AG ONE Newsletter October 30, 2017

BUDGET SAGA (FINALLY) ENDS

Update:

Please note the following updates to the AG ONE Newsletter below posted earlier today. These were signed into law today by Governor Tom Wolf:


HB 790
sponsored by House Agriculture & Rural Affairs Minority Chair Eddie Day Pashinski (D-Luzerne) (controlled and noxious weeds) is Act 46

HB 542
Tax Code (taxes on fireworks, $1.5 billion loan from Tobacco Settlement, etc.) is now Act 43.

HB 785 Capital Facilities Debt Act (state indebtedness levels) is now Act 45.

HB 674 Fiscal Code (takes $200 million from an insurance company reserves; gives Governor discretion as to where $300 million will come from dedicated funds) is now Act 44

HB 118
(Labor & Industry inspection fees) is now Act 40.

SB 651
Capital Budget (authorization wish list for wide variety of state bricks and mortar projects) is now Act 52.

HB 271 (expands gambling in hopes of generating $200 million more revenue to the state) is now Act 42.

*****

With House action October 25 and 26, the revenue side to the State Budget was sent to Governor Wolf for his signature.  He has ten days to approve, veto, or let the legislation go into effect without his signature.  Some major elements include:

  • Borrowing of $1.5 billion from future payments to Pennsylvania from the Tobacco Master Settlement to be paid back within 30 years  NOTE:  House Bill 542, page 271 http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2017&sessInd=0&billBody=H&billTyp=B&billNbr=0542&pn=2598
  • Taking $200 million from reserves held by the Joint Underwriting Association (JUA), the medical malpractice insurer of last resort.  The Administrative Code bill specifies that if JUA does not hand over the money by December 1st, it will be abolished.  JUA says that it is illegal for the state to “seize” insurance company reserves and that it will sue to prevent this from occurring.  NOTE: House Bill 674, Article II-D, section 201-D  page 14: Similar language is found in House Bill 118 but this specifies that the Supreme Court shall have exclusive jurisdiction to hear any challenge. http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2017&sessInd=0&billBody=H&billTyp=B&billNbr=0674&pn=2624
  • $200 million to come from gambling expansion (House Bill 271)
  • Senate Bill 651, the Capitol Budget, is a bricks and mortar wish list for projects funded by the Commonwealth.  Just because projects are listed here does not mean that the money is actually there. This is an authorization bill.  Examples for Capital Budget items might be a new barn for the Farm Show complex or significant upgrading to a state building HVAC system.
  • New Labor & Industry inspection fees schedule (boilers, elevators, ski lifts, etc. are found in Administrative Code bill, House Bill 118 starting on page 12.  www.legis.state.pa.us
  • New taxes on fireworks: 12% for consumers buying fireworks; annual fees ranging from $2,000 to $20,000 for permanent structures selling fireworks; and $3,000 per year for temporary structures.  One miscellaneous insurance provision is a $50,000 bond requirement for municipal fireworks displays.  (HB 542 page 257 dealing with new taxes on fireworks)

FARM SHOW LOAN IN LIMBO

In limbo is the Governor’s unilateral decision October 4 to borrow ahead (“securitize”) future profits from the PA Liquor Control Board and his October 9 pronouncement that PA would take out an equity loan on the Farm Show Complex owned by the state.  His rationale was that he would take budget matters into his own hands, absent a legislative resolution to the State Budget impasse. PSCFO has requested a meeting with Governor Wolf to discuss the Farm Show Complex loan issue.

AND…THERE IS A SLEEPER BUDGET ISSUE.

House Bill 674 contains this section:  SECTION 1726-G.FUND TRANSFERS.

DURING THE 2017-2018 FISCAL YEAR, $300,000,000 SHALL BE

TRANSFERRED FROM AMOUNTS AVAILABLE IN SPECIAL FUNDS AND

RESTRICTED ACCOUNTS TO THE GENERAL FUND.

This is the ultimate outcome of those seeking to balance the State Budget by taking monies from over 50 specified dedicated funds.  The Senate derailed that notion but this final language gives the Governor the discretionary authority to decide from which funds this $300 million shall come.  HB 674 does not contain language limiting his choices so they might or might not be  agriculture or environmental funds. PSCFO sent a heads up memo to Council members about this section.

SENATE BANKING & INSURANCE COMMITTEE HOLDS RX PRICE HEARING

On October 23, the Senate Banking & Insurance Committee convened a prescription drug price transparency hearing relative to Senate Bill 637 (White-R-Indiana).  It presented starkly contrasting views between the pharmaceutical industry which maintained that manufacturing costs increases are quite reasonable versus insurers and prescription benefit managers (PBMs) which pointed accusing fingers at the drug industry for unwarranted price increases.  Testimony also came from the PA State Grange which said that price transparency could give insurance companies the ability to negotiate more effectively because they could compare pricing practices between states, such as a hypothetical Epi-pen charge of $150 in one state versus $600 in PA.

WEED BILL GOES TO GOVERNOR (No, not that weed…)

Presented to the Governor October 25 was House Bill 790 regarding controlled and noxious weeds.  Prime sponsor is House Agriculture & Rural Affairs Minority Chair Eddie Day Pashinski (D-Luzerne).

EXPECT WORKERS’ COMPENSATION HIKES

The PA Compensation Rating Bureau (PCRB) revised loss cost filing goes into effect November 1st. This translates into a general increase in Workers’ Compensation premiums of 6.06%, necessary to adapt to the Supreme Court striking down a major provision of the Workers’ Compensation Act regarding permanent  impairment evaluation standards.

YOUTH GARDENING GRANTS up to $500 will be awarded by Katie’s Krops.  Eligible are youths aged 9-16.  Harvests must be donated to food banks.  Application deadline is December 31.  Details:  http://www.katieskrops.com/start-a-garden.html House Bill 790 (Pashinski-D-Luzerne) passed the Senate 49-0 on October 18 and was referred to the House Rules Committee.  The House now must consider amendments made to the bill in the Senate.

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