Legislative Updates: A Roundup of State and Local Actions – February 28

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, February 28, 2025

• The Tax Reform Commission released its interim report this week. The Chamber of Commerce for Greater Philadelphia (the Chamber) is encouraged by recommendations to eliminate the Business Income and Receipts Tax and reduce the wage tax. However, we believe more bold reforms are needed to usher in a new era of growth, prosperity, and job creation that will strengthen our city’s economic foundation so that we may all rise together.
• Philadelphia’s 250th Anniversary celebration received a $45 million allocation through a mid-year transfer from the City of Philadelphia.
• A special state and city session on investment in transportation and infrastructure has been scheduled for Wednesday, March 5, 2025.

• House and Senate Appropriations Committees are currently poring over Governor Shapiro’s $51.4 billion budget proposal for the upcoming fiscal year, which he delivered at the beginning of February.
• The Governor’s budget includes an accelerated reduction to the corporate net income tax together with mandatory unitary combined reporting.
• A $50 million PA Innovation program was proposed to leverage Pennsylvania’s strengths in life sciences and innovation, which the Chamber has called for since the Governor took office.
• The Chamber urges passage of a multimodal transportation funding package, which would provide a comprehensive, long-term, solution to Pennsylvania’s transportation funding needs.

• The NIH has implemented a 15% cap on Facility & Administrative (F&A) costs for all new and existing grants, which affects essential expenses like laboratory maintenance, utilities, salaries, and regulatory compliance.
• There are ongoing judicial challenges, including a temporary restraining order, as organizations brace for the economic fallout from this cap.
• The Chamber urges policymakers to reconsider the cap to ensure sustained investment in research, which is crucial for economic growth, global leadership, and community well-being.

Join us for an informative conversation with a panel of experts at Fair Chance Hiring: Building a Pathway to Employment on Tuesday, March 25, 2025. Learn about available tools, best practices for updating HR policies, diversifying your talent pool, and shifting your hiring culture to support these initiatives. Register now and unlock the potential of your workforce by embracing fair chance hiring.

Join the Chamber of Commerce for Greater Philadelphia and the Allegheny Conference on Community Development as we bring together business and civic leaders from across the state to honor members of the Pennsylvania General Assembly and Shapiro Administration at the Harrisburg Reception on May 5, 2025. Register now.

Tax Reform Commission

The Philadelphia Tax Reform Commission has completed its “Interim Report” outlining key tax reform recommendations, officially announced during a press conference on February 25, 2025, marking a significant step to address Philadelphia’s long-standing economic challenges.

The TRC’s proposed reforms could create between 31,200 and 93,200 new jobs over the next five years; double the skills and salaries of 15,000 Philadelphians; accelerate the success of over 1,000 small, diverse businesses; and attract hundreds of new businesses to our city.

Key recommendations include:

• Completely phasing out the BIRT over 8–12 years, beginning with the elimination of the net income portion (currently at 5.81%).
• Reducing the Wage Tax to 3% or less. Current Rates: 3.75% for residents and 3.44% for non-residents—among the highest in the country.
• Maintaining a commitment to steady tax reductions through the establishment of a predictable and stable tax policy that enables businesses to confidently plan long-term investments while maintaining the flexibility to adapt to exceptional economic shifts or unforeseen crises.

The Chamber is committed to advocating for tax reforms that will strengthen our city’s economy and create meaningful opportunities for all Philadelphians. We recognize the importance of the Tax Reform Commission’s work in laying a foundation for transformative change – reforms that not only address the structural barriers hindering economic growth but also create pathways for job creation, business expansion, and poverty reduction. While the “Interim Report” provides a promising start, we know the Commission’s work is far from complete, and the Chamber will continue to engage in the process.

