Wolf Signs Code Bills, Looks Ahead to Next Budget Cycle
Just shy of four months after passing a FY 2017-18 spending plan, the House and Senate came together this month and finally garnered the votes on a series of bills that lay out the means to pay for the spending. After several fits and starts over the ensuing months since HB 218 was passed, leaders of both chambers were able to cobble together a plan that passed muster in each chamber. Through an unorthodox combination of bond borrowing, fund taps and gaming expansion, a committee vote on a Marcellus Shale tax bill, and a surprise announcement by the Governor that he would seek more funds from the liquor stores profits, the House, which had been largely the roadblock in the process, relented enough to pass the package, despite needing an extra day to pass the final bill. Having accomplished all that, without any broad-based tax increases, the chambers adjourned for three weeks before resuming what will probably be a light legislative calendar for the rest of 2017.
Governor Wolf signed all but one of the “code” bills required to finish the 2017-18 budget on October 30. These bills outline the means of raising and distributing the funds approved in June by the General Assembly. The bills amend the Tax Reform Code, the Fiscal Code, the Gaming law, and two laws governing the “Capital Budget”. Somewhat ironically, one of the bills provides for “borrowing” $1.8 billion to balance the past year’s budget (which the state Treasurer authorized the same day), while another caps the amount that can be bonded for projects. In any event, the new laws provide the funding needed to close out the prior year’s books, and fill similar holes in the “structural deficit” going forward. This sets the platform for the coming 2018-19 budget process, which begins with the Governor’s budget address in February. It also, we understand, opens the door for the Commonwealth Financing Authority to reconvene and approve projects that have been delayed by previous meeting cancellations, at its November 14 meeting. The new laws also provide for some fund transfers, but gives the Governor some discretion in making the transfers. DCED is still studying the funds under its jurisdiction and awaits word from the Budget office on exactly what will be moved and when.
Gov. Tom Wolf was the featured speaker at October’s Pennsylvania Press Club luncheon, where Harrisburg’s broken governmental and budget processes were his main topics of choice.
“Here in Harrisburg there is a systemic problem that I try to work to change every day,” he said. “In the halls of the Capitol, special interests have more influence than constituents and protecting big money donors often comes before getting results.”
As evidence of this, the governor pointed to the legislature not passing a severance tax on natural gas extracts despite his pleas to do so and high public opinion polls regarding the imposition of the tax and the most recent budget impasse, which dragged on for nearly four months as lawmakers squabbled over how to best pay for the $31.99 billion budget and a $2.3 billion deficit. The governor also noted his administration’s efforts to streamline and consolidate state government that he said have already saved billions of dollars.
Questions asked of the governor included a variety of issues such as potential tax incentives to Amazon for their much-coveted HQ2. As to Amazon, the governor was reluctant to discuss particular tax incentives that may be offered to the company to entice the selection of a Pennsylvania city for its proposed second headquarters. However, he did note based on his own experience in running a company, that Pennsylvania’s schools, communities, environment, and infrastructure matter just as much as any tax incentive.
“These are thing things that people actually need,” he said.
As to the borrowing component either in his self-created plan to manage state finances by asking the Pennsylvania Liquor Control Board to monetize about $1.25 billion in future cash transfers to the General Fund, or in the legislatively created plan to let the Commonwealth Financing Authority figure out how to best monetize future Tobacco Settlement Fund revenues, the governor initially said that he would pursue both borrowing options, but later clarified that he will have to wait and see what the CFA does before deciding how to proceed.
“The CFA has to weigh in on whether the tobacco securitization makes sense. I am committed to borrowing from the Liquor Control Board,” he said. “I’m not going to do both.”
In addition, should the CFA approve a form of tobacco monetization, he said “you might be interested to see what I do.”
CFA approvals like the one related to the Tobacco Settlement Fund monetization require unanimous approval from legislative members.
Also detailing his views of $300 million in special fund transfers authorized in the Fiscal Code legislation he recently signed, Gov. Wolf said that he will be reviewing the potential for excess funds and will determine which transfers, if any, can be done without damaging existing programs. He said any such transfers would be done responsibly.
