CALL TO ACTION: Wolf Administration Proposes Overtime Eligibility Changes

From PA Chamber of Business & Industry

Employers have the opportunity to provide comment on new rules regarding overtime eligibility standards.  The Governor’s proposed changes are similar to a proposal put forth by former President Obama in 2015 which was widely opposed by the employer community and ultimately struck down by a federal court.

In January 2018, the Wolf administration announced its intent to implement changes to the Commonwealth’s overtime eligibility rules for employees.  The proposal, released this week, would dramatically change overtime eligibility rules imposed on Pennsylvania employers by requiring a wage threshold for “exempt status”  that is more than double the current rate set by the federal government.  The proposed changes further include significant revisions to the so-called “duties tests,” which are also used to determine eligibility.  Finally, the rule establishes an automatic update to the salary threshold every three years beginning in 2023.

When President Obama proposed this rule in 2015, the response from employers was swift and deeply negative, particularly among small businesses, nonprofit organizations, higher education institutions and the health service industry, among others. Employers not only described significant increases to the cost of providing services or doing businesses, but also the reality that this dramatic change would damage workplace culture and morale, as employers would be forced to shift employees from earning a salary to being paid by the hour. This transition typically requires employees to start clocking in and out, along with more burdensome record-keeping, less flexibility, a rigid work schedule and fewer training opportunities and benefits.

Governor’s Wolf’s proposal has prompted the same concerns; and since it would only apply to Pennsylvania, it would further harm the Commonwealth’s competitiveness in relation to other states.

If you are concerned with the negatives consequences this proposal would have on your business, you have an opportunity to have your voice heard. Governor Wolf’s proposal is pending with the Independent Regulatory Review Commission, which will accept comments through July 23, after which it will proceed to final rulemaking.  Employers are encouraged to email the commission and offer their feedback on this ill-advised policy.  IRRC is required to review all feedback and has previously taken action against a proposed rule based on the volume and nature of comments it receives.

For more information or questions, contact Alex Halper at 717 720-5471 or email.

PA Chamber Bringing Education Spending Facts to Light This Budget Season

From Gene Barr
President and CEO, PA Chamber of Business & Industry

With another election season upon us, a previously debunked but repeated falsehood is making its way across newspapers and campaign ads – that the previous governor cut education funding by nearly $1 billion.

Let’s set the record straight on what those who are paying attention refer to as the “$1 billion lie.” The funds in question were federal stimulus dollars that were never meant to be used for school districts’ operations and expired in the early days of the Corbett administration. A June 2013 report by the Pennsylvania Association of School Business Officials affirms that state funding was cut in the final Rendell years and backfilled with temporary stimulus money.

In the years that followed, state spending for education soared to record levels and was at an all-time high by the time Governor Wolf took office. It continues to go up, despite declining enrollment. As budget negotiations take shape, lawmakers will promote higher education spending under the simple guise of needing more money. But studies show that both students and teachers in Pennsylvania actually fare quite well in terms of the amount of taxpayer spending that’s being allocated each year. Consider these findings: a 2015 report by the U.S. Census Bureau ranked Pennsylvania 10th among the states in total per pupil spending; a USA Today article from February found that about 95 percent of Pennsylvania’s public school students attend districts with higher than average per pupil expenditures; and a 2017 National Education Association report shows that Pennsylvania teachers are the 10th highest paid in the nation.

Whether education is a worthy investment isn’t up for debate – most people would agree it most definitely is. In our education policy, the Pennsylvania Chamber stresses that every student deserves the opportunity to earn a high quality education to become the next generation of productive workers. To that end, we promote the expansion of the Educational Improvement Tax Credit program, which awards tax credits to businesses that contribute toward scholarships for students to attend the school that best meets their needs. We also advocate for transparency in education funding; and last year, celebrated the enactment of an important reform that replaced the ineffective ‘last in, first out’ seniority-based system of furloughing teachers to one based on classroom performance. The PA Chamber is also in our second year of leading a dynamic workforce development program that is connecting students and their families, educators and hiring businesses with in- demand jobs in the skilled trades, and through collaboration with the mikeroweWORKS Foundation and generous business donors is awarding scholarships to students who want to pursue this career route. You can learn more about this initiative and how to get involved at StartTheConversationHere.com.

At the same time that we’re engaged in these efforts we’re also working to advance a responsible state budget that doesn’t impose new tax burdens on businesses or individuals. That’s why our message to lawmakers as they craft this year’s spending plan is to ensure the investments they make in education are focused on promoting positive student outcomes.

The real driver of higher school district costs? The state’s public pension systems. Together, the Public School Employees Retirement System and the State Employees Retirement System have an unfunded liability of about $74 billion, which is due in large part to retroactive benefit increases that government unions are working to maintain through their continued calls for higher taxes. For the 2018-19 state budget, the state’s contribution to PSERS is estimated to be $2.5 billion – an 8.6 percent increase over the current year. Additional pension reforms are needed to get these costs under control and begin to make the real focus of education spending about the students, and not about propping up overly generous public pension benefits that state taxpayers can’t afford.

