Media Tags: Sentinel

Pennsylvania’s new Working Pennsylvanians Tax Credit delivered nearly $217 million to more than 876,000 residents during the 2025 tax filing season, according to the Pennsylvania Department of Revenue.

State officials estimate the total will increase to approximately $220 million, benefiting as many as 940,000 taxpayers, as the remaining 2025 returns (including those filed under extensions) are processed.

The refundable tax credit was created as part of the bipartisan 2025-26 state budget. Modeled after the federal Earned Income Tax Credit, the state credit is equal to 10 percent of a taxpayer’s federal EITC and is intended to provide targeted tax relief for lower-income working households. Eligible taxpayers can receive up to $805 through the program.

To encourage participation during the credit’s first year, the Department of Revenue automatically calculated the credit for taxpayers who filed their federal and state returns electronically at the same time and conducted outreach to eligible filers. The Department also mailed notices explaining the additional refunds received through the program.

The tax credit emerged from bipartisan negotiations in the General Assembly as part of the broader state budget package last year. Supporters said the measure would provide financial relief to working families while encouraging labor force participation and strengthening household finances. During legislative consideration, proponents also cited research suggesting earned income tax credits can increase workforce participation, reduce reliance on public assistance, and generate broader economic activity.

The Department of Revenue has launched an online eligibility calculator to help taxpayers determine whether they qualify for the credit. Officials expect participation to continue growing as awareness of the program increases and additional eligible taxpayers claim the credit in future tax years.

For more information on the Working Pennsylvanians Tax Credit, click here.

The Pennsylvania Public Utility Commission (PUC) has advanced a proposed rulemaking to modernize cybersecurity requirements for regulated electric, natural gas, water, wastewater and telecommunications utilities. The proposal is the culmination of a rulemaking process that began in 2022, when the Commission issued an Advance Notice of Proposed Rulemaking (ANPR) seeking stakeholder input on whether and how to strengthen its existing cybersecurity regulations.

In comments submitted in February 2023 (CLICK HERE), the PA Chamber supported maintaining the Commission’s existing performance-based regulatory framework. Specifically, the Chamber endorsed continuing the current self-certification model, under which utilities annually certify that they maintain and regularly test cybersecurity plans and programs rather than submitting those plans for Commission approval.

The Chamber also urged the PUC to avoid a “one-size-fits-all” regulatory approach, noting that utilities vary significantly in size, complexity and cyber risk. In addition, the Chamber cautioned against creating duplicative requirements where utilities are already subject to federal standards, insurance requirements or other cybersecurity obligations. Finally, the Chamber argued that any expansion of the regulations should be supported by a clear cost-benefit justification.

The proposed rule would replace the Commission’s existing cybersecurity self-certification framework with a more comprehensive regulatory structure. Under the proposal, utilities would be required to:

Among the key provisions, the proposal would:

• Require utilities to maintain cybersecurity programs aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
• Meet cybersecurity expectations that are scaled based on the size and complexity of their operations.
• Update cybersecurity program evaluation requirements.
• Modernize cyber incident reporting requirements and reporting criteria.
• Continue annual certifications that utilities maintain and regularly review their cybersecurity programs.
• Seek waivers from certain requirements when they can demonstrate compliance with equivalent cybersecurity standards.

The proposed rulemaking has been approved for publication in the Pennsylvania Bulletin, beginning the formal public comment period. Following the close of comments, the PUC will review stakeholder feedback and may revise the proposal before voting on a final rule. If adopted, the final regulation will also undergo review by the Independent Regulatory Review Commission (IRRC) before taking effect.

The Pennsylvania Department of Revenue has proposed new regulations intended to clarify how multistate businesses should source income from the sale of services for Corporate Net Income Tax purposes, providing guidance that businesses have sought since the state adopted market-based sourcing in 2013.

The new regulations, which have been submitted to legislative committees and the Independent Regulatory Review Commission (IRRC), establish explicit guidelines for sourcing revenue from the sale of services.

The rules determine whether service revenue is attributable to Pennsylvania based on where the customer receives the benefit of the service, rather than where the work is performed, and include industry-specific examples to promote consistent application across a range of businesses.

While Pennsylvania shifted to a market-based sourcing system more than a decade ago, businesses and tax practitioners have long argued that the absence of detailed regulations created uncertainty and inconsistent administration. The proposal follows a 2023 Pennsylvania Supreme Court decision that upheld the Department of Revenue’s approach to apportioning corporate income, but stakeholders continued to press for formal guidance.