With regard to the next budget, Gov. Wolf commented Pennsylvania is likely not to face as large of a deficit as the current fiscal year next year, if one were to exist at all. He speculated the next budget will balance much more easily and he will continue to seek cost-savings through streamlining government.
State Registration Board Publishes Final Renewal Fee Regulations
The State Registration Board for Professional Engineers, Land Surveyors and Geologists (Board) amends § 37.17, relating to schedule of fees. The Board voted at its March 12, 2014, meeting to propose increasing the biennial renewal fees from $50 to $100. The increased biennial renewal fee will be implemented with the September 30 biennial renewal. For more information contact Robin Shearer, Board Administrator, State Registration Board for Professional Engineers, Land Surveyors and Geologists, PO Box 2649, Harrisburg, PA 17105-2649, RA-engineer@pa.gov. Reference No. 16A-4713 (renewal fee) when requesting information. Notice was published in the September 30, 2017, issue of the PA Bulletin. https://www.pabulletin.com/secure/data/vol47/47-39/1613.html
Wolf Signs Executive Order Calling for Review of Professional Licensing In PA
Your association leaders and lobbyists are monitoring a new directive from the Wolf Administration. On October 25 Governor Wolf signed Executive Order 2017-03 that sets in motion a review of professional licensing in the Commonwealth of Pennsylvania. The Executive Order compels the Commissioner of BPOA to work with each Board and Commission to “undertake a critical and comprehensive review of the processes, fees, training, and continuing education requirements for occupational and professional licensure. The Commissioner shall prepare a report for each type of professional and occupational license issued by each Board or Commission. At a minimum for each type of professional license, this report shall include training requirements; licensing, registration, and renewal fees; continuing education requirements; and any other requirements described within this Executive Order. The report shall also include information regarding the number of other states which require a license for each professional or occupational license, the national and regional averages for training requirements, fees, and continuing education requirements.”
The stated goal of the review is to encourage uniformity and reciprocity with similar boards and commissions in other comparable states. It provides for the appointment of an advisory panel comprised of representatives of the 29 licensing boards and commissions in BPOA. The panel will review the laws and regulations of other relevant states, determine where PA’s regulatory system exceeds or departs from the majority of others, and asks for justification for why PA licensees need more stringent oversight. The panel is required to prepare a report of its findings and submit to the Governor’s office. No deadline is specified. We will monitor this process and report its progress.
Legislative Activity
The following bills of interest to PSPE have been introduced and/or acted upon in the past month.
Bidding / Contracting
HB 1849  RE: Public Works Open Contracting Act (by Rep. Stephen Bloom, et al)
Provides for open contracting by the Commonwealth and its political subdivisions and their agencies and authorities. It establishes that a party who is aggrieved by an act committed by a public body in violation of prohibited practices or discrimination prohibited may file an action in a court of competent jurisdiction to enjoin the act.
Introduced and referred to House State Government Committee, 10/10/2017
HB 1891  RE: Public-Private Partnership Pilot Program (by Rep. Eli Evankovich, et al)
Amends Title 62 (Procurement) establishing the Public-Private Partnership Pilot Program and the State Public-Private Partnership Board. The program shall consist of 16 authorized pilot projects: four authorized pilot projects for a facility or infrastructure used for public water supply distribution or treatment, storm water collection, treatment or disposal or wastewater collection, treatment or disposal; and 12 authorized pilot projects for any type of eligible project.
