IRRC recognizes the importance of clarifying tax laws, but it also highlights potential concerns about the regulation’s impact on businesses. They suggest that the DOR consider the administrative burden on small businesses and the potential for increased compliance costs. The IRRC’s feedback underscores the need for thorough stakeholder engagement to refine the regulations further, ensuring they achieve the intended clarity and fairness without placing undue strain on Pennsylvania’s business community. The next steps involve a period of public comment and potential revisions before the regulations can be finalized and implemented.
The DOR also proposed new regulations outlining acceptable payment methods for obligations due to Pennsylvania, aiming to modernize and streamline the process. The IRRC responded positively, but cautioned that the DOR must consider the potential impact on taxpayers, particularly those without access to digital payment options. The IRRC's feedback emphasizes the importance of ensuring equitable access and minimizing administrative burdens while implementing these changes.
Read PICPA’s comment letter on this proposal.
Cyber Charter Funding Issue Partly Addressed
The recently passed state budget includes some adjustment to how school districts are billed for students attending cyber charter schools, aiming to slightly reduce the financial burden on districts. The budget provides $100 million to reimburse districts for part of their cyber charter expenses, but it falls short of significant reform.
Proposed legislation that would have set a uniform statewide tuition rate for cyber schools – potentially saving districts over $450 million – was not included in this year’s budget agreement. House Bill 1422, sponsored by Rep. Joe Ciresi (D-Montgomery), which passed the state House by a 122-81 vote last July, would have set a statewide tuition rate of $8,000 for cyber schools. For special education students who require the least amount of support (Category 1, costing less than $27,303), the tuition rate would be multiplied by 1.64. For students in the higher cost tiers, a cyber charter school would need to justify expenses with the Pennsylvania Department of Education before charging the resident school district the statewide rate multiplied by 3.08 (Category 2) and 6.34 (Category 3).
The new provisions also tweak special education tuition rates, projected to save districts $34.5 million in 2024-2025 and about $69 million annually thereafter. Despite these changes, the Pennsylvania School Boards Association and other officials believe that establishing a uniform tuition rate and addressing special education costs more comprehensively remain crucial to future reforms.
IFO Report Shows Revenues, Spending Surged During Pandemic
The Pennsylvania Independent Fiscal Office (IFO) recently released a report detailing the dramatic surge in state revenue and spending during the COVID-19 pandemic.
According to the report, Pennsylvania experienced a significant increase in tax collections, driven primarily by federal stimulus payments and enhanced unemployment benefits, which bolstered consumer spending. The influx of federal funds and economic recovery efforts resulted in an unexpected revenue windfall for the state, allowing for increased investments in public health, education, and economic support programs.
The report also highlighted substantial growth in state expenditures as the government responded to the pandemic’s challenges. Increased spending on health care, unemployment benefits, and support actions for businesses and individuals strained the state’s budget. The report underscores the need for prudent fiscal planning to ensure that the state can manage future economic uncertainties without compromising essential services.
Pittsburgh Jock Tax to be Heard by Pa. Supreme Court
The Pennsylvania Supreme Court has agreed to hear a case challenging the controversial “jock tax” imposed on professional athletes by the City of Pittsburgh. Formally known as the Professional Sports Facility Usage Fee, the tax has been a point of contention since its inception as it levies a tax on the income of athletes who play games in the city, regardless of their residency.
Opponents argue that the tax unfairly targets a specific group of individuals and could discourage major sporting events from being held in Pittsburgh, potentially impacting the local economy. Proponents, however, contend that the tax is a necessary revenue stream for the city that helps offset the costs associated with maintaining sports facilities and providing public services.
The legal challenge, brought forward by a coalition of professional athletes and their representatives, asserts that the tax violates both state and federal laws, including the commerce clause of the U.S. Constitution. The plaintiffs argue that the tax imposes an undue burden on interstate commerce by disproportionately affecting nonresident athletes.
As the state’s highest court takes up the case, it will not only determine the fate of Pittsburgh’s jock tax but also set a significant precedent for similar taxes in other jurisdictions. The decision could have far-reaching implications for how cities fund their sports infrastructure and manage the financial relationships with professional sports teams and athletes.