The rulemaking is expected to provide greater certainty for companies operating in multiple states by establishing uniform standards for sourcing service revenue. The proposal will move through Pennsylvania’s regulatory review process before it can be finalized. Businesses and other stakeholders may submit public comments through Aug. 24. The PA Chamber’s Tax Policy Council is currently reviewing the regulation for potential comments.

To review the proposal, track updates, or submit comments, please visit the Independent Regulatory Review Commission’s website.

Pennsylvania’s newly enacted 2026-27 budget avoids drawing from the state’s Rainy Day Fund, but the Commonwealth continues to face an underlying structural deficit of about $5 billion, according to a new analysis by the Independent Fiscal Office.

The $52.17 billion spending plan is considered balanced under state law, but the IFO found that recurring expenditures are projected to exceed recurring revenues by roughly $5 billion during the fiscal year after accounting for one-time funding measures and payment timing changes.

The budget achieves balance in part by delaying more than $1.3 billion in Medicaid managed care payments from May and June until July, shifting those costs into the next fiscal year. The spending plan also relies on approximately $580 million in transfers from special-purpose funds and another $450 million from prior-year lapsed funds and temporary shifts of costs to other accounts.

Without those measures, the IFO concluded that ongoing revenues would fall well short of supporting current spending levels.

The budget preserves the state’s $7.8 billion Rainy Day Fund, avoiding the multibillion-dollar withdrawal proposed earlier this year. Keeping those reserves intact allows the fund to continue earning interest while maintaining a larger financial cushion for future economic downturns.

The IFO’s analysis indicates Pennsylvania’s structural budget imbalance remains unresolved, setting the stage for continued debate over how to align recurring revenues with long-term spending commitments in future budget cycles.

The report comes as policymakers continue to weigh options for closing the gap, including spending restraint, identifying new recurring revenue sources, and other fiscal reforms.

The PA Chamber affirms that the most durable, long-term solution to this imbalance is to continue enacting bipartisan, pro-growth policy reforms to improve the state’s business climate and attract more employers and residents to Pennsylvania.

You can read the full report here.

With state budget negotiations reportedly still in full swing, the state House of Representatives and Senate were in session last week, advancing a number of proposals relevant to the business community, including those related to tax policy, AI regulation, and noncompete agreements.

Here’s a recap of last week’s legislative action most relevant to employers.

 

Prison Industry Enhancement Authority (H.B. 2154; Briggs)

The House considered on second consideration HB 2154 last Wednesday, positioning the bill for potential final consideration.

House Bill 2154 would establish the Prison Industry Enhancement Authority to facilitate joint ventures between correctional facilities and private industry.

This legislation has potential to benefit both incarcerated individuals and employers; however, we have expressed concerns with several aspects of the bill including the employment status of participating individuals and liability on employers, among other areas.

We support amending this legislation (CLICK HERE for our memo).

 

Prohibiting Noncompete Agreements in Broadcasting (H.B. 2558; Waxman)

The House voted 103-99 to pass HB 2588 last Wednesday.

House Bill 2558 would prohibit noncompete agreements in the broadcasting industry.

This bill provides for legislative intervention between two private parties voluntarily agreeing to a noncompete agreement. Restrictive covenants may be particularly relevant for the broadcasting industry, where employers often invest considerably to recruit employees and provide the operational support, marketing, and public recognition usually necessary for broadcasting professionals to establish their career.

We opposed this legislation (CLICK HERE for our memo), which now advances to the Senate.

 

Conditioning Sales Tax Exemption (H.B. 2359; Ciresi)

The House voted 171-31 to pass HB 2359 last Tuesday.

House Bill 2359 would condition eligibility for the computer equipment sales tax exemption for data centers on a host of new requirements, including prohibiting state and local government agencies from entering into non-disclosure agreements (NDAs) related to the construction, development, or location of data centers. It would also impose additional certification, disclosure, reporting, and other compliance requirements on qualifying projects.