Introduced and referred to House State Government Committee, 10/25/2017
SB 799  RE: Pennsylvania Clean Water Procurement Program Act (by Sen. Rich Alloway, et al)
Establishes the Pennsylvania Clean Water Procurement Program to provide for the purchase of verified TMDL nutrient credits from certified nutrient credit generators through a competitive bidding process consistent with 62 Pa.C.S. Pt. I (relating to Commonwealth Procurement Code) and any other competitive process determined to be appropriate by the Department of Environmental Protection and the State Conservation Commission; provides for powers and duties of the State Conservation Commission; and establishes the Watershed Improvement Fund. The department shall transfer the nutrient reduction mandates of a permittee to a competitive bidding program to enable all certified nutrient credit entities that can generate verified TMDL nutrient credits to participate in an RFP on a voluntary basis. In return for being absolved from the TMDL nutrient reduction mandate, the aggregate number of permittees may pay into the program $50,000,000 annually for 10 years, subject to annual adjustment. Transfer payments shall be paid into the Watershed Improvement Fund, to be used by the commission for the purchase of verified TMDL nutrient credits. Winning bids will offer 20 percent of total nutrient reduction allotment to be available for participation for 30 days by small sources that did not participate in the bidding process so that a small producer who installs a BMP can subscribe to sell their credits into this pool and receive the winning bid price absent the need to participate in the bidding process.
Reported as amended from Senate Environmental Resources and Energy Committee, and read first time, 10/17/2017 Read second time and rereferred to Senate Appropriations Committee, 10/18/2017
Budget Related Bills
HB 271  RE: Gaming Expansion (by Rep. Jason Ortitay, et al)
Amends Title 3 (Agriculture) providing for race horse industry reform and amends Title 4 (Amusements) extensively revising gaming provisions providing for fantasy contests; for lottery; for iLottery; for interactive gaming; for multi-use devices at qualified airports; for sports wagering; for casino simulcasting; and for video gaming; further providing for general provisions of gaming and the Pennsylvania Gaming Control Board; for licensees; for revenues; table games; administration, enforcement and miscellaneous provisions; and making related repeals. It is estimated that $238,518,000 of application fees and license fees will be deposited into the General Fund in 2017-18. The amount of tax revenues to be generated in 2018-19 will depend on the length of time for the licensees to commence operations. The department estimates the iLottery will generate $25,000,000 annually for the Lottery Fund. It is anticipated that $10,000,000 will be generated for the Lottery Fund in 2017-18.
Re-reported on concurrence as amended from Senate Rules and Executive Nominations Committee, and Senate concurred in House Amendments to Senate Amendments as further amended in Senate, 10/25/2017
Received as amended in House and rereferred House Rules Committee, re-reported on concurrence as committed from House Rules Committee, 10/25/2017
House concurred in Senate amendments to House amendments as further amended by the Senate, 10/26/2017 
Approved by the Governor, 10/30/2017 (Act No. 42 of 2017)
HB 542  RE: Tax Reform Code (by Rep. Curtis Thomas, et al)
Amends the Tax Reform Code further providing for the title of the act; in sales and use tax, further providing for definitions, for imposition of tax and for exclusions from tax; providing for marketplace providers and marketplace sellers; further providing for remote sales reports; providing for lodging tax; in personal income tax, providing for the Pennsylvania ABLE Savings Program Tax Exemption, repealing provisions relating to contribution for Korea/Vietnam Memorial National Education Center and further providing for operational provisions, providing for definitions, further providing for requirement of withholding tax, providing for withholding tax requirement for non-employer payors, further providing for information statement, providing for information statement for non-employer payors and for information statement for payees, further providing for time for filing withholding returns, providing for time for filing payors’ returns, further providing for payment of taxes withheld, providing for payment of taxes withheld for non-employer payors, further providing for liability for withheld taxes, providing for payor’s liability for withheld taxes and for payor’s failure to withhold, further providing for amount of withholding tax and for treatment of nonresident partners, members or shareholders, providing for withholding on income and for annual withholding statement and further providing for requirements concerning returns, notices, records and statements and for additions, penalties and fees; in corporate net income tax, further providing for definitions and providing for qualified manufacturing innovation and reinvestment deduction; in realty transfer tax, further providing for definitions and for exempt parties; providing for tax credit eligibility; in entertainment production tax credit, further providing for definitions and for credit for qualified film production expenses, providing for film production tax credit districts and establishing the Entertainment Economic Enhancement Program; in city revitalization and improvement zones, further providing for restrictions and for transfer of property; in neighborhood improvement zones, further providing for definitions and providing for transfer of property; in keystone opportunity zones, keystone opportunity expansion zones and keystone opportunity improvement zones, further providing for additional keystone opportunity zones; in inheritance tax, further providing for timely mailing treated as timely filing and payment; in Public Transportation Assistance Fund, further providing for fund; providing for fireworks; in procedure and administration, further providing for petition for reassessment and for review by board; in general provisions, further providing for timely filing; providing for severability; making related repeals; and making editorial changes.