Chancellor Greenstein to End Service with the State System
Dr. Dan Greenstein, chancellor of Pennsylvania’s State System of Higher Education (PASSHE), informed the board of governors that he will complete his service as chancellor on Oct. 11, 2024.
In an open letter to the students, faculty, and staff at the 10 state-owned universities within PASSHE, Greenstein expressed gratitude for the opportunity to serve as chancellor and shared insights about his time in the role.
Greenstein has served as chancellor since September 2018, leading a system redesign that has resulted in improved financial stability, increased new-student enrollment, restored legislative relationships, and increased state investment.
“Perhaps the single most important thing we’ve done is freeze tuition every year since I arrived, thus securing PASSHE’s place as the most affordable four-year option for students,” Greenstein said. “That was possible only because of the hard work of our universities in controlling costs, because of the mission-mindedness of the board of governors, and because of the renewed investment by the legislature and the governor.”
The board of governors will commence a national search for the next chancellor and identify an interim chancellor to be appointed when Greenstein ends his service.
Legislative Update - Week Ending July 26, 2024
In this issue: PICPA Legislative Update webcast this week; Review commission comments on Pa. DOR regs; Pennsylvania cyber charter funding; and more.
by PICPA Government Relations
Jul 26, 2024, 08:55 AM
With the July passage of the state budget, Pennsylvania legislators are now in recess. PICPA’s Legislative Update will take a break from publishing until the General Assembly returns in September. Thank you for your support of PICPA’s advocacy efforts.
- PICPA Quarterly Legislative Update Webcast Focuses on Budget
- Review Commission Comments on Proposed DOR Regs
- Cyber Charter Funding Issue Partly Addressed
- IFO Report Shows Revenues, Spending Surged During Pandemic
- Pittsburgh Jock Tax to be Heard by Pa. Supreme Court
- Chancellor Greenstein to End Service with the State System
PICPA Quarterly Legislative Update Webcast Focuses on Budget
With Pennsylvania’s new $47.6 billion spending plan for fiscal year 2024-2025 in place and the General Assembly in recess until mid-September, join Peter Calcara, PICPA vice president – government relations, and Drew VandenBrul, CPA, Grant Thornton Advisors, on Aug. 1 as they examine what's new in this year’s budget, what lawmakers and the Shapiro administration excluded, and what tasks remain for the General Assembly when it returns to Harrisburg in the fall. The webcast starts at 9:00 a.m. and is complimentary for PICPA members.
Review Commission Comments on Proposed DOR Regs
The Independent Regulatory Review Commission (IRRC) released its preliminary comments on two proposed regulations from the state Department of Revenue (DOR). The PICPA State Taxation Steering Committee reviewed both proposed regulations and submitted comments.
In May, the DOR proposed a new regulation to more clearly define what constitutes business and nonbusiness income for state tax purposes. The initiative aims to provide clearer guidelines for taxpayers and reduce the ambiguity that often leads to disputes and legal challenges. The proposal delineates the criteria for categorizing various types of income, intending to align state tax codes with contemporary economic realities and business practices. The DOR believes this regulation will enhance compliance, streamline the tax filing process, and ensure a fairer tax system for businesses and individuals.
Read PICPA’s comment letter.
The IRRC’s comments on the proposed regulation emphasizes the need for a balanced approach. The IRRC recognizes the importance of clarifying tax laws, but it also highlights potential concerns about the regulation’s impact on businesses. They suggest that the DOR consider the administrative burden on small businesses and the potential for increased compliance costs. The IRRC’s feedback underscores the need for thorough stakeholder engagement to refine the regulations further, ensuring they achieve the intended clarity and fairness without placing undue strain on Pennsylvania’s business community. The next steps involve a period of public comment and potential revisions before the regulations can be finalized and implemented.
The DOR also proposed new regulations outlining acceptable payment methods for obligations due to Pennsylvania, aiming to modernize and streamline the process. The IRRC responded positively, but cautioned that the DOR must consider the potential impact on taxpayers, particularly those without access to digital payment options. The IRRC's feedback emphasizes the importance of ensuring equitable access and minimizing administrative burdens while implementing these changes.
Read PICPA’s comment letter on this proposal.