Developers frequently require confidentiality while evaluating potential sites, negotiating infrastructure needs, and assessing project feasibility. NDAs are a common and widely accepted practice during preliminary discussions in economic development projects. Prohibiting NDAs may discourage companies from engaging with local governments until later in the process and could lead to some projects being directed toward states that provide greater flexibility for confidential business negotiations. We oppose repealing or conditioning this existing sales tax exemption, just as we would oppose any comparable legislative bait-and-switch that creates a perception of Pennsylvania’s business climate as unreliable and unpredictable.

We opposed this legislation (CLICK HERE for our memo), which now advances to the Senate.

 

AI in Healthcare (H.B. 1925; Venkat)

The House Communications and Technology Committee voted 19-7 to advance HB 1925.

House Bill 1925 would establish a broad new regulatory framework governing how artificial intelligence (AI) is used by hospitals, insurers, and other parts of Pennsylvania’s healthcare ecosystem.

While we appreciate the positive amendments made to H.B. 1925, we remain concerned that establishing a sector-specific AI framework for healthcare could create unnecessary complexity, while duplicative reporting requirements and penalties may increase costs and compliance burdens.

We opposed this legislation (CLICK HERE for our memo), which now advances to the full House.

As state budget negotiations continued in Harrisburg last week, the House Rules Committee amended and advanced sweeping anti-business legislation that includes historic business tax increases and regulatory burdens, with all Democrats voting in favor and all Republicans opposed. The legislation, House Bill 1667, contains a broad package of tax increases, utility regulations, and economic development policy changes that would significantly increase costs for employers, discourage private-sector investment, and weaken Pennsylvania’s competitiveness.

The full House was expected to consider the bill on Friday before it was removed from the calendar.

House Bill 1667 remains pending before the chamber and could be brought up for a vote when lawmakers return to session, though no return date has been announced.

House Bill 1667 contains provisions that would significantly increase costs and create uncertainty for employers, including:

• Combined Reporting: House Bill 1667 would impose mandatory unitary combined reporting for Pennsylvania businesses, creating an entirely new corporate tax structure that would raise taxes by over $1 billion, increase compliance burdens, and make the Commonwealth less competitive for business investment. The policy would introduce significant complexity, create additional uncertainty for employers, increase administrative costs, and make Pennsylvania’s business income tax code one of the most hostile in the nation, according to the Council on State Taxation (COST).
• Digital Advertising Tax: The legislation would impose a five percent gross receipts tax on digital advertising, a cost that would ultimately be passed on to Pennsylvania businesses, particularly small businesses that rely on affordable digital marketing to reach customers. Rather than taxing “big tech,” the proposal would directly increase costs on Pennsylvanians. The tax also raises significant legal concerns because it specifically targets internet-based commerce while exempting traditional advertising platforms.
• Return on Equity Restrictions for Utilities: House Bill 1667 would undermine investment in Pennsylvania’s energy infrastructure by imposing new limits on utility returns. Pennsylvania’s regulated utilities invest billions annually into grid modernization, reliability improvements, and infrastructure projects that support businesses and communities across the Commonwealth. Creating new statutory restrictions would discourage investment and ultimately risk higher costs for energy customers.
• Repealing the Data Center Sales and Use Tax Exemption: The bill would also repeal the sales and use tax exemption for data center equipment, undermining a bipartisan policy enacted to attract critical digital infrastructure investments. Data centers support nearly every sector of the economy, including healthcare, manufacturing, financial services, and emerging technologies. Changing the rules after businesses have made long-term investment decisions based on existing policy sends a damaging message that Pennsylvania’s economic development environment is unpredictable and unreliable.
• Removing Commercial Customers from the Gross Receipts Tax Exemption: House Bill 1667 would provide electricity tax relief only for residential customers while continuing to impose the gross receipts tax on commercial customers. This would unfairly subject Pennsylvania businesses to comparatively higher energy costs at a time when employers are already navigating inflation, rising expenses, and increased competition from other states.

Taken together, House Bill 1667 is a sweeping departure from the bipartisan reforms enacted in recent years to improve Pennsylvania’s business climate. The legislation would increase taxes, raise operating costs, discourage investment, and place the Commonwealth at a competitive disadvantage at a time when states across the nation are aggressively competing for jobs, investment, and economic growth.

The Pennsylvania Chamber of Business and Industry joined lawmakers, small business advocates, and employers from across the Commonwealth last week to oppose House Bill 1678 – legislation that would impose a burdensome new tax on digital advertising.