Recommitted to House Rules Committee, Re-reported on concurrence as amended from House Rules Committee, and House concurred in Senate amendments as amended by the House, 10/17/2017
Received as amended in Senate and rereferred Senate Rules and Executive Nominations 10/18/2017
Re-reported on concurrence as committed from Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments to Senate amendments, 10/25/2017
Signed in the House and in the Senate, 10/25/2017
Approved by the Governor, 10/30/2017 (Act No. 43 of 2017)
HB 674  RE: Fiscal Code Changes (Sponsor withdrew)
Amends The Fiscal Code, implementing the 2017-2018 Commonwealth budget and instituting future budget implementation: further providing for title of act; in Department of Revenue: providing for lottery winnings intercept; providing for ambulatory surgical center data collection and for Joint Underwriting Association; in Treasury Department: providing for provisions for General Assembly; in Department of Auditor General: further providing for agencies receiving State aid and providing for audits of interstate commissions; in procedure for the disbursement of money from the State Treasury: further providing for settlement agreements and enforcement actions; in financially distressed municipalities: providing for payroll tax; in oil and gas wells: further providing for definitions, providing for Oil and Gas Lease Fund, repealing provisions relating to oil and gas operations in the South Newark Basin and providing for temporary cessation of oil and gas wells; in transportation network companies and motor carrier companies: providing for regulation of taxicabs and limousines by parking authority of city of the first class, for penalties and for provision of transportation network service; in Pennsylvania Gaming Economic Development and Tourism Fund: further providing for other grants; in Tobacco Settlement Fund: further providing for use of fund; in Pennsylvania Race Horse Development Fund: further providing for definitions, for fund and for distributions from fund; in miscellaneous limitations and transfers: further providing for drug and alcohol programs and providing for Workers’ Compensation Security Fund; in Natural Gas Infrastructure Development Fund: further providing for definitions and for transfer of funds; providing for First Chance Trust Fund; in 2016-2017 restrictions on appropriations for funds and accounts: repealing provisions relating to fund transfers; in general budget implementation: further providing for Department of Agriculture, for Department of Community and Economic Development, for Department of Education, for Pennsylvania Gaming Control Board, for Department of Human Services, for Commonwealth Financing Authority Restricted Revenue Account and for surcharges, providing for Multimodal Transportation Fund, further providing for Pennsylvania Liquor Control Board and providing for sales by distilleries, for Liquor Code suspension for deficiency, for State Employees’ Retirement System Restricted Account and for Public School Employees’ Retirement System Restricted Account; in school district debt refinancing bonds: further providing for sinking fund charges for school building projects and for Public School Building Construction and Reconstruction Advisory Committee; repealing provisions relating to 2012-2013 budget implementation and 2012-2013 restrictions on appropriations for funds and accounts; providing for 2017-2018 budget implementation and for 2017-2018 restrictions on appropriations for funds and accounts; making an editorial change; and making related repeals.
