A Bipartisan Attempt at Business Tax Reform

Supporters say they’ve found a solid middle ground on business tax reform in Pennsylvania.  “You’ve got folks who support the tax cut side.  You’ve got folks who support only the Delaware Loophole side,” says House Republican Policy Chair Dave Reed (R-Indiana).  “But merging the two together may be the right equation to get the ball over the goal line.” 

The bill Reed’s pushing alongside Democrat Eugene DePasquale (D-York) would gradually lower the state’s corporate net income tax from 9.99% to 6.99%, over the course of six years.  It would also close the so-called Delaware Loophole with an “expense add-back” provision, which Reed says would target specific companies that are using the loophole with the sole purpose of avoiding paying their Pennsylvania taxes. 

State Rep. Eugene DePasquale

State Rep. Eugene DePasquale

Rep. DePasquale says Pennsylvania’s high CNI is a black eye on the state, which is stifling job growth.  “I believe… that this will lead to actually more revenue in the future because you will have greater job growth.”  Both of the prime sponsors say their effort is aimed at creating a fair tax climate in the state.   

The “expense add-back” approach may be new to Pennsylvania, but supporters say it’s already used by 23 other states.  At an unrelated capitol news conference, Senate Democrats expressed their continued support through closing the Delaware Loophole through combined reporting.  “There is a way to transition to mandatory combined reporting in a way that would allow for revenue neutrality because we’d be expanding the base,” says Senator John Blake (D-Lackawanna).

Committee Advances Bill to Reduce Size of State House

Some say the 203-member state House is too big for its own good, and HB 153 would slash membership by 50 following the 2020 Census.  It received some bipartisan support in the House State Government Committee on Tuesday.  Its next stop is the House floor. 

Knowing that similar bills have never seen the light of day, State Rep. Seth Grove (R-York) called it a historic day.  “We get to send a message to the residents of Pennsylvania that we are serious about looking at the foundation of our General Assembly, we are serious about cutting our costs, we are serious about right-sizing government,” Grove said prior to the vote. 

HB 153 is sponsored by Speaker of the House Sam Smith (R-Jefferson) and capitol observers say that kind of clout gives this measure a better shot at passing than previous efforts. 

Critics, however, contend that larger House districts would create a whole new set of problems.  “You are making us more dependent on special interest group money if you do decrease the size of the legislature,” says Delaware County Democrat Greg Vitali, who also questions whether such an effort would actually save taxpayers money. 

Reducing the size of the state House would require a constitutional amendment, which means this bill would have to pass two consecutive sessions of the General Assembly before being put to a voter referendum.  HB 153 would not make any changes to the 50-member state Senate.

Capitol Rotunda - Facing House Chamber

Advocates Push PA Lyme Disease Law

Patients and doctors lined up to testify on the proposed Lyme and Related Tick-borne Disease Education, Prevention and Treatment Act.  The House Human Services Committee convened a capitol hearing on HB 272 this week.  “The latest statistics we have from 2009 show that there were almost 5,000 reported cases of Lyme disease in the state of Pennsylvania.  That is by far the highest number of any of the states,” says Chairman Gene DiGirolamo (R-Bucks).  Others later testified that those reported cases are likely just the tip of the iceberg. 

Lyme Disease rash

Lyme Disease will often leave a "bull's eye" rash.

The legislation would create a statewide Lyme disease education task force, and require that health insurers cover Lyme disease treatments.  “There are so many people suffering from this particular disease that is misdiagnosed so many times by a physician, either because they don’t have sufficient training or don’t understand how debilitating this disease can be,” State Rep. Dick Hess (R-Bedford) said in an interview with Radio PA. 

Julia Wagner, who chairs Lyme Action PA, testified that Lyme disease can have severe neurological effects.  “The impact of this disease is such that I was so cognitively affected that I could not string a sentence together.  I could no longer recognize the meaning of a red light, when I stopped at a traffic light,” Wagner says.  Lyme Action PA is a coalition of 19-Lyme disease support groups across the state. 

Hess’s bill has 30-bipartisan co-sponsors, and currently awaits action in the Human Services Committee.  The Insurance Federation of Pennsylvania supports the educational aspects of the legislation, but testified that its insurance mandate is a step in the wrong direction.  “HB 272 is not just an insurance mandate, it also amounts to legislative endorsement of a controversial course of medical treatment,” says Jonathan Greer, vice president of the Insurance Federation of PA.  Despite patients’ testimony, Greer says the science behind long-term antibiotic treatment of Lyme is mixed.