 

Speaking at a Capitol press conference, PA Chamber Vice President of Government Affairs Neal Lesher warned that the proposal would undercut Pennsylvania’s recent progress on tax reform and economic competitiveness.

 

“We’ve been making progress over the last few years to make Pennsylvania more competitive through various tax reforms, and this bill is a step in the wrong direction,” Lesher said.

 

Lesher emphasized that while proponents frame the measure as a way to target large technology companies, the real impact would be felt by Pennsylvania consumers and employers – especially small businesses that rely on digital platforms to reach customers.

 

“We have to think about the way that digital advertising works,” Lesher said. “Making advertisements more expensive under this legislation will also make ads more expensive for the restaurant that is trying to get the word out about their weekly specials -they simply can’t afford that.”

 

During his remarks, Lesher addressed several key misconceptions surrounding H.B. 1678:

 

Myth: The bill is a tax on big tech
Lesher said the structure of the digital advertising marketplace means increased costs will ultimately be passed along to advertisers – local businesses trying to grow and compete in today’s economy.

 

Myth: The bill does not tax Pennsylvania businesses
On the contrary, Lesher explained that the proposal effectively taxes services tied to digital advertising. Revenue generated from ads purchased and used in Pennsylvania would already be subject to the state’s Corporate Net Income Tax – meaning this legislation would result in double taxation.

 

Myth: The bill is legally sound
Lesher also raised concerns about the legislation’s constitutionality, noting that a Maryland circuit court has already ruled that a similar law in that state is an illegal tax prohibited under the federal Internet Tax Freedom Act. If enacted in Pennsylvania, he warned, H.B. 1678 would likely face legal challenges and be defeated in court.

 

The PA Chamber was joined in opposition by a broad coalition, including representatives from the National Federation of Independent Business (NFIB), House Republican Whip Rep. Tim O’Neal, R-Washington, and small business owners from various industries.

 

Rep. O’Neal underscored the importance of digital advertising as a modern-day business tool, comparing it to traditional newspaper advertising.

 

“Digital ads are the new newspaper ads – the easiest way for businesses to get the word out,” O’Neal said. “They should not be unduly burdened.”

Speakers throughout the press conference echoed a common concern: that H.B. 1678 amounts to a double-taxation scheme that will drive up costs for employers and ultimately be passed on to consumers.

 

The PA Chamber’s opposition to the bill was also expressed in a recent memo to House lawmakers. The legislation has passed the House and awaits consideration in the Senate Finance Committee. The PA Chamber urges Senate lawmakers to reject this bill and instead support policies that promote economic growth, strengthen Pennsylvania’s competitive position, and empower businesses of all sizes to succeed—without imposing new and burdensome taxes on the tools they rely on every day.

 

Photos from the event were posted to the PA Chamber’s X account.

Click here for a video outlining why the Digital Ads Tax is a bad idea.

With state budget negotiations reportedly in full swing, the House of Representatives and Senate were in session last week, advancing proposals related to sales taxes, data center and infrastructure regulations, AI, and other areas relevant to business.

Here’s a recap of last week’s legislative action most relevant to employers.

 

Conditioning Sales Tax Exemption (H.B. 2359; Ciresi)

The House Energy Committee voted 23-3 to advance HB 2359.

This bill would condition eligibility for the computer equipment sales tax exemption for data centers on a host of new requirements, including prohibiting state and local government agencies from entering into non-disclosure agreements (NDAs) related to the construction, development, or location of data centers. It would also impose additional certification, disclosure, reporting, and other compliance requirements on qualifying projects.

Developers frequently require confidentiality while evaluating potential sites, negotiating infrastructure needs, and assessing project feasibility, and the use of NDAs during these preliminary discussions is a common and widely accepted practice in economic development projects. Restricting the use of NDAs may discourage companies from engaging with local governments until late in the process and could lead to some projects being directed toward states that might better accommodate confidential business negotiations.

We opposed this legislation (CLICK HERE for our memo), which now awaits consideration on the House floor.

 

GRID Requirements (H.B. 2650; Webster)

The House floor voted 134-68 to pass HB 2650 last Wednesday.

The bill would establish the Governor’s Responsible Infrastructure Development (GRID) program and create a new framework governing the development of data center projects in Pennsylvania. The bill would require qualifying projects to satisfy new certification, reporting, energy, and compliance requirements to access expedited permitting and qualify for the existing sales and use tax exemption for computer equipment.

