House and Senate lawmakers returned to legislative session last week, voting on proposals related to civil justice reform, transportation, banking, labor, taxes, and more. Here is a rundown of what happened last week in the legislature:
House Bill 689 (Clean Slate Expansion)
On Monday, House lawmakers overwhelmingly approved H.B. 689, which aims to expand Pennsylvania’s first-in-the-nation Clean Slate law (which provides for the automatic sealing of old criminal records for individuals who remain crime-free for a set period of time) to also cover certain nonviolent, drug-related felonies, excluding drug dealing or trafficking.
Given our Commonwealth’s severe workforce shortage, the PA Chamber has been proud to advocate for Clean Slate expansion as a means to encourage Pennsylvanians with a criminal record to reenter the workforce and give employers access to a broader talent pool. This legislation is an important piece of the puzzle in closing the job-skills gap and part of our multi-tiered workforce development strategy. The law also includes key liability protections for employers.
As such, we supported this measure (CLICK HERE for our memo), which later passed the House 189-14. House Bill 689 now heads to the Senate Judiciary Committee for further consideration.
House Bill 1028 (Rail Freight Restrictions)
Also on Monday, lawmakers voted to pass H.B. 1028, which would impose new regulatory requirements on interstate rail freight regarding safety, staffing, and reporting. The proposal includes several new regulatory requirements on rail freight which are likely pre-empted by or in conflict with federal standards. The bill also grants expansive and unprecedented powers to organized labor to access private property under the guise of safety investigations.
The PA Chamber strongly supports a safe, efficient and modernized system of infrastructure, including with respect to rail freight, and shares the goal of moving our economy forward while protecting consumers and workers. However, the regulatory burdens this legislation would inflict on Class I rail operators could result in disruptions to operations in the state for the movement of goods and products necessary to sustain the economy.
We opposed this bill on these grounds and expressed concern that several of its provisions are in conflict with the agreement negotiated last fall to avert a large-scale labor strike. (CLICK HERE for our memo). House Bill 1028 later passed the House by a vote of 141-62 and now awaits further action by the Senate Consumer Protection and Professional Licensure Committee.
House Bill 181 (Mandatory Paid Leave)
On Tuesday, the House Labor and Industry Committee narrowly passed H.B. 181. This proposal would assess a new payroll tax on Pennsylvania workers – equivalent to a roughly 33 percent increase in the Personal Income Tax – to pay wage benefits for as much as 20 weeks per individual, per year. The bill allows for automatic annual tax increases that would not require legislative input or approval.
This legislation would require employers of all sizes to adopt a one-size-fits-all mandatory policy related to time off, regardless of the company’s size or industry, and prohibit employers from developing customized leave policies that benefit their employees while still accommodating their own unique staffing requirements.
We sent a memo to committee lawmakers on Tuesday, expressing concern and urging them to delay consideration of this measure until adequate feedback from stakeholders (including employers expected to administer this program) could be incorporated.
The bill later passed committee by a vote of 11-10.
House Bill 106 (Mandatory Nurse Ratios)
Also on Tuesday, the House Health Committee met to consider H.B. 106, which seeks to address the ongoing nurse shortage by establishing government-mandated nurse staffing ratios in Pennsylvania hospitals. The bill also imposes monetary penalties on hospitals that do not meet its strict nurse-to-patient ratios.
The PA Chamber supports market-driven solutions to address nursing shortages (such as streamlining the licensure process, improving reciprocity for out-of-state healthcare professionals, and strengthening the pipeline of new nurses) and sent a memo cautioning committee lawmakers against government-mandated ratios that will not solve this problem.
This proposal could likely trigger unintended consequences, including reduced services, bed closures, and even hospital closures. The bill later passed the committee in a party-line vote of 12-9.
House Bill 1138 (Eliminating Cell Phone Taxes)
Also on Tuesday, the House Finance Committee advanced H.B. 1138, exempting cell phone service from the state’s Sales and Use Tax (SUT) and Gross Receipts Tax (GRT).
In addition to creating greater certainty for the business community, the legislation would create a more welcoming tax environment with respect to telecommunications services, which will encourage additional private capital investment into the deployment and adoption of mobile communications technology.
We supported this legislation (CLICK HERE for our memo), which passed the House Finance Committee along party lines in a 12-9 vote. It now awaits further action in the House Appropriations Committee and will be eligible for final passage this week.
Senate Bill 69 (Recovery-to-Work Pilot Program)
On Wednesday, the Senate Labor and Industry Committee met to consider S.B. 69, which would create a pilot program to connect individuals in drug recovery with occupations through local workforce development boards.
The current heroin and opioid epidemics are impacting every region of the Commonwealth; we know that gainful employment represents a meaningful step in the long-term recovery process. This legislation aims to break the cycle of addiction and also address the state’s workforce needs by helping individuals with a history of substance abuse obtain employment.
We supported this legislation, which advanced by a vote of 7-4.
Senate Bill 742 (Bank Shares Goodwill Deduction)
Also on Wednesday, the Senate Finance Committee met to consider S.B. 742, which would amend the Tax Reform Code by clarifying that any goodwill filed by banks with the Federal Deposit Insurance Corporation (FDIC) is excluded from the bank shares tax calculation.
Goodwill is an intangible asset added to a balance sheet when any company acquires another business in a transaction at a price higher than the net fair value. While goodwill has historically been allowed as a deduction from total bank equity in order to calculate a financial institution’s tax liability under the bank shares tax, the Department of Revenue has recently denied goodwill deductions that involve combinations of bank holding companies which result in the combination of subsidiary banks.
This impacts the vast majority of mergers, resulting in a tax increase, a competitive disadvantage for Pennsylvania banks, and a growth constraint for businesses and consumers. Every $1,000 paid in tax could be leveraged to provide $10,000 in loans.
We supported this legislation (CLICK HERE for our memo), which advanced by a vote of 8-3.
House Bill 611 (State Budget)
The House advanced legislation for enacting the state budget in a party-line 102-101 vote this week. The bill was originally introduced to reflect the budget proposed by Gov. Shapiro earlier this year. However, prior to its final passage, the House amended the bill – adding roughly $1.3 billion in additional spending that was not contained within the governor’s proposal.
House Democrats cited revenues coming in above projections as justification for the additional spending. As of the end of May, General Fund tax collections are approximately $1.2 billion above projection – nearly $1 billion of which is from Corporate Net Income Tax collections. In opposing the plan, Republican members argued that the budget proposal spends too much, citing a 14 percent increase over the current year. They also cautioned that the proposal would result in draining the state’s Rainy Day Fund, which may be needed in the coming years.
The budget bill is now in the Senate and will ultimately be amended again to reflect the final budget agreement negotiated by the governor and both chambers of the state legislature.