LEG REG REVIEW 2017, 29th Issue September 11, 2017

AN IMPORTANT MEMO TO PAHU MEMBERS
Since 2003, PHILLIPS ASSOCIATES has provided LEG REG Review to PAHU as a value-added member benefit.  This arrangement has ended for HEALTH UNDERWRITERS who are not members of GPAHU. Ordinarily, this publication subscription is $100.00 per year.  What this means is that PAHU members wishing to receive LEG REG Review will need to subscribe UNLESS THEY ARE MEMBERS OF GPAHU.  By special arrangement, GPAHU members continue to receive LEG REG Review at no cost.  If you find this newsletter to be of help in keeping you abreast of legislative and regulatory developments that affect insurance brokers and their clients, I ask that you subscribe.  I look forward to hearing from you.
Sincerely, Vince Phillips
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BUDGET, BUDGET, WHO’S GOT THE BUDGET?
This week the House returns to Harrisburg to continue its efforts to finalize a revenue budget (Fiscal Code) after a summer recess which included numbers of internal meetings of Republican lawmakers.  Right now, there are several options being considered.  First is the Senate option which generated controversy because of its tax on Marcellus Shale natural gas production and other tax increases.  This was a non-starter for the House Republican leadership.  Two other major options being considered this week are:

THE TAXPAYERS’ BUDGET
Crafted by a number of conservative Republican House members and released September 5, it does not raise taxes.  Instead, it taps into various special fund reserves.  This plan envisions $2.44 billion in revenue. Out of specified 55 funds, a number directly involve insurance and financial services.

  • Banking Fund $25 million: Based on fees charged to financial institutions, this fund is the working fund for the Department of Banking & Securities.  This year’s budget would not be affected.
  • Insurance Regulation and Oversight Fund $20 million:This fund comes from fees charged by the PA Insurance Department from various sources such as licensing.  Approximately ½ goes into the Department’s operating budget while the other ½ is meant as a reserve.  $20 million will reduce the unallocated part of the Insurance Regulation and Oversight Fund to about $5-8 million.
  • PA eHealth Partnership Fund $2 million:This fund provides support to a state agency seeking to make medical records accessible electronically to health care providers so as to reduce duplicative tests which drive up the overall cost of health care borne by insurers.
  • Tobacco Settlement $14.8 million unspent from previous years.
  • JUA Fund $200 million:This fund comes from medical malpractice insurance premiums paid by health care providers when they cannot obtain standard medical malpractice insurance.  JUA is the insurer of last resort and functions much like State Workers’ Insurance Fund (Workers’ Compensation) or the Assigned Risk Plan (auto insurance).  JUA already gave notice that if this is enacted, there will be a lawsuit. JUA maintains that it functions as a private sector carrier unlike SWIF.  As such, it says that the state has no right to take its reserves.
  • Underground Storage Tank Indemnification Fund (USTIF) $100 million:USTIF collects a small part of state gasoline revenues in order to fund cleaning up oil or gasoline spills from PA below and above ground storage facilities.  It also contains a specialized program to fund oil spills from household furnaces up to $5,000 – not covered by traditional homeowners’ insurance policies.

The group that worked on the Taxpayers’ Budget is comprised of Reps. Dan Moul (R-Adams), Keith Gillespie (R-York), Dawn Keefer (R-York/Cumberland), Seth Grove (R-York), Will Tallman, (R-Adams/Cumberland), Cris Dush (R-Jefferson/Indiana), Kristin Phillips-Hill (R-York), Frank Ryan (R-Lebanon), Dave Zimmerman (R-Lancaster), Joe Emrick (R-Northampton), Kate Klunk (R-York), Ryan Mackenzie (R-Lehigh/Berks), Mike Tobash (R-Schuylkill/Dauphin), Paul Schemel (R-Franklin) Stephen Bloom (R-Cumberland) and Eric Nelson (R-Westmoreland).

THE DiGIROLAMO BUDGET
Rep. Gene DiGirolamo (R-Bucks) presented an alternative budget for consideration on September 7. His proposal would:

  • Tax Marcellus Shale natural gas drilling 3% ($400 million)
  • Increase the rate of the Personal Income Tax (PIT) from the current 3.07% to 3.32% generating one billion dollars
  • $300 million in estimated gaming revenue (expansion to other cities)
  • $50-70 million from “alternatives to liquor privatization”
  • $44.3 million from expanding the reach of the Sales Tax to online marketplaces and booking agents
  • $400-500 million from “fund transfers”.

There are other budget options too.  Among them are House Bill 453 (Ryan-R-Lebanon) which addresses numerous budget areas such as how Tobacco Settlement money will be spent (tobacco cessation programs, etc.) and authorizes the Philadelphia Parking Authority to impose a one-percent tax on ride-sharing networks such as Uber, etc.. A Democratic alternative to Republicans’ State Budget ideas comes from Rep. Curtis Thomas (D-Phila.).  House Bill 542 also covers a wide span of State Budget areas.  Both of these bills were referred to the House Rules Committee September 8.  Adding his perspective, PA Auditor General Eugene DePasquale argued for legalization of recreational use of marijuana which he says would bring in $200-300 million per year.  (opinion editorial in Philly.com on September 7)

FALL SESSION DAYS
Month                                     Senate                        House
September                                18,19,20                      11,12,13,25,26,27
October                                   16,17,18,23,24,25       2,3,4,16,17,18,23,24,25
November                               13,14,15                      13,14,15,20,21,22
December                               11,12,13,18,19,20       4,5,6,11,12,13,18,19,20

POLITICS
On September 7, U.S. Rep. Charlie Dent (R-15) announced that he is not seeking re-election in 2018.  That brings to three the number of PA Members of Congress opting not to run.  Rep. Tom Marino (R-10) was tapped by the White House to serve as the Nation’s Drug Czar.  Rep. Lou Barletta (R-11) is not running for re-election as he is seeking the Republican nomination to oppose Democratic Senator Robert Casey. A House member, Justin Simmons (R-Lehigh/Montgomery/Northampton) is seeking the GOP nomination to succeed Dent as is fellow House member Ryan Mackenzie (R-Lehigh).

REST IN PEACE… On September 8, Rep. Dan McNeil (D-Lehigh) passed away due to natural causes.  He was elected in 2012.  Earlier, on September 1, former Rep. Bud George (D-Clearfield) died.  He had served the citizens of his district in the General Assembly from 1974-2012.

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