While the PA Chamber supports efforts to promote responsible data center development and streamline permitting, H.B. 2650 raises concerns by conditioning an existing tax incentive on a host of new requirements. Changing the rules after the exemption has already driven investment creates uncertainty and sends a troubling signal about the predictability of Pennsylvania’s business climate.

We opposed this legislation (CLICK HERE for our memo), which now advances to the Senate following its third consideration and final passage in the House.

 

EITC Overhaul (H.B. 2632; Rivera)

The House floor voted 105-97 to pass HB 2632 last Monday.

This bill would terminate the authority to issue tax credits under the existing Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs beginning in FY 2027-28 and would establish a new Education Options Tax Credit program with revised allocations and requirements.

The bill would upend two long-standing programs that have received bipartisan support and helped expand educational opportunities for thousands of Pennsylvania students. By replacing the existing EITC and OSTC programs with a new framework, the bill creates uncertainty and risks reducing access to scholarships and educational options for the students and families who currently benefit from these successful programs.

We opposed this legislation (CLICK HERE for our memo), which now advances to the Senate for consideration.

 

Utility Bill Tax Cut and Capping ROE (H.B. 2224; Fiedler)

The House floor voted 202-0 to unanimously pass HB 2224 last Monday.

House Bill 2224 started as legislation that would statutorily cap return on equity (ROE) for all Pennsylvania utility companies, which we warned would discourage energy infrastructure investment in Pennsylvania, reduce employment, and ultimately raise costs on residential, commercial, and industrial ratepayers.

The legislation was ultimately amended to eliminate the 6.5 percent gross receipts tax that consumers pay on their electric bills.

 

While we support eliminating taxes on electric bills, we strongly oppose the underlying bill to cap ROE for utility companies and therefore opposed this legislation (CLICK HERE for our memo), which now moves to the Senate.

 

PA Common Cents Act (H.B. 2388; Davidson)

The House floor voted 187-15 to pass HB 2388 last Wednesday.

The “Pennsylvania Common Cents Act” is intended to address reduced coin availability and an ongoing penny shortage that is making it increasingly difficult for businesses and other entities to consistently provide exact change. The bill outlines cash rounding guidelines to the nearest nickel in situations where exact change is unavailable due to the national penny shortage.

The bill sets forth clear, balanced rounding guidelines that apply only to cash transactions when exact change cannot be provided. Totals ending in 1¢, 2¢, 6¢, or 7¢ are rounded down to the nearest nickel, while totals ending in 3¢, 4¢, 8¢, or 9¢ are rounded up, ensuring an even-handed, predictable approach over time for both consumers and merchants. These provisions are narrowly tailored, do not apply to electronic payments, and are not used when exact change is available. Importantly, the amendment maintains current tax treatment by requiring all taxes to be calculated prior to rounding and includes reasonable protection for when rounding occurs.

We supported this legislation (CLICK HERE for our memo), which now moves onto the Senate for consideration.

 

Flexible Use of County Bridge Funding (H.B. 2437; Davidson)

The House floor voted 202-0 to unanimously pass HB 2437 last Wednesday.

HB 2437 provides a commonsense update to existing bridge funding, allowing counties to reinvest unused dollars from completed Marcellus Legacy Fund bridge projects into other eligible bridge needs within the county. Under current law, these funds are restricted to a narrow category of at-risk deteriorated bridges, which can leave remaining balances unused once those specific projects are complete. This legislation enables counties to apply overage dollars more broadly across bridge maintenance and repair needs, consistent with federal and state requirements.

This legislation ensures that available resources can be fully utilized to address ongoing infrastructure needs without creating new funding obligations or shifting existing allocations. Providing counties with this flexibility supports more efficient project delivery and helps maintain critical transportation infrastructure across the Commonwealth. Well-maintained bridges are essential to economic activity, supply chain reliability, and access to jobs, markets, and services.

We supported this legislation (CLICK HERE for our memo), which now advances to the Senate.

 

AI Companions (H.B. 2006; Shusterman)

The House Communications and Technology Committee voted 14-12 along party lines to advance HB 2006 last Tuesday.

This legislation would establish a new regulatory framework for AI companions, imposing requirements related to disclosures, age verification, and content controls. The bill would authorize enforcement by the Attorney General and expose companies to significant civil penalties for violations.

