LEG REG REVIEW 2017, 6th Issue February 6 2017

WELCOME TO GENERAL ASSEMBLY BUDGET WEEK
On February 7, Governor Tom Wolf will present his proposals for state spending. In his speech to the General Assembly, he will announce spending priorities and further tout his idea for consolidation of four separate Cabinet departments into one. Previously, he said that he would not propose broad-based tax increases but would like to tax natural extraction. Note: The PA Insurance Department budget will be unaffected by the upcoming budget debate since its general government operations budget comes from a 2013 law, Act 46, which created a dedicated fund, the Insurance Regulation & Oversight Fund. An upcoming LEG REG Review will describe key elements of the Governor’s State Budget proposal. Later in February, House and Senate Appropriations Committee hearings will take place.

LEGISLATIVE HAPPENINGS
• Senate Resolution 15 (White-R-Indiana) was adopted by the Senate January 30, declaring February 6 to be “Mutual Insurance Day” at the State Capitol.
• Senate Urban Affairs & Housing Committee reported out two bills January 25 dealing with flood notifications. Senate Bill 50 and 51 (Greenleaf-R-Montgomery) require that the seller of a property disclose its location in a flood zone and whether or not any floods had actually occurred. New Senator and home builder John DiSanto (R-Dauphin/Perry) voted against both bills.
• Senate Bill 9 (Stefano-R-Fayette/Somerset/Westmoreland) requires lawful proof of citizenship as a prerequisite for receiving any state benefits. It was reported out of the Senate State Government Committee January 31.
• A bill with strong budget implications was reported out of the Senate Appropriations Committee January 31. Senate Bill 181 (Mensch-R-Berks/Montgomery/Bucks) provides for performance-based budgeting. This is also known as zero-based budgeting where agencies justify their budgets from dollar one for all existing and proposed programs for each fiscal year. Last session, similar legislation, SB 1341, passed the Senate but was not acted upon by the House.

DEPARTMENT SEEKS SURPLUS LINES INPUT
On February 4, the PA Insurance Department issued a call for input as to what types of insurance coverage should be put on what is called the export list. This list specifies certain types of P/C insurance coverage that can be accessed through the Excess & Surplus Lines (E & S) market without securing three declinations from standard carriers. If a coverage is on the export list, it means that the Insurance Department has concluded that this coverage is simply not available in the standard market so declinations are not needed. A retail insurance producer must still utilize someone who is licensed in the E&S market before placing this product. Those wishing to comment are invited to send a written statement by March 2 containing “sufficient detail and relevant facts to inform the Insurance Department of the basis for the statement” to Cressinda Bybee, PA Insurance Department Office of Corporate and Financial Regulation, 1345 Strawberry Square, Harrisburg, PA 17120, FAX 717-787-8557; cbybee@pa.gov.

POLITICS:
• U.S. Rep. Pat Meehan (R-7) has opted not to challenge incumbent Democrat Bob Casey in next year’s Senate election according to a February 5 philly.com report.
• State Senator Larry Farnese (D-Phila.) has been acquitted in a Philadelphia $6,000 bribery case.
• Wolf Administration Chief of Staff Mary Isenhour is stepping down from that post to become a key figure in Governor Tom Wolf’s re-election campaign.

REVENUES CONTINUE SLIDE
Released February 1 by the PA Revenue Department were year-to-date budget numbers that make PA’s State Budget prospects for this fiscal year even bleaker. According to the Revenue Department, revenues are $416.8 million below expectations. Unless revenues pick up, the Commonwealth will face a deficit for this fiscal year ending June 30, 2017 of $700 million or more. Tax category year-to-date figures are:
– Sales Tax: $5.9 billion revenue but $138.4 million less than anticipated
– Personal Income Tax (PIT): $6.7 billion YTD revenue but $98.6 million less than anticipated
– Corporate Tax: $1.4 billion and $160.9 million below estimate
– Inheritance Tax: $530.1 million revenue but $9 million below estimate. This tax’s collections showed an uptick in January to the tune of $1.7 million above estimate.
– Realty Transfer Tax: YTD is $281.9 million in revenue but $44.6 below projections
– Other General Fund tax revenues (cigarettes, cigars, malt beverages, liquor and table games) brought in $1.1 billion this fiscal year. This is actually $5 million higher than estimated.

MORE BAD FINANCIAL NEWS
As reported by Rep. Paul Schemel (R-Lancaster), unfunded liability for the state’s pensions funds total $74 billion. His source was the PA Pension Clock which also reported that the unfunded pension funds’ liability had increased by ten billion dollars in 2016.

INSURANCE BILL INTRODUCTIONS MULTIPLY
Although early in the legislative session, a good number of insurance bills have been introduced, including these from minority House Insurance Committee chair Tony DeLuca (D-Allegheny):
– House Bill 345, “Any Willing Provider” legislation
– House Bill 344, mandated benefit to cover cost of a medically necessary cranial hair vacuum prosthesis for a person suffering from hair loss when afflicted with alopecia totalis (all head hair) or alopecia universalis (all body hair)
– House Bill 338, required notice of long-term care insurance rate increases to policyholders
– House Bill 161 requires rate filings by pharmaceutical manufacturers to the Insurance Department so as to promote transparency in drug pricing. NOTE: This bill is the subject of a House Insurance Committee hearing February 8.

LEG REG Review SUBSCRIPTION UPDATE
Please don’t be left off the list. LEG REG Review has always been available on a paid subscription basis, but there are many who are being distributed LEG REG Review free of charge. Since preparing each issue takes four to five hours, PHILLIPS ASSOCIATES is asking readers to remit $100 for the subscription to help cover the overhead.

There are exceptions. If you are a member of the Crop Insurance Agents Association of PA or the Pennsylvania Association of Health Underwriters (PAHU), you continue to receive a subscription as a member benefit. Likewise, if you are employed by the public sector, you will continue to receive this publication on a complimentary basis since it is an educational resource. Details: xenobun@aol.com

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on Pennsylvania legislation and regulations impacting the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU). Subscriptions are $100 per year and further information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to xenobun@aol.com. Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list. Whether it means meeting your CE need or helping with a particular problem/question, please visit our web site to explore how PHILLIPS ASSOCIATES may be of service to you, your employees and your clients. www.vphillipsassoc.com

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