Philadelphia City Council

Philadelphia’s 250 Anniversary celebration received a $45 million allocation, in addition to Governor Shapiro’s proposed $65 million, which will provide resources for Philadelphia to prepare.  Council’s Committee on Appropriations, voted three bills out of committee this week as part of the mid-year budget transfer process:

Bill #250071, #250072, and #250073: These bills adopt a Capital Program for Fiscal Years 2025–2030 by adjusting various appropriation amounts to align with the Capital Budget Ordinance. They authorize transfers of appropriations for Fiscal Year 2025, including funds from the Grants Revenue Fund, which consists of restricted grant funding for various city offices, departments, boards, and commissions. These transfers will direct funds to the General Fund, which supports the city’s core operations, and the Transportation Fund for designated transportation-related expenditures.

A “mid-year transfer” in city government is a budgetary adjustment that occurs halfway through a fiscal year, allowing the City of Philadelphia to reallocate funds between different departments or programs.

The Committee on Legislative Oversight held a hearing this week to investigate the City’s progress toward achieving its Vision Zero goals and examining opportunities to increase safety measures for pedestrians and cyclists.

Vision Zero Philadelphia is a collaborative effort led by the City of Philadelphia to improve traffic safety on city streets.

Cyclist and pedestrian safety is a critical issue for all Philadelphians and has a disproportionate impact on working-class communities.

The Zero Action Plan 2025-2030 is being updated this year and is set to be completed by October 31.

Special State and City Session

On Wednesday, March 5, 2025, from 2:00 -4:00 p.m., at the IBEW Local 98 Training Facility (1101 Kitty Hawk Ave), there will be a joint hearing between City Council’s Transportation Committee and the PA House Democratic Policy Committee to discuss investment in transportation and infrastructure in the city and state budget process.

Nuisance Business Bill and Resolution Introduced

During Council’s session on Thursday, February 20, 2025, Councilmember Bass introduced a bill that provides for the suspension of licenses for businesses not in compliance with regulations and or whose physical layout significantly differs from the originally approved floor plan.

Concurrently during Council’s Thursday, February 27, 2025, session, Councilmember Bass introduced a Resolution to add improper sale of tobacco to nuisance conditions and require businesses in violation of state tobacco laws to post signage saying they cannot sell tobacco.

This is part of a package of bills targeting neighborhood nuisance businesses.

Mayoral Updates

Mayor Cherelle Parker signed the Declaration of Disaster Emergency Executive Order 2-25 which recognizes the impact of the medical aircraft crash on city infrastructure, property damage, business losses, trauma experienced by the community and enables the city to pursue all eligible public assistance and grants to aid in recovery.

The One Philly Fund, established by the Parker administration in partnership with the Philadelphia City Fund, was created to support survivors of disasters that occur in Philadelphia. The fund continues to accept monetary donations from individuals and businesses that go directly to those affected by the aircraft crash incident. Learn more about eligibility and to apply for financial support.

Mayor Parker also recently joined City officials and stakeholders to launch her H.O.M.E Initiative to dramatically improve housing options for Philadelphians by creating and preserving 30,000 dwelling units.

She signed the Philadelphia Housing Opportunities Made Easy (H.O.M.E.) Executive Order (#3-25) to establish an Advisory Group and engage the stakeholders who will inform the mayor’s housing plan. This order has taken effect on Wednesday, February 19, 2025.

The goal, according to the mayor, is to give residents a diverse supply of high-quality, affordable luxury and accessible housing options. It also aims to shrink the “time tax” on development imposed by government processes.

The mayor’s Fiscal Year 2026 Budget Address next month will specify how much money is going to this project.

Mayor Parker also recently addressed the business community at the Chamber’s annual Mayoral Luncheon on Wednesday, February 12, 2025, to talk about her “Safer, Cleaner, Greener City, with Access to Economic Opportunity for All” agenda. This event brought together more than 2,000 executives, elected officials, business owners, and civic leaders.

Upcoming City Council Committee Hearings

On Monday, March 3, 2025, at 1:30 p.m., in Room 400, City Hall, The Committee on Streets and Services will hold a Public Hearing on Monday, to examine the City’s response to illegal dumping, focusing on monitoring high-activity areas, enforcement strategies, and the development of effective tools to combat this issue.