Reported as amended from Senate Appropriations Committee, and passed Senate, 10/23/2017 (41-9)
Received as amended in House and rereferred to House Rules Committee, re-reported on concurrence as committed from House Rules Committee, and House concurred in Senate amendments, 10/24/2017 (109-75)
Signed in the House, 10/24/2017
Signed in the Senate, 10/25/2017
Approved by the Governor, 10/30/2017 (Act No. 44 of 2017)
HB 785  RE: Capital Facilities Debt Enabling Act Bond Caps (by Rep. Stan Saylor, et al)
Amends the Capital Facilities Debt Enabling Act adding language providing retirements of principal for funding bonds under section 312 relating to funding bonds shall be regular and substantial if made in annual or semiannual amounts whether by stated serial maturities or by mandatory sinking fund retirements computed in accordance with either a level annual debt service plan as nearly as may be or upon the equal annual maturities plan. Also adds language providing that beginning July 1, 2018, and each July 1 thereafter until the sum of the outstanding obligations for redevelopment assistance capital projects equals $3.2 billion, the maximum amount of outstanding obligations for redevelopment assistance projects shall be decreased by $50 million per year for a period of five years and specifies the principal amount of additional debt that may be incurred during fiscal year 2017 to 2018 for capital projects. Further provides for limitation on additional capital project releases financed by debt and for carry forward. Adds a chapter relating to capital budgets for particular fiscal years. The amendment to section 317 (b) relating to limitation on redevelopment assistance capital projects obligations shall apply retroactively to July 1, 2017. http://www.legis.state.pa.us/WU01/LI/BI/FN/2017/0/HB0785P2632.pdf
Received as amended in Senate and rereferred to Senate Rules and Executive Nominations Committee, 10/16/2017
Re-reported on concurrence as amended from Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments to Senate amendments as further amended by Senate, 10/23/2017
Received as amended in House and rereferred to House Rules Committee, re-reported on concurrence as amended from House Rules Committee, and House concurred in Senate amendments as further amended by
the Senate to House amendments as amended again by House, 10/24/2017
Received as amended in Senate and rereferred to Senate Rules and Executive Nominations Committee, re-reported on concurrence as committed from Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments to Senate amendments, 10/25/2017
Signed in the House and in the Senate, 10/25/2017
Approved by the Governor, 10/30/2017 (Act No. 45 of 2017)
HB 1401 RE: Shale Tax (by Rep. Gene DiGirolamo, et al)
Amends the Tax Reform Code adding a new article providing for a volumetric severance tax imposing a 3.2 percent severance tax on unconventional natural gas extraction in addition to the existing impact fee. The addition of the new article except section for section 2403 relating to minimum royalty and section 2403 relating to remedy of this act shall apply retroactively to October 1, 2017. Effective immediately.
Reported as amended from House Finance Committee, read first time, and laid on the table, 10/18/2017
Removed from the table, 10/24/2017
SB 181  RE: Performance-Based Budgeting and Tax Credit Efficiency Act (by Sen. Bob Mensch, et al)
Provides for performance-based budgeting and tax credit efficiency review; establishes the Performance-Based Budget Board and providing for its powers and duties; and imposes duties on the Independent Fiscal Office (IFO). Establishes the Performance-Based Budget Board as an independent board to review and approve performance-based budget plans developed by the IFO for agencies to make recommendations on how each agency’s operations and programs can be made more transparent, effective and efficient. Requires the Secretary of the Budget, in conjunction with the IFO director, within 30 days of the effective date, to establish a schedule of performance-based budget reviews for all agencies under the Governor’s jurisdiction. Provides all agencies are subject to review at least once every five years. Also requires the Secretary of the Budget for fiscal year 2018-19 to initiate a program of performance-based budget reviews as part of the annual budget preparation and program evaluation processes. The IFO shall complete reviews in a timely manner and to submit plans to the Performance-Based Budget Board for review and approval or disapproval. Further provides the Governor and the General Assembly shall consider approved plans during budget development, review and enactment.
Laid on the table, Removed from the table, 10/17/2017
Read third time, and passed House, 10/25/2017 (180-4)
Received as amended in Senate and rereferred Senate Rules and Executive Nominations Committee, re-reported on concurrence as committed from Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments, 10/25/2017 (50-0)
Signed in the Senate and in the Senate, 10/25/2017
Approved by the Governor, 10/30/2017 (Act No. 48 of 2017)
SB 651 RE: Capital Budget Project Itemization Act of 2017-2018 (by Sen. Pat Browne, et al)
Provides for the capital budget for fiscal year 2017-2018.This legislation itemizes capital projects in the aggregate amount of $22,446,503,001. Of this amount, $20,725,451,001 would be funded from debt, $132,467,000 would be funded from current revenues, and $1,588,585,000 would be funded from debt or current revenues. Debt service for debt-funded projects would be paid from the General Fund or applicable special fund in the form of annual appropriations to the Treasury for general obligation debt service. The types of projects in Senate Bill 651 are: Public Improvement projects, Furniture and Equipment projects,
Transportation Assistance projects, Redevelopment Assistance projects, Flood Control projects, Keystone Recreation, Park and Conservation Fund projects, Environmental Stewardship Fund projects, State Forestry Bridge projects, Parks and Forest Management projects, State ATV/Snowmobile projects, Pennsylvania Fish and Boat Commission projects, Oil and Gas Lease Fund projects, and Motor License Fund projects.
