Your Chamber advocacy team is working to share legislative updates and continue to advocate for your business in Washington, D.C., Harrisburg, and Philadelphia. We’ve created a round-up of recent activity including Key Takeaways for Your Business and a Detailed Legislative Update. This represents our best knowledge of the situation as of 9:00 a.m. on Friday, June 30, 2023.

Chamber members are invited to join weekly legislative update calls hosted by our Advocacy team to hear the latest legislative matters concerning our community. The legislative updates calls will resume weekly in September 2023.

KEY TAKEAWAYS FOR YOUR BUSINESS

Local

City Council is in recess for the summer. The next City Council Stated Meeting is scheduled for Thursday, September 14, 2023. 

Inclusive Growth Coalition (IGC) Update
The IGC will conduct a 52-week advocacy and engagement agenda focused on working with the public sector to: 

  • Improve the ease of doing business in the city, 
  • Lower the cost of doing business (Wage and BIRT); and  
  • Help to make the city safer and cleaner. 

With current momentum and continued joint advocacy, we are well on the way to growing more businesses and creating more jobs in Philadelphia. 

Stay updated on the IGC's efforts by following on LinkedIn – Instagram – Twitter – Facebook. 

You can also visit the news section of the IGC website for stories related to this work. 

State

Budget
Lawmakers are not expected to pass a 2023-24 state budget before the close of the state’s fiscal year on Friday, June 30, 2023.  

Little details have emerged as leaders continue to negotiate differences on topline spending and more contentious issues such as minimum wage, school funding, and vouchers for private education. 

Tax Code
The House is considering an accelerated phasedown of the CNIT, an increase in the NOL carry-over limit, and unitary combined reporting. 

Pass-Through Business Tax Relief
Legislation is currently in the Senate committee that would help mitigate the effects of the 2017 federal tax reform package on pass-through business entities. 

Federal

The House and Senate were both out of session this week in observance of the July 4th holiday. They will return to session on Tuesday, July 11, 2023, when the House is expected to resume appropriations markups and approvals.  

DETAILED LEGISLATIVE UPDATE

Local: Updates from Philadelphia’s City Hall

City Council is in recess for the summer. The next City Council Stated Meeting is scheduled for Thursday, September 14, 2023. 

Unhealthy Air Quality
On Thursday, June 29, 2023, the Philadelphia Health Department announced that the City of Philadelphia is under a Code Red Fine Particles Action Day Alert. This alert means that the air is unhealthy to breathe, and some members of the general public may experience health effects. When Philadelphia is under an air quality alert, the air is unhealthy for sensitive groups, including children, elderly people, and those who are pregnant, or with respiratory diseases or heart conditions. Residents are still encouraged to continue taking precautions to protect themselves. Masks are available at no cost at locations throughout the city. 

I-95 Reopening
I-95 reopened to traffic on Friday, June 23, 2023. Governor Josh Shapiro and Pennsylvania Department of Transportation (PennDOT) Secretary Mike Carroll officially reopened six lanes of traffic on I-95 after the deadly fire and collapse of the roadway on Sunday, June 11, 2023. 

Mail-in Ballots in Advance of Election 2024
The Philadelphia Inquirer broke down the stats behind rejected mail-in ballots in advance of the 2024 Presidential Election. As voting behaviors level out from the expansion of mail-in voting following the pandemic, data shows that thousands of ballots continue to be rejected due to errors. The most common in recent elections was un-dated ballots, followed by late ballots as the second-biggest issue. The likelihood of voting by mail and a ballot being rejected is unequal across different groups of voters, according to the Inquirer's analysis. In Philadelphia: 

  • One out of every three to four votes in recent elections are cast by mail, and nearly all mail voters have voted by mail in a previous election.  
  • Older voters are significantly more likely to vote by mail than younger voters. They are also disproportionately more likely to see their votes thrown out.  
  • Whiter, higher-income, better-educated neighborhoods have higher mail voting rates than other neighborhoods but have lower rejection rates.  
  • People who are new to voting by mail and less frequent voters are also particularly likely to make errors that lead their votes to be thrown out. 

Make sure you are educated on how and where to vote, particularly with the general election quickly approaching. The Chamber is committed to keeping our members informed and engaged during Philadelphia's key elections – stay tuned for more information and resources as they become available in the coming months. 

Record Mayoral Primary Costs
This year's Mayoral Primary was the most expensive in the city's history. Based on an analysis by the Inquirer, the Democratic candidates and the political action committees (PACs) that supported them spent about $37.7 million.  

State: Updates from Harrisburg

Budget
The Governor and key House and Senate leadership members continue negotiating toward a bipartisan agreement for the state’s 2023-24 budget. Details of the negotiations have been kept mostly behind closed doors. Although Senate President Pro Tempore Kim Ward said earlier in the week that the Governor and Senate Republican leadership had arrived at a top-line spending number together with several agreed-upon priorities. Ward had called the Governor’s approach to the negotiations “reasonable.”  Despite the loose agreement, House Democrats have yet to align themselves with the framework.  