On Tuesday, March 4, 2025, at 10:00 a.m., in Room 400, City Hall, The Joint Committees on Public Safety and Legislative Oversight will hold a Public Hearing to hear testimony on examining actions necessary to significantly reduce the Philadelphia prison population in an effort to permanently close Philadelphia’s oldest and most inhumane prison facility, The Detention Center.

On Tuesday, March 4, 2025, at 2:00 p.m., in Room 400, City Hall, The Committee on Public Health and Human Services will hold a Public Hearing to hear testimony on a Resolution authorizing the Committee on Public Health and Human Services to hold a hearing on the prevalence of vaping among children and the effectiveness of current enforcement efforts.

On Wednesday, March 5, 2025, at 10:00 a.m., in Room 400, City Hall, The Committee on the Environment of the Council of the City of Philadelphia will hold a Public Hearing to hear testimony on a Resolution authorizing the Committee on the Environment to conduct a hearing to evaluate progress on the implementation of the Philly Tree Plan, determine how to expedite progress and what, if any, additional policies might promote the City’s sustainable greening goals.

Budget Hearings Underway 

House and Senate Appropriations Committees are currently poring over Governor Josh Shapiro’s $51.4 billion budget proposal for the upcoming fiscal year that he delivered at the beginning of the month.

The Governor’s plan represents a significant expansion of state spending, seeking to increase expenditures by more than $3.5 billion – a 7.5 percent jump from the current year’s budget. To fund this growth, the Governor has proposed tapping into the state’s financial reserves, calling for the complete utilization of the $2.9 billion General Fund available surplus and drawing an additional $1.6 billion from Pennsylvania’s Rainy Day Fund.

This approach to state finances has reignited a familiar political divide in Harrisburg. Republican leadership has voiced concerns about fiscal responsibility, arguing that the Governor’s plan would deplete the state’s financial reserves. Meanwhile, Democratic lawmakers have rallied behind the proposal, contending that Pennsylvania’s strong financial position presents a rare opportunity to make meaningful investments in economic growth and public education.

Senate Appropriations budget hearings and House Appropriations budget hearings  continue through March 6 as lawmakers from both parties scrutinize the details of the Governor’s plan and question administration officials about specific spending priorities.

Budget resources are available below, including detailed appropriations, summary briefs, and presentation materials:

2025-26 Governor’s Executive Budget

2025-26 Budget in Brief

2025-26 Proposed Budget Line-Item Appropriation

2025-26 Proposed Budget Slide Presentation

Tax Reforms

The Governor’s budget accelerates the corporate net income tax (CNIT) reduction to 4.99% by 2029 together with mandatory unitary combined reporting.  While the Chamber supports the Governor’s calls for an accelerated phasedown of the CNIT, we have serious concerns about coupling these cuts with combined reporting requirements. This approach would create several problematic outcomes, including:

• Creating significant disincentive for businesses to operate in Pennsylvania;

• Eliminating predictability in tax compliance while burdening companies with expensive legal, accounting, and administrative costs; and

• Expanding state authority to audit companies, add income to corporate tax returns, and define business activities in other states.

Economic Development

The budget calls for a major reorganization within Department of Community and Economic Development (DCED) to form the BusinessPA Team, which consolidates agency resources and focuses on business location, expansion, and marketing & attraction through streamlined programs and enhanced funding, including increased funding to enhance site selection, business attraction marketing, and business retention.

The Governor’s Budget also proposed $50 million for a PA Innovation program to leverage Pennsylvania’s strengths in life sciences and innovation. The program would provide $30 million to grow our life sciences sector through increased coordination among research universities to commercialize cutting edge technologies as well as $20 million for a state match to federal awards for start-up companies or competitive grants.

At the Senate Budget Hearing this week, DCED Secretary Rick Siger explained that the $30 million would serve as a one-time investment that would accelerate development of drug and device manufacturing; create a leadership pipeline to help commercialize intellectual property; build partnerships across health care and academic institutions to develop a clinical trial network; and provide money to fund innovations through a competitive grant process.