Although businesses share the objective of ensuring age-appropriate, safe, and transparent interactions with AI systems, H.B. 2006 takes a more prescriptive approach than comparable laws adopted in other states. Its broad requirements, ambiguous standards, and punitive penalties would add to the growing patchwork of state AI regulations, creating compliance uncertainty and potentially discouraging adoption of AI technologies in Pennsylvania.

We opposed this legislation (CLICK HERE for our memo), which now advances to the full House.

 

Reducing Pricing Flexibility (H.B. 2626; Davidson)

The House Consumer Protection, Technology, and Utilities Committee voted 18-8 to advance HB 2626 last Tuesday.

H.B. 2626 would prohibit the use of dynamic pricing in brick-and-mortar retail stores under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. The bill applies to electronically displayed prices that can be changed remotely in near real time.

Dynamic pricing technologies allow businesses to adjust prices in response to factors such as inventory levels, promotions, and consumer demand, helping retailers manage costs and offer discounts and other programs valued by consumers. The bill would expose retailers to increased litigation and liability risk under Pennsylvania’s consumer protection laws and could discourage the use of these tools, which would result in less pricing flexibility.

We opposed this legislation (CLICK HERE for our memo), which now moves onto the House floor for consideration.

 

Paraquat Ban (H.B. 1135; Mihalek)

The House Consumer Protection, Technology, and Utilities Committee voted 26-0 to unanimously advance HB 1135 last Tuesday.

H.B. 1135 would prohibit the sale and use of paraquat in Pennsylvania, removing it from use as a federally registered restricted-use herbicide in agricultural production.

Paraquat is a critical, federally regulated tool used by growers for fast, effective weed control that supports conservation tillage and resistance management. A statewide ban would eliminate a key input with limited alternatives, increasing production costs, reducing weed control flexibility, and undermining conservation practices in Pennsylvania agriculture.

We opposed this legislation, which now moves onto the full House.

 

Caffeine Disclosure Mandate (H.B. 2377; Dougherty)

The House Consumer Protection Technology and Utilities Committee voted 20-6 to advance HB 2377 last Tuesday.

H.B. 2377 would require beverages containing 80 mg or more of caffeine per serving to carry warning labels when sold in retail and food service establishments in Pennsylvania.

This bill would create inconsistent and burdensome labeling requirements for restaurants, grocery stores, convenience stores, and other food retailers, adding complexity without improving consumer understanding. It could also confuse consumers by applying warnings unevenly across similar products and impose additional operational costs on businesses that already provide caffeine disclosure and adhere to federal regulatory standards.

We opposed this legislation, which now advances to the full House.

 

Amending Public Utility Commission Standards (H.B. 2184; Otten)

The House Consumer Protection, Technology, and Utilities Committee voted 18-8 to advance HB 2184 last Tuesday.

This bill would require the Pennsylvania Public Utility Commission to explicitly consider “public interest” in its proceedings and decisions.

This legislation is both unnecessary, as PUC practice and approval processes already emphasize the concept of “public interest,” and detrimental, as it would complicate PUC proceedings by forcing the PUC to expand the factors it must consider beyond its intended scope.

We opposed this legislation, which now moves to the House floor.

 

Virtual Currency Kiosk Regulatory Structure (H.B. 2643; Ciresi)

The House Commerce Committee voted 16-10 to advance HB 2643 last Monday.

House Bill 2643 would create a regulatory framework for virtual currency kiosks (commonly known as cryptocurrency ATMs) in Pennsylvania. It establishes licensing requirements, oversight by the Department of Banking and Securities, and a dedicated fund to support public education on virtual currency use and risks.

Operators of virtual currency kiosks would be required to obtain licenses, meet financial and operational standards, and comply with ongoing reporting, disclosure, and consumer protection requirements.

We supported this legislation, which now advances to the full House.

With state budget negotiations reportedly still underway, the state House of Representatives was in session in Harrisburg last week, advancing proposals related to AI and economic regulation, sales taxes, data centers, and debt collection.

Here’s a recap of last week’s legislative action most relevant to employers.

 

AI Disclosure Mandate (H.B. 95; Pielli)

The House voted 124-78 to pass HB 95 last Wednesday.

The bill regulates the use of artificial intelligence in advertising by requiring disclosures for certain AI-generated or synthetic content. While the bill was improved through committee amendments, it continues to expose businesses to significant litigation risk by allowing a private right of action through Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL). As a result, employers could still face costly lawsuits, legal uncertainty, and increased compliance burdens for ordinary AI uses.