Several contentious budget issues are presumed to be at the center of the negotiations, including:  

  • House Democrats passed an almost $46 billion topline spending plan, more than $1.4 billion above what the Governor had proposed in his budget. Republicans presumably are willing to negotiate somewhere between current spending and the Governor’s proposed spending number. 
  • The House Democrat budget included an additional $900 million above the Governor’s proposal for public education, including dedicated funding for basic and special education, underfunded school districts, and aging public school facilities. 
  • The state House passed legislation increasing Pennsylvania’s minimum wage from the current $7.25 per hour to $15 per hour by 2026 and the indexing for annual inflation thereafter.  Senate Republican leadership has called the proposal “not viable.” 
  • Senate Republicans have a history of support for lifeline scholarships, which would provide vouchers for students in worst-performing school districts to use towards private school tuition and related education expenses. The issue was launched to the center of the budget debate following the Governor’s recent comments in support of lifeline scholarships, drawing the ire of teachers’ unions and public school advocates. 

Tax Code
In addition to our reporting on the numerous tax-related issues positioned between the House and Senate for inclusion in the tax code as part of budget negotiations, the House Finance Committee held a hearing this week to consider the following pieces of business tax legislation: 

  • HB 1482, legislation that would accelerate the phasedown of the corporate net income tax (CNIT) to 4.99% by 2026, similar to a Senate version which also has the support of the Governor. 
  • HB 1483, legislation that would gradually increase the net operating loss (NOL) carryover limit from 40% to 80% over a four-year phase-in, similar to a Senate version that received unanimous and bipartisan support in the Senate committee. 
  • HB 1462, legislation that would require unitary combined reporting to determine the share that multi-state corporations will pay towards Pennsylvania’s CNIT based on the location where transactions occur. 

At the time of this update, the House Finance Committee was scheduled to vote on the above measures Friday, June 30, 2023, at 9:30 a.m. It is possible that the CNIT and NOL bills could be amended with unitary combined reporting language before a vote in committee to send to the House floor.  

The Chamber supports efforts to accelerate the phasedown of the CNIT and increase the NOL carryover limit as a way to make Pennsylvania more competitive with other states and support small business growth. However, considering these measures in combination with unitary combined reporting it will have the reverse effect and discourage business investment in the state. 

Pass-Through Business Tax Relief
The Senate Finance Committee is considering two pieces of revenue-neutral legislation that would provide tax relief to pass-through business entities. The legislation would align Pennsylvania with a majority of the states in the country that have adopted similar reforms. The bills would allow pass-through businesses to circumvent the state and local tax deduction $10,000 cap passed under the federal Tax Cuts and Jobs Act (TCJA) in 2018. 

According to the bill sponsor, SB 659 provides an elective pass-through entity tax (PTET) election, allowing a Pennsylvania pass-through entity to pay the usual 3.07% personal income tax rate on income but, in turn, receive corresponding credits. The net result would be payment of the same amount of tax but with the benefit of increased federal deductibility as an expense of the electing business.   

Some Pennsylvania resident partners may be required to be included in PTET returns even though they may be double taxed by their resident state – Pennsylvania; this means resident partners face a Pennsylvania tax increase simply due to their inclusion in another state’s PTET return. SB 660, would fix the double-tax issue of other states’ PTET on Pennsylvania resident taxpayers. 

Federal: Updates from Washington D.C.

Both the House and Senate were out of session this week on a two-week recess in observance of the July 4th holiday. 

Upcoming Legislative Activity 
Before their recess, the House Appropriations Committee approved six funding bills: Energy and Water Development and Related Agencies; Defense; Military Construction, Veterans Affairs, and Related Agencies; Legislative Branch; Agriculture, Rural Development, and Food & Drug Administration; and Homeland Security. Upon returning to session on Tuesday, July 11, 2023, the House will continue working to send the remaining six spending bills to the full appropriations committee for their consideration: State, Foreign Operations, and Related Programs; Financial Services and General Government; Transportation, Housing & Urban Development, and Related Agencies; Labor, Health & Human Services, Education; Commerce, Justice, Science, and Related Agencies; and Interior, Environment, and Related Agencies.  

Additionally, the House is expected to begin floor action upon their return on three priorities: passing the $886 billion National Defense Authorization Act as well as reauthorizing both the Federal Aviation Administration and the farm bill for the next five years.  

Economic Performance and Investments
This week the Congressional Budget Office (CBO) released its 2023 Long-Term Budget Outlook projecting what the economy could look like over the next 30 years, building upon the 10-year outlook released earlier this year. Considering the spending caps identified within the Fiscal Responsibility Act, the CBO estimated that debt as a percentage of GDP would be two percentage points higher this year and nine percentage points lower in 30 years.  

President Biden and Vice President Harris began the second phase of the "Investing in America" tour by announcing the Broadband Equity Access and Deployment (BEAD) Program on Monday, June 26, 2023. According to a fact sheet released by the White House, the BEAD Program is a $42.5 billion grant program through which every state will receive at least $107 million to support high-speed internet infrastructure deployment.  

The Department of Energy released the 2023 U.S. Energy and Employment Report (USEER) on Wednesday, June 28, 2023, showing a 3.8% growth in the energy workforce in 2022, representing almost 300,000 jobs. The USEER report indicates that the clean energy sector is experiencing "significant job growth," with all 50 states and Washington, D.C. seeing growth in the number of clean energy jobs.  

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We invite you to reach out to our advocacy team directly with your questions:

Chamber members are invited to join weekly legislative update calls hosted by our Advocacy team to hear the latest legislative matters concerning our community. The legislative updates calls will resume weekly in September 2023.