Transportation

The Governor proposed $292.5 million in additional funding for public transit agencies across the Commonwealth. The Governor also proposed that the scheduled stepdown of funds from the Motor License Fund to the State Police be slowed from $125 million to $50 million. This delayed phase-out results in a cumulative reduction of $275 million in the scheduled amount available for roads and bridges through FY 2028-29.

 The Chamber urges lawmakers to adopt a comprehensive, long-term, multimodal solution to Pennsylvania’s transportation funding needs.  Passage of Act 89 in 2013, provided an additional $2.3 billion annually for transportation, enabling significant improvements to bridges, roadways, and public transportation across the state. However, Act 89’s traditional funding mechanisms, primarily liquid fuels taxes, are becoming insufficient due to improved vehicle fuel efficiency and the rise of alternative fuel vehicles.  Rising construction and materials costs in the face of inflationary pressures continue to limit state purchasing power. These factors combined have created a situation where the funding mechanism that seemed adequate a dozen years ago is now struggling to meet Pennsylvania’s transportation infrastructure needs.

Education and Early-Learning

Governor Shapiro’s budget proposal demonstrates a significant state commitment to Pennsylvania’s education system across all levels. The plan includes significant investments in K-12 public education, early childhood programs, higher education institutions, and workforce development initiatives, including:

• $526 million in increased funding for basic education in the continuing effort to close the adequacy gap highlighted and recommended by the Basic Education Funding Commission Majority Report.

• $41.6 million in increased funding for early childhood education

• $55 million to support childcare workforce recruitment and retention grants

• $60 million funding for the state-related universities to be distributed based on the recommendations of the Performance-Based Funding Council; $40.4 million increase in funding for the state-owned universities; and $13 million increase in funding for community colleges.

• $5.5 million increase for Career and Technical Education

Trump Administration Implements Cap on National Institutes of Health Reimbursements

On February 7, the Office of the Director of the National Institutes of Health (NIH) announced an immediate implementation of a 15% cap on Facility & Administrative (or “F&A”) costs for all new and existing NIH grants. Under the current system, institutions negotiate F&A reimbursement rates based on audited financial statements and research expenditures to cover essential, non-negotiable expenses:

• Laboratory maintenance, heating, and cooling

• Utilities, including lighting, water, and internet

• Salaries for scientists and research support staff

• Regulatory compliance, accounting, and data security

These are not extraneous costs – without support for these critical infrastructures, research slows, discoveries stall, and innovation grinds to a halt. The Chamber strongly opposes the implementation of this cap, which poses a severe threat to the Greater Philadelphia region’s research institutions, economic development, and our national and global competitiveness.

While judicial challenges, including a temporary restraining order, are ongoing, organizations across Pennsylvania and beyond are bracing for the economic fallout. The Chamber urges policymakers to reconsider this cap and ensure sustained investment in research that drives economic growth, global leadership, and community well-being. If we fall behind, we won’t just lose funding—we’ll lose the talent, technology, and advancements that define us as global leaders in medicine, engineering, and life sciences.

Read the Chamber’s full statement on NIH reimbursement caps here.

Disparate Reconciliation Instructions Pass Through Congress As Government Shutdown Looms

In the last week, the House and Senate have both passed their own versions of budget reconciliations, each reflecting the respective chamber’s priorities.

The Senate instructions direct committees to fund border, defense, and energy. Notably, however, this resolution leaves extensions of the 2017 tax cuts for a second reconciliation process later this year. Dubbed a “skinny” budget resolution, the Senate’s measure allocates $175 billion in new border and immigration funds and $150 billion in new defense funds. To offset this new spending, the resolution requires cuts to mandatory spending programs, particularly instructing the Agriculture, Energy and Natural Resources, Finance, and Health, Education, Labor and Pensions committees to reduce spending by at least $1 billion over the next 10 years. The Armed Services, Commerce, and Environment committees were instructed to increase their spending within specific limits.

The House instructions, which passed by a vote of 217-215, features significant departures from the Senate instructions and seeks to tackle all of the Trump administration’s priorities. The broader set of priorities includes $4.5 trillion in tax cuts, a $4 trillion debt limit increase, $200 billion in new funding for the border and immigration, and $100 billion in new defense funds.