The bill could increase compliance costs for businesses that use AI tools in marketing, advertising, and customer communications by requiring additional review, disclosure, and recordkeeping processes. By allowing private lawsuits under the UTPCPL, the bill also creates litigation exposure that may discourage businesses from adopting or utilizing beneficial AI technologies, even in low-risk applications.

We opposed this legislation (CLICK HERE for our memo), which now moves to the Senate for consideration.

 

Capping ROE and Discouraging Energy Infrastructure Development (H.B. 2224; Fiedler)

The House Rules Committee voted 18-15 along party lines last Tuesday to advance HB 2224. The House then advanced the bill on second consideration.

House Bill 2224 would statutorily cap return on equity (ROE) for all Pennsylvania utility companies.

This legislation would discourage energy infrastructure investment in Pennsylvania, reduce employment, and ultimately raise costs on residential, commercial and industrial ratepayers.

We opposed this legislation (CLICK HERE for our memo), which may be considered for final consideration in the House this week.

 

Data Center Non-Disclosure Agreement Ban and Sales Tax Exemption Requirements (H.B. 2359; Ciresi)

The House Energy Committee voted 23-3 to advance HB 2359 last Wednesday.

This bill would prohibit state and local government agencies from entering into nondisclosure agreements (NDAs) related to the construction, development, or location of data centers.

The committee also adopted an amendment that would impose significant new conditions on eligibility for the sales and use tax exemption for computer equipment by adding additional certification, disclosure, and reporting requirements for qualifying projects, along with new ongoing compliance obligations.

Developers frequently require confidentiality while evaluating potential sites, negotiating infrastructure needs, and assessing project feasibility. Nondisclosure agreements during these preliminary discussions are a common and widely accepted practice in economic development projects. Restricting the use of NDAs may discourage companies from engaging with local governments until later in the process or could lead some projects to be directed toward states that provide greater flexibility for confidential business negotiations.

Additionally, we oppose repealing or conditioning sales tax exemptions, just as we would oppose any comparable legislative bait-and-switch that creates a perception of Pennsylvania’s business climate as unreliable and unpredictable.

We opposed this legislation (CLICK HERE for our memo), which now moves to the House floor.

 

Risks to Credit Access, Increased Costs for Consumers (H.B. 1731; Guzman)

The House Judiciary Committee voted 14-12 to advance HB 1731 last Wednesday.

HB 1731 establishes new documentation requirements at the time of filing lawsuits, reduces the statute of limitations for debt collection actions to three years, and adds additional procedural steps for obtaining default judgments far beyond current standards.

These changes would increase compliance complexity and legal costs, making it more difficult and time-consuming for businesses to recover legitimate debts. The added burden could lead to tighter credit standards, reduced access to financing, and higher costs that are ultimately passed on to consumers.

We opposed this legislation (CLICK HERE for our memo), which now advances to the full House.

 

Creating Strict, Enforceable Controls on Data Center Development in Pennsylvania (HB 2650; Webster)

The House Finance Committee voted 15-11 to advance HB 2650 last Wednesday.

H.B. 2650 would establish the Governor’s Responsible Infrastructure Development (GRID) program and create a new framework governing the development of data center projects in Pennsylvania. Among other provisions, the legislation would require projects to satisfy new certification, reporting, energy, and compliance requirements to access expedited permitting and qualify for a sales tax exemption previously passed by the legislature.

This legislation also adds new conditions for employers to qualify for an existing sales and use tax exemption for the purchase of data center equipment. We are concerned with proposals to repeal this sales tax exemption for data center equipment or impose onerous new conditions to qualify. This exemption passed with bipartisan support in 2021 specifically to attract investment, and it is clearly performing as intended. We oppose repealing or conditioning this exemption, just as we would oppose any comparable legislative bait-and-switch that creates a perception of Pennsylvania’s business climate as unreliable and unpredictable.

We opposed this legislation (CLICK HERE for our memo), which now moves to the House floor.

The PA Chamber raised concerns about a proposed Allegheny County paid leave mandate, warning the policy could impose significant costs on employers and undermine the region’s economic competitiveness.