Recommitted to House Appropriations Committee, and Re-reported as amended from House Appropriations Committee, 10/24/2017
Read third time, and passed House, 10/25/2017 (189-2)
Received as amended in Senate and rereferred Senate Rules and Executive Nominations Committee, re-reported on concurrence as committed from Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments, 10/25/2017 (50-0)
Signed in the House and in the Senate, 10/25/2017
Approved by the Governor, 10/30/2017 (Act No. 52 of 2017)
Environmental Building Standards
HB 1486  RE: High Tunnels (by Rep. David Zimmerman, et al)
Amends the Storm Water Management Act, further providing for definitions and for effect of watershed storm water plans. The bill defines “high tunnel” and establishes when a high tunnel shall be exempt from provisions. It also states that any municipality that has adopted a local ordinance or regulations that regulates high tunnels following a watershed storm water plan prior to the effective date shall amend the ordinance or regulation to comply with the subsection.
Reported as committed from House Environmental Resources and Energy Committee, read first time, and laid on the table, 10/3/2017
Removed from the table, 10/4/2017
Read second time, and Rereferred to House Appropriations Committee, 10/16/2017
Reported as committed from House Appropriations Committee, read third time, and passed House, 10/17/2017 (156-33)
Local/State Government/Regulations
SB 242  RE: One Call System (by Sen. Lisa Baker, et al)
Amends the Underground Utility Line Protection Law further providing extensively for definitions, for duties of facility owners, for duties of the One Call System, for duties of excavators, for duties of designers, for duties of project owners and for penalties; providing for enforcement, for underground utility line protection fund and for compliance; and further providing for One Call System authority and for expiration. Among the many changes, facility owners shall maintain existing records of main lines abandoned on or after the effective date and mark, locate or identify the main lines if possible, based upon the existing records, but shall not be required to locate lines or facilities installed before the effective date unless there are existing maps which meet specifications. A damage prevention committee is established to review reports of violations, issue warnings and determinations, submit an annual report on relevant data, and require persons to attend damage prevention educational programs. Extends the Sunset date to December 31, 2024, (from 2017).
Reported as amended from House Consumer Affairs Committee, read first time, and laid on the table, 10/4/2017
Removed from the table, 10/16/2017
Amended on House floor, read second time, and rereferred to House Appropriations Committee, 10/17/2017 Reported as committed from House Appropriations Committee, read third time, and passed House, 10/18/2017 (188-1)
Received as amended in Senate and rereferred Senate Rules and Executive Nominations Committee, re-reported on concurrence as committed from  Senate Rules and Executive Nominations Committee, and Senate concurred in House amendments, 10/23/2017 (50-0)
Signed in the Senate and the House, 10/24/2017
Approved by the Governor 10/30/2017 (Act No. 50 of 2017)
SB 928  RE: Pipeline Siting Review (by Sen. Andrew Dinniman, et al)
Amends Title 66 (Public Utilities), in powers and duties of commission, providing for pipeline siting review.
Introduced and referred to Senate Consumer Protection & Prof. Licensure committee, 11/1/2017
Professional Licensure
HB 1001 RE: Home Inspector Licensing Act (by Rep. Sue Helm, et al)
Licenses and regulates home inspectors; provides for funds, for licensure, for disciplinary action, for remedies and for penalties; and repeals provisions relating to home inspections. Also modifies provisions relating to manufactured housing liability and disclosure.
Reported as amended from House Appropriations Committee, 10/16/2017
Read third time and passed House, 10/17/2017 (125-63)
Copies of all bills of interest can be accessed via the Internet at: http://www.legis.state.pa.us/cfdocs/legis/home/session.cfm