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 the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/728-1164 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 this list.
BUDGET NEWS (Are We There Yet?)
Legislative leaders and Governor Corbett are in sustained negotiations on budget particulars regarding spending priorities…Stay tuned. This week should be pivotal even as the earlier June 13 estimated completion date now seems implausible.
The PA Senate started the Budget Gauntlet by passing Senate Bill 1466 in May, a measure that restored $500 million in education cuts proposed by the Governor in February. It went to the House where some interests clamored for more restorations given the better than expected revenues versus others who maintained that the state is still in a deep budgetary hole and that more budget-cutting must take place. The House Appropriations Committee reported out SB 1466 intact, readying it for a House gauntlet which has already meant changes.
With a proposed general operations budget of $17.947 million, the Insurance Department appears not to have been changed by SB 1466. PA must have a balanced budget passed by the General Assembly by June 30 per the Constitution.
NOTE: Understand in the Budget Process that the House makes changes that the Governor’s Office and the Senate cannot accept. The Senate non-concurs and then it goes to a Conference Committee where leadership negotiate the differences. As examples, note these budget changes to HB 1466 and ask yourself if they would be acceptable:
- Governor’s Office cut from $6.179 million to $1.5 million
- Lt. Governor’s Office cut from $802,000 to $250,000
REVENUES LESS THAN ANTICIPATED IN MAY
Pennsylvania collected more than anticipated in revenue projections in April 2012 but those numbers fell off for May 2012. $1.9 billion came in for the General Fund in May or $43.8 (2.3%) million less than anticipated. The YTD collections show that the state is $332.9 million below estimate for this fiscal year worsening from April’s $288.4 million revenue below estimates. This news has a definite impact on the Budget since legislative reversal of some Corbett cutbacks were fueled by the earlier more optimistic revenue numbers.
TAX BILL DRAWS STRONG REACTIONS
The House Finance Committee convened a hearing June 4 on House Bill 1776 (Cox-R-Berks) HB 1776 would eliminate many exemptions from the state’s sales and use tax in order to fund an elimination of the school property tax. The legislation would also increase the sales tax from six to seven percent. Opinion was strong by both advocates and detractors. One supporter of the bill was the PA Farm Bureau. Some of the opposition came from the PA Retailers Association and the National Federation of Independent Businesses (NFIB). PAHU was the only insurance organization to present comments via a chapter President. PAHU weighed in against expanding the sales tax to include broker fees. The Finance Committee may vote on the bill this week.
SENATE BANKING & INSURANCE COMMITTEE DID NOT MEET
The Senate Banking & Insurance Committee canceled its June 5 meeting which would have considered three bills, all of which are sponsored by committee chair Don White (R-Indiana).
- SB 1524 amends the Reinsurance Credits Law to allow for reduced collateral for reinsurers that are financially solvent and licensed in the Commonwealth (absorbed into SB 1464 by amendment)
- SB 1538 amends the MCARE Act by requiring that the Insurance Commissioner conduct a study of the amount of punitive damages paid for by health care providers for claims resolved under the Medicare Care and Reduction of Errors Fund.
- SB 1545 establishes the Banking-Securities Commission Act. This takes the now free-standing Securities Commission and moves it into the Banking Department. It stems from a reorganization recommendation from the Corbett Administration that surfaced during Budget hearings. Both Banking and Securities are self-sustaining from industry fees, not from the General Fund.
A new meeting date to consider SB 1538 has been set for June 13.
MORE LEGISLATIVE UPDATES
- Placed on Governor Corbett’s desk June 7 was Senate Bill 1310 (Gordner –R-Columbia) regarding the state’s unemployment compensation insurance system. The measure would help the Commonwealth’s UC Trust Fund remain solvent and pay off a $3.87 billion Federal loan to PA for UC benefits. Paying off the Federal debt through a bond means state indebtedness but the payback would be less because of lower interest charges. The bond would be paid off by 2019.
- The House Insurance Committee plans an off the floor meeting to consider two company reinsurance bills, Senate Bill 1464 (D. White-R-Indiana) and House Bill 2437 (Micozzie-R-Delaware). SB 1464 was amended in the Senate to include the language from SB 1524.
LICENSING BILL CLEARS HOUSE
By a unanimous vote, the House approved House Bill 2135 (Quinn-R-Bucks) to create a new limited line of authority governing property insurance sales by unlicensed retail clerks for portable electronic products such as cell phones.
REGULATORY NOTES
- The PA Insurance Department is convening a seminar June 13 for public adjusters to become familiar with new requirements, licensing terms/timelines, consumer protections and disclosures. Details: Adriane Force at ra-in-producer@pa.gov.
- AIG will pay $16.8 million fine in fines and assessments to PA in a settlement regarding AIG’s Workers’ Compensation program. The PA Insurance Department took the lead in this multi-state agreement where AIG had understated its liabilities to the departments. The settlement breaks down to $8.6 million in fines, $3.6 million to the WC Security Fund, and $4.6 million in premium taxes and assessments. The total AIG will pay to the states amounts to $100 million.
CE NOTES
PHILLIPS ASSOCIATES is planning two summer CE blitzes. First is a compliance blitz where lobbyist Vince Phillips will join with former Insurance Department Counsel Christopher Knight, now with the law firm of Hawke, McKeon, & Sniscak LLP to discuss Insurance Department compliance issues for insurers and producers. Second will be a blitz across the state to help insurance producers better understand the upcoming US Supreme Court’s decision on the constitutionality of the Patient Protection Affordable Care Act. Details will be announced for both.
A second CE note is that the SPARKS Club Clinic for 2012 has been approved for four credits in Pennsylvania, Maryland and Delaware. Details: www.sparksclub.com
RavenWood Creative.