Work to be Done on State Budget

House and Senate lawmakers return to Harrisburg for session this week. With less than two months until the end of the Fiscal Year, they will have to take into account the state’s $1.2 billion revenue shortfall and incorporate that reality into their plans for spending in 2017-18. The law requires that the budget must be balanced; therefore, further cuts to spending, new taxes or other proposals to generate revenue will be necessary to close the gap. The House awaits Senate action on H.B. 218, the budget vehicle they passed a little more than a month ago that relies on gaming expansion and liquor reforms to generate new revenue, which the Senate Appropriations Committee could take up as early as this week.

On Friday, Senator John Gordner expressed concern about gaming expansion generating significant new revenue. He feels gaming in Pennsylvania may be at a saturation point, and that further expansion may result in reduced lottery proceeds for senior citizen programs. His comments were made at the budget breakfast sponsored by the Joint Governmental Affairs Committee of the Chamber and Columbia-Montour Visitors Bureau held at The Greenly Center in downtown Bloomsburg. Representative David Millard and Harold Hurst from Rep. Kurt Masser’s office also participated.

Jennifer Reis, Manager of Government Affairs with the PA Chamber of Business & Industry, provided an overview of $32.2 billion budget proposed by Governor Wolf, as well as the $31.5 billion spending plan advanced by the House. While the Governor’s budget did not address the state’s public pension crisis, Senator Gordner believes that legislation to provide a long-term solution will be advanced and signed by the Governor. As the state Supreme Court would likely declare any changes in benefits to existing employees unconstitutional, a solution for immediate relief is unlikely.

Senator Gordner and Representative Millard felt confident that a budget bill will be provided to the Governor by the June 30 deadline.

New Hire Reporting Benefits Employers and Children

Each year, timely and accurate new hire reporting by employers results in increased child support collections (between $30 million to $50 million) for Pennsylvania’s children. Employer outreach and education — focusing on the importance of timely and accurate reporting of new hire data (because it directly impacts dependent children who are owed child support) — is critical to the continued success of this program. Pennsylvania’s New Hire Reporting Program within the Department of Labor & Industry offers resources to understand the system.

Employers also directly benefit from new hire reporting, because the new hire data they submit to us are matched to Unemployment Compensation and Workers’ Compensation claimant data, and often result in reduced UC and Workers’ Compensation fraud overpayments. This saves employers millions of dollars each fiscal year in possible fraud overpayments — over $38 million in total since 1998.

But these results only come about if employers are aware of the Program, and the federal and state laws that mandate new hires be reported to the Commonwealth—employer reporting is not optional, but is required by law.

Additional information about new hire reporting is available through the CareerLink website, or by calling 1-888-PAHIRES (888-724-4737).

Education Tax Credit Application Period Approaching

For businesses that have participated in the Educational Improvement Tax Credit (EITC) program, May 15 is a critical date. The popular state program provides funding for Pre-K scholarships, scholarships for private schools, and educational enhancement programs like those supported by the Chamber’s Foundation. Despite increased allocations to the program in recent years, eligible businesses are strongly encouraged to submit applications on the early enrollment date.

Important points to note are:

1.  Companies that have fulfilled a two-year commitment in their most recently completed fiscal year continue to receive preferential treatment by being allowed to file for a new “initial” application between May 15th and June 30th for the start of another two-year commitment. Moreover, those companies will be able to increase the amount they are applying for as the limit of combined credits for any fiscal year is up to $750,000. Companies that wish to make contributions to Pre-K Scholarship Organizations may receive a tax credit equal to 100% of the first $10,000 contributed and up to 90% of the remaining amount contributed up to a maximum credit of $200,000 annually.

2. Businesses applying for Pre-K credits may now choose to make a two-year commitment. Companies supporting Pre-K organizations now also receive the “preference” for filing on May 15th, having successfully fulfilled a two-year commitment in their most recently completed fiscal year.

3. All EITC applications must be filed electronically. (This will include companies filing for their second-year credits beginning on May 15th.) Paper applications are no longer accepted. Once a company has established a “profile” online, almost everything will be completed electronically. DCED no longer requires applicants to mail the signed signature page.

The current guidelines are now available on the DCED website. The applications are now available online but cannot be filed until May 15. Businesses that are not currently active in the program must wait until July 3 to apply. Due to the recent allocation increase, and current legislation that would further increase the allocation, interested businesses may want to consider submitting a new application on that date.

The Chamber has been advocating since 2014 that the application process be open to all Pennsylvania-based businesses at the same time. A letter renewing that call was recently sent to Senator Gordner and the members of the Senate Education Committee, where the legislation is being considered.

Small Business Tax Reform Bills Clear Committee Hurdle

From PA Chamber of Business & Industry

The PA House Finance Committee voted last week to advance three bills that would help small businesses in the Commonwealth compete on an even playing field.

House Bill 331 would bring the state’s Tax Code in line with federal law to allow for a tax deferral of a “like kind exchange” which is the disposal of an asset and the acquisition of a replacement asset without generating a current tax liability from the sale of the first asset – a tax strategy that operates in every state but Pennsylvania.

House Bill 332 would allow small businesses to use the Net Operating Loss deduction, helping those that pay the personal income tax to offset prior year financial losses with future year gains.

Lastly, H.B. 333 would bring the state’s Tax Code in line with the Internal Revenue Code and more than 30 other states to allow small businesses in Pennsylvania to take the full deduction for the purchase of qualifying equipment. Currently, Pennsylvania C-corporations are able to utilize the full $500,000 deduction allowed under the IRC; but companies filing personal income tax are limited to an amount of $25,000. Again, this makes Pennsylvania regrettably unique as the only state that allows for full equipment purchase expensing for larger businesses while disallowing smaller businesses to take advantage of the same deduction level.  The PA Chamber sent a memo to the committee in advance of the meeting that urged a “yes” vote on all three bills.

House Bills 331, 332 and 333 now await further consideration by the full House.

Montour County Readdressing Meetings Scheduled

A series of public information sessions will be held in May to provide updates on the merger of the 911 centers between Columbia and Montour counties and readdressing in Montour County. Residents and commercial property owners in Montour County, Riverside Borough and Rush Township are encouraged to attend one of the following sessions.

  • Wednesday, May 10 – Danville Middle School, 120 Northumberland Road
  • Wednesday, May 24 – Anthony Township Municipal Building, 1295 White Hall Road
  • Thursday, May 25 – First Baptist Church of Danville, 20 Brookside Drive
  • Wednesday, May 31 – St. Peter’s United Methodist Church, 240 Sunbury Road, Riverside

The sessions are being hosted by the Montour County Commissioners and will begin at 7:00 p.m. Additional information on 911 readdressing is available on the Montour County website.

The Chamber supports the 911 consolidation to improve emergency response and to save costs in the long-term.