Cyber Charter Funding Issue Partly Addressed
The recently passed state budget includes some adjustment to how school districts are billed for students attending cyber charter schools, aiming to slightly reduce the financial burden on districts. The budget provides $100 million to reimburse districts for part of their cyber charter expenses, but it falls short of significant reform.
Proposed legislation that would have set a uniform statewide tuition rate for cyber schools – potentially saving districts over $450 million – was not included in this year’s budget agreement. House Bill 1422, sponsored by Rep. Joe Ciresi (D-Montgomery), which passed the state House by a 122-81 vote last July, would have set a statewide tuition rate of $8,000 for cyber schools. For special education students who require the least amount of support (Category 1, costing less than $27,303), the tuition rate would be multiplied by 1.64. For students in the higher cost tiers, a cyber charter school would need to justify expenses with the Pennsylvania Department of Education before charging the resident school district the statewide rate multiplied by 3.08 (Category 2) and 6.34 (Category 3).
The new provisions also tweak special education tuition rates, projected to save districts $34.5 million in 2024-2025 and about $69 million annually thereafter. Despite these changes, the Pennsylvania School Boards Association and other officials believe that establishing a uniform tuition rate and addressing special education costs more comprehensively remain crucial to future reforms.
IFO Report Shows Revenues, Spending Surged During Pandemic
The Pennsylvania Independent Fiscal Office (IFO) recently released a report detailing the dramatic surge in state revenue and spending during the COVID-19 pandemic.
According to the report, Pennsylvania experienced a significant increase in tax collections, driven primarily by federal stimulus payments and enhanced unemployment benefits, which bolstered consumer spending. The influx of federal funds and economic recovery efforts resulted in an unexpected revenue windfall for the state, allowing for increased investments in public health, education, and economic support programs.
The report also highlighted substantial growth in state expenditures as the government responded to the pandemic’s challenges. Increased spending on health care, unemployment benefits, and support actions for businesses and individuals strained the state’s budget. The report underscores the need for prudent fiscal planning to ensure that the state can manage future economic uncertainties without compromising essential services.
Pittsburgh Jock Tax to be Heard by Pa. Supreme Court
The Pennsylvania Supreme Court has agreed to hear a case challenging the controversial “jock tax” imposed on professional athletes by the City of Pittsburgh. Formally known as the Professional Sports Facility Usage Fee, the tax has been a point of contention since its inception as it levies a tax on the income of athletes who play games in the city, regardless of their residency.
Opponents argue that the tax unfairly targets a specific group of individuals and could discourage major sporting events from being held in Pittsburgh, potentially impacting the local economy. Proponents, however, contend that the tax is a necessary revenue stream for the city that helps offset the costs associated with maintaining sports facilities and providing public services.
The legal challenge, brought forward by a coalition of professional athletes and their representatives, asserts that the tax violates both state and federal laws, including the commerce clause of the U.S. Constitution. The plaintiffs argue that the tax imposes an undue burden on interstate commerce by disproportionately affecting nonresident athletes.
As the state’s highest court takes up the case, it will not only determine the fate of Pittsburgh’s jock tax but also set a significant precedent for similar taxes in other jurisdictions. The decision could have far-reaching implications for how cities fund their sports infrastructure and manage the financial relationships with professional sports teams and athletes.
Chancellor Greenstein to End Service with the State System
Dr. Dan Greenstein, chancellor of Pennsylvania’s State System of Higher Education (PASSHE), informed the board of governors that he will complete his service as chancellor on Oct. 11, 2024.
In an open letter to the students, faculty, and staff at the 10 state-owned universities within PASSHE, Greenstein expressed gratitude for the opportunity to serve as chancellor and shared insights about his time in the role.
Greenstein has served as chancellor since September 2018, leading a system redesign that has resulted in improved financial stability, increased new-student enrollment, restored legislative relationships, and increased state investment.
“Perhaps the single most important thing we’ve done is freeze tuition every year since I arrived, thus securing PASSHE’s place as the most affordable four-year option for students,” Greenstein said. “That was possible only because of the hard work of our universities in controlling costs, because of the mission-mindedness of the board of governors, and because of the renewed investment by the legislature and the governor.”
The board of governors will commence a national search for the next chancellor and identify an interim chancellor to be appointed when Greenstein ends his service.
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