The instructions also call for $2 trillion in spending cuts over 10 years to partially offset the new spending. The Education and Workforce, Transportation and Infrastructure, and Agriculture committees will be among those with the largest required spending cuts. Most significantly, however, the Energy & Commerce committee is required to cut $880 billion over the next decade. This cut is expected to primarily impact Medicaid funding and has raised concerns for House Democrats and moderate Republicans alike. These representatives will continue to focus on what spending cuts could mean for their constituents as the next phase of the reconciliation process gets underway.

Though both chambers passed their own versions of reconciliation instructions, they must adopt the same resolution to formally begin the process. The Senate has indicated a new willingness to switch to a one-bill approach that encompasses key issues along with tax cuts, but will continue to push for major policy changes, including making the 2017 tax cuts permanent, addressing the debt ceiling through mechanisms other than reconciliation, and negotiating on spending cuts proposed by the House. The unified version of the instructions is not expected on the House floor until early April, by which time two new Republican Representatives from Florida will be sworn in, providing the caucus a more comfortable voting margin.

The focus on reconciliation has diverted attention from the impending government shutdown, set to begin on March 14 if a funding compromise is not reached. While leaders report they are close to aligning on a topline spending figure, partisan disagreements persist among appropriators. Democrats are prioritizing provisions requiring the president to spend funds appropriated by congress, while Republicans resist limiting the options of the executive branch.

The two paths forward – a long-term continuing resolution (CR) through September 30 or a full slate of 12 appropriations bills – are under consideration. Democrats and the Pentagon, unusual allies in spending debates, are both unlikely to agree to the CR. Democratic leaders say this runs counter to their goal of requiring the president to spend funds appropriated by congress, while the Pentagon is concerned that the CR would hinder their ability to fund multiyear programs and projects. President Trump himself, on the other hand, has endorsed the CR through September 30 and has directed House and Senate appropriators to develop a stopgap spending bill to align with that timeframe.

Reporting Requirements for Beneficial Ownership Information Reinstated

Effective January 1, 2024, the Corporate Transparency Act mandates small businesses – typically those with under 20 employees or under $5 million in gross receipts revenue – to report information about beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The bipartisan Corporate Transparency Act was enacted in 2021 to “curb illicit finance” and, according to FinCEN, the goal of Beneficial Ownership Information (BOI) Reporting is to more efficiently target willful disobedience and money laundering conducted through anonymous corporate structures.

In December of 2024, a Federal Court in Texas issued a preliminary injunction on the Corporate Transparency Act’s (CTA) new Beneficial Ownership Information (BOI) reporting requirement, ruling that the requirement was “likely unconstitutional and that its implementation would irreparably harm reporting companies if they were forced to comply.” However, this injunction has since been reversed, and the reporting requirement reinstated.

Under the BOI structure, entities created or registered before January 1, 2024, must file their initial reports by January 1, 2025. Companies created or registered after January 1, 2024, or before January 1, 2025, must report within 90 calendar days of their organizational effective date. Companies created or registered on or after January 1, 2025, must file within 30 calendar days of their organizational effective date. Because of the legal challenges this requirement faced, however, most companies will now have 30 days from February 19, 2025 to file.

FinCEN’s BOI information center includes resources to assist small businesses in reporting BOI, including an Introduction to BOI Reporting, a Small Entity Compliance Guide, and answers to Frequently Asked Questions.

ChamberPHL Political Action Committee
Help us advance the business community’s agenda by contributing to support state and local candidates in key elections who share our commitment to a healthier business climate.

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

• Shannon Williams, Senior Vice President, Advocacy – swilliams@chamberphl.com
• Renee Androckitis, Federal and State Affairs – randrockitis@chamberphl.com
• Anselm Sauter, State Affairs – asauter@chamberphl.com
• William Carter, Local Affairs – wcarter@chamberphl.com
• Ashley Miscevich, Local Affairs – amiscevich@chamberphl.com

Chamber members are invited to join weekly legislative update calls hosted by our advocacy team to hear the latest legislative matters concerning our community.