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). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to firstname.lastname@example.org. Please email email@example.com supplying both your name and e-mail address if you wish to be removed from or added to this list.
AUTO APPRAISAL BILL SIGNED BY GOVERNOR
House Bill 1638 (Tobash-R-Schuylkill) was signed into law April 14, 2016 as Act 13 of 2016. This law amends the Motor Vehicle Physical Damage Appraisal Act to allow for photos to be used as documentation of a vehicle’s post-accident condition when making an appraisal. Disputed findings by auto shops and others would mean that a physical personal inspection of the vehicle would take place. Act 13 goes into effect in sixty days.
MEDICAL CANNABIS BILL SIGNED BY GOVERNOR
Signed into law April 17 was Senate Bill 3 (Folmer-R-Lebanon and Leach-D-Montgomery) which establishes a regulatory approval system for entities seeking to provide this medical cannabis for specific medical conditions. It also includes taxation provisions as well and envisions as much as $68 million going to the Commonwealth in the first year or so with $20-40 million per year thereafter. Implementation is expected to be completed in 18 to 24 months. SB 3 crossed the finish line legislatively when the House concurred with Senate amendments by a 149-46 vote. The no votes were cast by Republicans including Health Committee Chair Matt Baker (R-Bradford/Potter/Tioga). Two Republicans and six Democrats did not vote.
Governor Wolf’s web site covers questions about how the new law will work. An Act number is not yet available at time of writing.
DEPARTMENT CHANGES POSITION ON AUTO MINIMUMS
At a joint hearing April 11 of the House Transportation and Insurance Committees on Senate Bill 928 (White-R-Indiana) and House Bill 1258 (Ellis-R-Butler), two bills that would double the minimum auto insurance required in Pennsylvania. The Insurance Department reversed a previous Corbett Administration position taken during a previous House Insurance Committee hearing in 2011. While acknowledging that physical damage claims are on average $3,000 and under current law’s minimum coverage of $5,000, the Department said that higher minimum coverage are necessary given other states which have higher minimums and that current requirements no longer adequately protect insured drivers. Current minimums were established by Act 6 of 1990.
Also supporting the legislation were the Insurance Agents and Brokers (IA&B) and the PA Association for Justice (trial lawyers).
Opposing was the Insurance Federation of Pennsylvania (IFP) representing the carriers. IFP stressed that consumers with low or fixed incomes would be disadvantaged by SB 928 and HB 1258 because increasing coverage minimums would increase premiums. IFP also cited implementation concerns since carriers would have to seek Insurance Department approval for new rates.
PA Association of Mutual Insurance Companies (PAMIC) has not taken a position on the legislation.
The General Assembly sent Fiscal Code legislation to the Governor April 14 on which he must take action by April 24. House Bill 1589 (Causer-R-Cameron/Potter/McKean) restores much of previous legislation that was vetoed. HB 1589 did not include several items Governor Wolf objected to in the previous bill although those are being pushed as separate bills which would again challenge the Governor. The Senate vote was veto-proof (38 to 11) with nine Democrats crossing over to vote with the Republican majority. A two-thirds vote of the 50-Senator chamber is needed to override a veto.
Background Note: PA actually has two budgets. The spending budget became law without Governor Wolf’s signature. The second budget is called the Fiscal Code. It specifies how the money will be spent – spending formulas for education, allocations from specific funds, etc. If HB 1589 becomes law, it will represent the last chapter in resolving the State Budget for the current fiscal year starting July 1, 2016.
REVENUE NUMBERS CONTINUE TO IMPROVE
PA collected $4.5 billion in General Fund revenue in March, which was $86.7 million, or 2-percent more than anticipated for the month. The year-to-date revenue is $22.2 billion or $147.4 million over estimate. If there is a significant amount of revenue over estimate near the end of this fiscal year, it could have a bearing on the FY 2016-17 State Budget negotiations.
Individual revenue categories follow.
Revenue Source Above/Below Year to Date Projections
Sales Tax + 27.8 million
Personal Income Tax – 21.5 million
Corporate Taxes + 72.4 million
Inheritance Tax + 31.3 million
Realty Transfer + 5.4 million
Other General Fund Revenue – 3.9 million
(Cigarette, malt beverage, liquor, table games taxes)
MORE BUDGET ITEMS
- On April 13, the House Appropriations Committee reported out House Bill 1999 (Adolph-R-Delaware) as the vehicle for the FY 2016-17 State Budget. Even though committee Democrats voted no, both parties recognize that this is simply a starting point.
- Lt. Governor Mike Stack joined Republican and Democratic lawmakers to urge adoption of legislation changing Pennsylvania’s budget cycle from annual to a two-year budget The cycle would be concurrent with the legislative two-year cycle. Current legislation is Senate Bill 1171 (Aument-R-Lancaster).
DATES TO REMEMBER
- April 25 is Philly I Day. (https://phillyiday.com/ )
- May 2 is Mutual Insurance Day at the State Capitol. (www.pamic.org)
- The next House session day is May 2.
- The next Senate session day is May 9.
NAIFA-PA’s Annual Meeting is May 4-6 at Nemacolin in Farmington, PA. For more information or to register follow this link: https://events.constantcontact.com/register/event?llr=8etrkqcab&oeidk=a07ebz1gn59f551c5ab