As budget season approaches, it’s expected that lawmakers will engage in deliberations related to education funding – but those discussions ought to be honest and grounded in the facts. Think of that the next time you hear the $1 billion lie.

Chambers Gather in Harrisburg to Discuss Business Issues

With the state budget deadline quickly approaching and the General Election right around the corner, more than 100 state and local chamber representatives from across the Commonwealth gathered in Harrisburg on Tuesday, June 5 for Chamber Day at the State Capitol. The annual event, which is co-hosted by the PA Chamber of Business and Industry and the Pennsylvania Association of Chamber Professionals, provides a forum for constructive dialogue between representatives of local chambers and key policymakers on issues important to the state’s business community and the best ways to improve the Commonwealth’s business climate. Columbia Montour Chamber Board Vice Chair Dan Knorr (Bloomsburg University) and President Fred Gaffney were among the attendees.

“We are fortunate to have a strong network of chambers across Pennsylvania,” said Gaffney. “While the PA Chamber serves as our “boots on the ground” in Harrisburg, several of the legislators noted the importance of us coming together in Harrisburg to amplify our message. Being accompanied by members further strengthens the effort.”

Participants met with several elected officials throughout the day; including: Senate Pro Tempore Joseph Scarnati, R-Jefferson; Speaker of the House Mike Turzai, R-Allegheny; House Appropriations Majority Chairman Stan Saylor, R-York; and Democratic Chairman Joseph Markosek, D-Allegheny.  Policy discussions throughout the day were on a variety of topics, including: the 2018-19 state budget, the state’s opioid epidemic, workforce development, federal issues that impact employers, as well as the upcoming 2018 General Election. The luncheon speaker was Republican Gubernatorial candidate and former state Senator Scott Wagner. 

As echoed at the Chamber’s recent legislative breakfast, it is expected that this year’s budget process will be less contentious than in recent years. Revenues are trending slightly higher than projected, making a balanced budget easier to achieve without borrowing from special funds and issuing bonds. Governor Wolf’s budget proposes an increase of 3.1 percent. Republican leaders stated that if the increase can be negotiated to around 2 percent, a budget could be finalized by June 30. There are no broad-based tax increases included in the Governor’s budget and Republican leaders do not expect some harmful business proposals to be in the final plan.

Legislation to Help Small Businesses Access Financing Signed into Law

Late last month, President Trump signed into law legislation designed to help the nation’s small businesses grow by better tailoring regulations for community and regional banks. The Columbia Montour Chamber joined with the U.S. Chamber of Commerce and the PA Chamber of Business & Industry in calling for reforms to the rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which were put in place following the financial crisis in 2008.

The financial crisis led community, mid-size and regional banks to become regulated under a “one-size-fits-all” model that doesn’t take into account the institution’s actual risk profile. As a result, cost of credit for small businesses has increased, capital has slowed; along with relationship banking that is based upon local knowledge and judgment is hindered. The Chamber sent a letter to Senators Pat Toomey and Bob Casey in December, urging reforms that reduce burdensome regulations while maintaining reasonable controls.

Senate Bill 2155 passed in the Senate in March, and in the House on May 22, with the President signing the bill into law two days later. Senator Toomey and Congressman Barletta voted in favor of the legislation.

This Week in the Pennsylvania Legislature

From PA Chamber of Business & Industry

House and Senate lawmakers both return to session this week, with the Senate convening Monday through Wednesday and the House coming in Tuesday through Thursday.

With less than six weeks to go before the end of the 2017-18 Fiscal Year, the General Assembly met some headwinds last week in their quest for funding to balance the coming year’s spending plan. A question that had been tied up in court concerned whether the General Assembly could transfer $200 million from the state’s Joint Underwriting Association to the general fund. This question was answered last week when a federal Judge Christopher Conner ruled it could not, explaining, “The association’s function is inherently private. It is, as its core, an insurance company …The commonwealth cannot take those funds without just compensation.”   This order – which House GOP spokesman Steve Miskin called “overly broad,” could have larger implications on the Fiscal Code and means that the state will have $200 million less than it planned on for 2018-19. Wolf administration spokesman J.J. Abbott called the transfer “one of the many mechanisms passed by the General Assembly and signed into law to eliminate the deficit,” adding that the administration as reviewing the decision.

While elected officials contend with this new development, the PA Chamber is also urging lawmakers to pass legislation that would fix a recent anti-business ruling by the state Department of Revenue. Senate Bill 1056 – which passed the Senate late last month , and H.B. 2017 – which passed the House in March, would reverse the agency’s ruling issued last December that prohibits Pennsylvania taxpayers from taking advantage of 100 percent bonus depreciation when filing their corporate taxes, and would provide for a generally accepted depreciation schedule. The PA Chamber supports both bills as they would reverse the department’s action, which has made Pennsylvania less competitive and dissuades businesses from making purchases such as new equipment that would help to expand and improve their facilities.

State Senator John Gordner and PA Chamber director of government affairs Alex Halper will discuss these and other issues currently under consideration in Harrisburg at the Chamber’s spring legislative breakfast on Thursday, May 31 at the Greenly Center in downtown Bloomsburg. Cost is $20 for members and $30 for non-members, which includes a buffet breakfast.