Legislative Alerts

With May revenues even worse than anticipated and more than $3 billion deficit immediately on the horizon, the budget focus in Harrisburg has shifted to a possible increase in the personal income tax coupled with a temporary freeze in the phase out of the Capital Stock and Franchise tax. There is also discussion about passing a stop gap budget that doesn’t raise taxes, but makes the necessary cuts to simply keep government running. Neither option is overly appealing to most lawmakers. Stay tuned to the GCAP website for further developments on the state budget.

GCAP continues to work with the Pennsylvania Institute of Certified Public Accountants, the PA Chamber, Associated Pennsylvania Constructors and others to ensure passage of this important legislation, which will protect contractors from potential double jeopardy with regard to business privilege taxes (BPT) . If you or your company are located in a municipality that levies the BPT, please contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

Representatives John Galloway (D-Bucks) and Daryl Metcalfe (R-Butler) have introduced a pair of bills intended to prevent employers in the construction industry from intentionally hiring illegal aliens. HB 1502 requires contractors and subcontractors engaged in public works projects to “verify” that all of their employees – to the best of their knowledge using E-verify and the Social Security Number Verification Service – are legal. HB 1503 requires construction industry employers to maintain a record of verification for their employees.

GCAP will keep you posted on these bills as they move through the legislative process. In the meantime, any questions, please contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

Senate staff continues to work on amendments to HB 400. GCAP is working with the Committee to ensure that a general contractor is not responsible for the hiring practices of other employers on a job site. For more information about this legislation and what you can do to help, please call contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

May 26, 2009 Legislative Update

State tax revenues for April were way down, continuing a disappointing trend. State Budgeteers are now projecting a $3 to $3.2 billion shortfall for FY 2008-09. By most counts that number will grow to an even larger structural deficit for the coming fiscal years. Even with the federal stimulus and other infusions of one-time monies, some are suggesting that gone are the days when either more spending cuts or tax increases can get the Commonwealth out of this hole. Even with this bleak outlook, however, there currently doesn’t appear to be any appetite for any broad tax increases (personal income, business, sales, etc.).

Since the beginning of 2009, one career center and six school districts (A.W. Beattie Career Center and Antietam, Avon Grove, Columbia Borough, Grove City Area, Oil City Area and Parkland School Districts) have received approval from the Department of Education to utilize single prime contracting for their school construction projects. At least five more districts are awaiting similar approval.

School entities from across the Commonwealth continue to demonstrate that single prime contracting can be a more effective and economical approach to major construction initiatives. Mandate Waiver applications approved in 2009 estimate millions in proposed savings for those districts looking to use the single prime method to complete their school construction projects. For more detail information regarding the districts noted above, please contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

Earlier this month, GCAP successfully lobbied members of the Senate Finance Committee in support of Senator Pat Browne’s (R-Lehigh) legislation to overturn the Pennsylvania Supreme Court’s decision in Redina v. Harrisburg. Redina reverses long standing legal precedent by allowing a municipality to levy a business privilege tax (BPT) tax on the business transactions of an entity that does not have a permanent base of operations within its boarders.

With the bill currently in the Senate Appropriations Committee, GCAP continues to work with the Pennsylvania Institute of Certified Public Accountants, the PA Chamber, Associated Pennsylvania Constructors and others to ensure passage of this important legislation. To that end, GCAP and its business partners met with key Senate Appropriations staff on May 18 to discuss the need to move SB 601 forward.

As a result of that meeting, GCAP is currently collecting additional information regarding the impact of Redina on our members. If you or your company are located in a municipality that levies the BPT, please contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

On May 5, by a bi-partisan vote of 126-72, the State House passed HB 400 (Lentz, D-Delaware). As approved by the House, this legislation seeks to penalize companies in the construction industry who intentionally misclassify workers as independent contractors to avoid paying taxes, insurance costs and payroll deductions or to hire illegal aliens. During the weeks leading up to the vote, GCAP advised House Members that these practices result in lost tax revenue, higher workers’ compensation premiums, illegal profits and a grossly uneven playing field when it comes to cheaters entering into competitive bids with those of us who abide by the rules.

The House-passed version included several amendments that improve and strengthen the legislation, including a re-scaling of penalties and a rebuttable presumption protection for employers. However, GCAP has told the State Senate Labor and Industry Committee that additional changes are required to make the bill an even more effective tool to combat the problem of employee misclassification. The most important of these changes is a specific safeguard for general contractors and subcontractors who operate in full compliance with the law, regardless of the business or hiring practices of their subcontractors or sub-sub.

GCAP is working with the Senate on proposed amendments to the bill. For more information about this legislation and what you can do to help, please call contact Terry McDonough at 717-731-6272 or email hidden; JavaScript is required.

GCAP primarily provides legislative monitoring and advocacy services to members of KCA, the Master Builders Association, the General Building Contractors Association and the Builders Association of Eastern Ohio and Western Pennsylvania. Additionally, the Board of Governors of GCAP does arrange to meet at least annually with representatives of state agencies to hear their proposed construction plans for the upcoming fiscal year. GCAP met with the agencies at it’s March 27th Board of Governors meeting and we have prepared a summary of projected construction projects which were presented for review.