Government Affairs & General Updates
September 6, 2023
1. Shapiro signs executive order aimed at helping small businesses and small diverse businesses get more state contracts. Gov. Josh Shapiro on Tuesday signed an executive order intended to increase the number of small businesses and small diverse businesses that get state government contracts. Shapiro's order authorizes the Department of General Services to increase the ceiling on annual revenue for companies to qualify as small businesses and establishes an advisory council on inclusive procurement to ensure that agencies are doing as much as possible to help minority-owned small businesses get state government contracts. Due to the order, the revenue limit to qualify as a small business will increase from $38.5 million to $47 million. Shapiro said this move is needed to reflect the increase in prices due to inflation. He said the state should also raise the ceiling on the number of employees that a company can employ and still qualify as a small business. Under state law, a business can have no more than 100 employees to qualify as a small business, but the federal government allows businesses to have as many as 500 employees and still qualify as a small business, Shapiro said. The governor said he can't raise the ceiling on the number of employees without legislative action.
2. Taxpayers sidelined amidst school funding tit-for-tat As the state's prolonged game of chicken enters its third month, all eyes turn toward the Pennsylvania House of Representatives. That’s because two key pieces of legislation needed to enact the $45.5 billion budget sit unfinished on the chamber’s desk, though neither meets the demands of the Democrats in charge. As such, leadership dismisses the bills as nothing more than the Senate’s revenge for a school voucher program Gov. Josh Shapiro cut from the budget to appease his legislative allies. That’s how the state’s largest teachers union – key critics of the voucher proposal – sees it. “Public schools are struggling to place teachers and aides in classrooms and hire bus drivers to take kids to school,” said Rich Askey, president of the Pennsylvania State Education Association. “We need to fund programs that address these problems. No Pennsylvanian can afford to let tuition voucher politics get in the way of doing that.” Senate Republicans shrug off this characterization. When Shapiro killed the deal he’d struck with them on school vouchers – a program he told media outlets he still supports as recently as Aug. 11 – Senate leadership said they too had to reconsider. The two fiscal codes the upper chamber passed last week demonstrate a reconstituted framework that drops authorization for certain Democratic priorities, such as an additional $100 million earmarked for the state’s neediest school districts and student-teacher stipends.
3. August revenue outpaced prior year and IFO projection, but fell short of Department of Revenue prediction. We've written in the past about how the state's Independent Fiscal Office has struggled to accurately predict the state's revenue picture. So, fair's fair. They pretty much nailed it in August. "In June 2023, the Independent Fiscal Office (IFO) released revenue projections for fiscal year (FY) 2023-24. General Fund collections for August were $2.90 billion, $8.7 million (0.3%) above the IFO's official estimate, with overages in corporate net income tax (CNIT) and inheritance tax offsetting shortfalls in sales and use tax (SUT) and personal income tax (PIT)," the IFO reported Friday. They added parenthetically: "(The IFO monthly estimate was $35.8 million lower than the estimate certified by the Governor.) Not surprisingly, the Revenue Department announced Friday: "Pennsylvania collected $2.9 billion in General Fund revenue in August, which was $27.1 million, or 0.9 percent, less than anticipated." Both the IFO and the Revenue Department over-estimated how much revenue the state would get in sales and use tax and under-estimated how much the state would get in corporate taxes. August revenues increased $34.5 million (1.2%) over the prior year.
4. While fate of code bills passed by Senate is unclear, many provisions in them will likely end up in spending plan. The larger of the two fiscal code bills passed by the Senate last week contains numerous provisions that spell out budget policy directives across a wide range of areas. The overall fate of House Bill 1300 approved on a largely party line vote by the Senate Republican majority is uncertain, but major portions of it will likely wind up in the final budget package for Fiscal Year 2023-24 once bipartisan agreement with Democratic Gov. Josh Shapiro and the Democratic-controlled House is reached. CLICK HERE to read more.
5. U.S. Department of Energy commits $398.6M to battery project The U.S. Department of Energy recently committed to issue Eos Energy Enterprises a $398.6 million loan to support the construction and production of next-generation battery systems at its facility in Turtle Creek. Eos’ Project AMAZE will scale up production of Eos Z3 zinc-bromine batteries. The company will purchase primarily domestically sourced materials using the loan. The company’s goal is to transition to 100 percent U.S.-sourced material by 2026. The project is expected to create 50 union jobs during construction and as many as 650 operations positions when at full operational capacity. “Pennsylvania has powered our Nation for generations, so it’s no surprise that workers in the Mon Valley are going to lead the way on clean energy storage production,” U.S. Sen. Bob Casey (D-PA) said. “When we passed the Inflation Reduction Act, this is the kind of project we had in mind. It’s not only an investment in cutting edge technology, but also in Pennsylvania workers.” The Inflation Reduction Act created new tax credits to spur advanced manufacturing investments, particularly in clean energy sectors, by investing in domestic manufacturing. Read More