Ex-Speaker Perzel Pleads Guilty, Will Cooperate

Flanked by two attorneys and wearing a dark blue suit, former Speaker of the House John Perzel stood in front of Dauphin County Judge Richard Lewis, Wednesday, to enter his guilty plea.  The Philadelphia Republican did not speak to reporters as he entered or left the third floor courtroom, but he did release a written statement. 

It reads: “…The truth is that as the legislative leader of my caucus, I oversaw the spending of millions of dollars in taxpayer funds, and I bear the responsibility for the improprieties that occurred in the spending of those dollars.”  Perzel also expressed regret for his actions.  “You had a right to expect better from me, and I am sorry I let you down,” the statement concludes. 

Perzel pleaded guilty to 8 of 82-charges that were leveled against him in 2009.  They range from conflict of interest, to theft, to conspiracy.  He could face a maximum of 24-years behind bars, but the standard minimum sentence is 18 – 50-months.  The charges also carry $50,000 dollars in fines. 

Frank Fina - Bonusgate

Prosecutor Frank Fina talks to reporters after former Speaker John Perzel pleaded guilty.

“Whenever we have somebody of this responsibility and this position stepping forward and pleading guilty, and taking responsibility for illegal conduct, I think it is an important event,” Chief Deputy Attorney General Frank Fina told a tightly-packed gaggle of reporters.   Fina says the plea agreement includes Perzel’s cooperation – and likely testimony – as the political corruption cases proceed. 

A former Perzel aide was also in the courtroom, Wednesday, to plead guilty.  It brings to five the number of guilty pleas out of the 10- Republican House members and staffers who were charged in the second round of the “Bonusgate” investigation.  The political corruption probe also indicted 15-Democrats in phases I and III of the investigation. 

A 188- page grand jury presentment from November of 2009 concluded that Perzel was the mastermind of a sophisticated scheme that spent more than $10-million taxpayer dollars for campaign work. 

Political activist Gene Stilp of Taxpayers and Ratepayers United thinks Perzel’s guilty plea breathes new life into the ongoing political corruption investigation.  “If he cooperates with the prosecution, many people in the House and the Senate should be worried,” Stilp says.

Sate Capitol View from Commonwealth Ave.

“Fair Share Act” Goes to Governor Tom Corbett’s Desk

    The state House of Representatives has given final approval to a Senate bill known as the “Fair Share Act.” The legislation was one of the top priorities of Governor Tom Corbett and it is now on its way to his desk for signature.

    The bill addresses percentages in civil lawsuit awards to ensure that the percentage of damages leveled against a defendant does not exceed the level of their determined responsibility. It would apply to defendants found 60% liable or less in civil cases. Democrats tried unsuccessfully to amend the bill to exempt minors and senior citizens before the legislation passed 116-83 on Monday afternoon.

    Supporters of the bill argued that exempting anyone from the proposed tort reform would defeat its purpose, and that the bill had nothing to do with plaintiffs. They say the current lawsuit climate in Pennsylvania has hindered the state’s ability to attract new business and create jobs.

    The bill will become law 60 days after the governor signs it.

Final Days of the State Budget Process Are Here

    Both the state House of Representatives and state Senate gaveled in rare Sunday voting sessions over the weekend, as the two chambers brace for the final flurry of legislative activity expected this week before the summer break. Thursday is the deadline for the state budget, and despite some minor delays in the Senate over the weekend, leaders still say the deadline can be met for the first time since 2002.

    In addition to budget-related bills, House lawmakers dealt with a distracted driving measure that would ban all texting while behind the wheel and legislation that limits liability for damages to the percentage of responsibility in civil lawsuits. Those bills could see final House action this week.

    The Senate is expected to begin working through budget amendments on Monday after dealing with non-preferred appropriations bills for state-related universities among its action on Sunday. The debate over funding for higher education, which was a big part of Sunday’s floor activity, is expected to continue this week.

    Off the floor on Sunday, House and Senate Democrats continued their call for a Marcellus Shale extraction tax or state impact fee. Governor Tom Corbett says he won’t even consider such a proposal and he wants any “impact fees” kept local and completely separate from the General Fund budget talks.

Voter ID Bill Clears State House

    A bill that would require voters to present a photo ID every time they cast a ballot passed the state House of Representatives Thursday after weeks of debate and political wrangling. The measure received a mostly partisan 108-88 vote in the Republican-controlled House.