In formal comments submitted to the Allegheny County Board of Health, the PA Chamber outlined a series of concerns with the proposal, which would require employers of all sizes to provide up to 18 weeks of employer-funded paid leave following the birth, adoption, or placement of a child.

The Chamber argued the proposal represents a sharp departure from established policy and could create serious financial and operational challenges for employers, particularly for small and mid-sized businesses.

“This proposal would position Allegheny County as perhaps the most extreme and business-hostile jurisdiction in the country,” the Chamber wrote, citing the mandate’s scope and broad eligibility requirements.

One of the key concerns raised is the proposal’s eligibility threshold, which would allow employees to qualify for the benefit after just 30 days on the job – a significant change from the 12-month standard under federal law. The Chamber noted that “after more than 30 years, through both Democratic and Republican Administrations and Congresses, that standard has remained constant.”

From a cost perspective, the Chamber warned the mandate could dramatically increase labor expenses at a time when many employers are already navigating workforce shortages and economic uncertainty.

“Employers in many industries… would now be required to pay two salaries for one job,” the Chamber stated. “The labor cost associated with one position could increase by 150 percent.”

Those added costs, the Chamber cautioned, could force difficult business decisions, including downsizing and closure.

“Employers may have no choice but to cut services, reduce their workforce, scale back their business, or cease operations entirely,” the submission noted, emphasizing that smaller employers and nonprofits operating on thin margins would be hit hardest.

Beyond cost, the Chamber also raised concerns about compliance. A county-specific mandate would add another layer of regulation for employers operating across multiple jurisdictions, requiring them to adapt to a new set of rules and administrative requirements.

“Adding a unique leave mandate to Allegheny County would require employers… to navigate an additional set of rules, policies, and recordkeeping obligations,” the Chamber wrote.

More broadly, the proposal could make it more difficult for the region to compete for jobs and investment, driving economic growth opportunities to other counties and states.

“Employers evaluating where to locate, expand, or invest consider labor costs and regulatory obligations,” the Chamber explained, adding the proposal “may place Allegheny County at a competitive disadvantage” compared to surrounding communities.

 

Local Business Owners Echo Concerns

These concerns are being echoed by business owners across the region.

In recent coverage from the Pittsburgh Post-Gazette, local employers highlighted the real-world challenges of implementing a mandate of this scale.

Meredith Boyle, a restaurant owner and employer of 50 workers, noted that “the policy in its current format is not something that can be sustainable in the long-term.”

Others warned the financial realities could be even more stark. Beau Mitall, owner of a North Side restaurant employing 17 people, said bluntly: “If I have to pay two employees for one job, I will go out of business.”

The economic concerns have also drawn attention from policymakers. County Councilman Nick Futules, a Democrat, underscored the potential impact on job creation and growth, stating: “Our jobs as County Council is to promote new jobs, new tax revenues… This kills everything.”

 

Impact on School Districts and Public Education Employers

In addition to the challenges facing small businesses, the proposed mandate also raises significant concerns for school districts and public education employers, which operate under fixed budgets and already face ongoing staffing shortages.

Recent reporting from the Pittsburgh Post-Gazette underscores how the policy could create substantial financial and operational strain for local school systems. Public school employers would be required to provide up to 18 weeks of paid leave while still ensuring classroom continuity—effectively requiring districts to pay both the employee on leave and a long-term substitute or replacement teacher.

• Increased staffing costs: School districts would face the same “two employees for one role” dynamic cited by employers, but within the constraints of taxpayer-funded budgets that cannot easily absorb unplanned cost increases.
• Substitute teacher shortages: Districts already struggle to secure qualified substitutes. Extended leave periods could exacerbate these shortages, leaving schools scrambling to maintain consistent classroom instruction.
• Budgetary pressure on local taxpayers: Unlike private employers that can adjust pricing or operations, school districts must operate within approved budgets. Any additional personnel costs could ultimately translate into higher local tax pressure or cuts to other educational programs.
• Workforce and operational disruption: Extended absences—particularly among specialized staff such as special education teachers, counselors, or technical instructors—could disrupt continuity for students and strain remaining staff.

 

Balancing Worker Support and Economic Growth

The PA Chamber concluded its comments by urging policymakers to pursue a more balanced approach – one that supports workers without placing unsustainable burdens on employers.

“Allegheny County’s long-term success depends on policies that encourage employers to invest, hire, and grow,” the Chamber wrote.

Read the public comments here.