    Critics say the bill will suppress turnout among the elderly and minorities, but supporters contend that their only goal is to combat voter fraud. During Thursday’s final debate, Luzerne County Democrat Gerald Mullery, who’s also an attorney, argued that a similar law passed in Indiana resulted in valid court challenges and costly legal battles. He predicted the same fate here if Pennsylvania enacts a voter ID law. During debate on the constitutionality of the bill, Lancaster County Republican Bryan Cutler countered that Pennsylvania already has some voter restrictions in place, and requires a photo ID from first-time voters and those voting for the first time at a new polling place.

    Chester County Republican Chris Ross cast the only “no” vote in the Republican caucus. All Democrats present in the chamber voted against the bill, which now heads to the state Senate.

One Week Remains Before State Budget Deadline

State budget negotiations continue in Harrisburg as the Corbett Administration attempts to iron out differences with fellow Republicans in the legislative leadership. Their goal is to have a spending plan signed and in place one week from tonight, making this the first budget deadline met in 8 years.

Governor Tom Corbett said last night that he remains confident that a deal can be reached in time to meet that deadline, but there are indications that his confidence is not shared by the Senate leadership. Drew Crompton, Chief of Staff to Senate President Joe Scarnati, says the governor’s refusal to discuss a proposed Marcellus Shale “impact fee” has the potential to push the process beyond June 30th. The governor has previously stated that the impact fees are to be kept separate from the general fund budget and he refused to comment on whether or not they were a part of Wednesday’s talks. Corbett does list tort reform and school vouchers as two major issues that need to be discussed before party leaders can agree on a budget.

Senate Majority Leader Dominic Pileggi previously stated that a handshake agreement of sorts would need to be in place by today if the budget had a chance to pass by June 30th. As talks ended last night, indications were that such a “gentleman’s agreement” is still elusive.

Meanwhile, state Democrats are critical of the budget negotiation, calling it a “behind closed doors” process. Republicans control the House, Senate and Governor’s office in Harrisburg.

Lottery Fund

Pennsylvania House Votes to Give PA Lottery a Financial Check Up

The Pennsylvania Lottery will be getting a financial check up.  The state House of Representatives has adopted a resolution that directs the Legislative Budget and Finance Committee to prepare a report on lottery sales forecasts, in both the short and long term.

Representative Martin Causer (R-Cameron/McKean/Potter), the sponsor of the resolution, says the last financial review was conducted in 1994.

Causer says a lot has changed since then, and he wants to make sure there’s sustainable funding for the valuable programs the lottery supports.  The resolution, HR 106, cites the introduction of casino gambling and lingering concern regarding the potential impact of slot machines and table games on lottery sales.

The committee will look at whether state Lottery fund revenues are sufficient to support lottery-funded programs at existing or expanded levels or if cutbacks or program changes will be needed to maintain the solvency of the fund. The panel will also determine if any changes to law, regulation or policy are needed.

Lottery funded programs include Area Agencies on Aging, PACE, PACENET, long term living, Property Tax and Rent Rebates and shared ride services.

The   committee will have six months to complete the study.   The report will be submitted to the Aging and Older Adult Services and Finance Committee.

The vote to approve HR 106 was unanimous.

New Impact Fee Legislation Introduced In Pennsylvania House

While state House Democrats have been pushing for a broader Marcellus Shale tax, Republican Marguerite Quinn of Bucks County has introduced impact fee legislation that has bipartisan co-sponsorship.  She says House Bill 1700 would not direct any money into the general fund.

Half of the fee would be divided between counties and municipalities that host drilling sites, 5% would go to the state’s conservation districts,  15% to the Environmental Stewardship fund, 10% to the Hazardous Site Cleanup Fund and 20% to the Motor License Fund.  

The fee would start at $50 thousand per well for the first two years, drop to $45,000 for the next two years, $40,000 for the next two years, and then continue declining to $15,000 in year 15 and $10,000 in year 20.    

Representative Mario Scavello (R-Monroe) applauded the proposal, saying quite a bit of the funding would go back to local communities and that’s where the impact is the greatest.

Representative Eugene DePasquale (D-York) says the bill differs from the Senate impact fee legislation in a key area.  He says many members in the house find the local zoning provision in the Senate bill particularly troubling.   

The Senate bill (SB 1100) calls for the development of a model ordinance for zoning in drilling areas.  It would make municipalities or counties that adopt stricter

Representative Marguerite Quinn (R-Bucks)

ordinances ineligible to receive a share of the impact fee.