Written By: Beth Brennan, Lobbyist, Cozen O'Connor

Happy Spring to our friends in film. Better weather is on the horizon, great for shooting outdoor scenes.

Also, additional Covid-relief efforts are underway in Harrisburg. Twice this month, Pennsylvania Governor Tom Wolf announced the loosening of various pandemic related restrictions. On March 15, the Governor announced the easing of some of his COVID-19 mitigation policies on businesses, effective April 4. For restaurants, the indoor dining capacity will be raised to 75 percent. Capacity for other businesses, including gyms and entertainment facilities, such as theaters and casinos, will be increased to 75 percent occupancy. Back on March 1, the Governor and the state Health Department rescinded a November order that required anyone over the age of 11 who visits from another state to provide evidence of a negative COVID-19 test or place themselves in a travel quarantine for 14 days upon entering Pennsylvania.

The state Senate Appropriations Committee began its hearings for the 2021-22 budget, meanwhile, the House concluded their hearings in mid-March. Republican House and Senate members continued to express concern about the Governor’s proposals to raise the personal income tax, increase the minimum wage, and impose a severance tax on natural gas, among other contentious issues.

With the announcement of two additional legislative vacancies this month, May 18th – PA’s primary election day – will now be the date of four state legislative special elections. One March 5th, state Sen. John Blake, D-Lackawanna, resigned from his 22nd Senatorial District seat to accept a new job with Pennsylvania Democratic U.S. Rep. Matt Cartwright. On March 16th, state Rep. Jeff Pyle R-Armstrong, resigned immediately due to health issues. Special elections already set for May 18th were the 48th Senatorial District seat which was vacant due to the January death of Sen. Dave Arnold, R-Lebanon and the 59th House District which was vacant due to the January death of Rep. Mike Reese, R-Westmoreland.

On March 10, Senator Camera Bartolotta, R-Greene, introduced SB 321. Co-sponsored by Senators Collett, Scavello, Robinson, Costa, Yudichak and Stefano, the bill increases the film tax credit limit from $70 million to $125 million. It also renames the Film Production Tax Credit as the Film Industry Incentive. The bill was referred to the Senate Finance Committee.

On March 12, Representatives Kathleen Tomlinson, R-Bucks, and Joe Ceresi, D-Montgomery, circulated a co-sponsorship memo announcing their intent to introduce that would re-brand the Film Production Tax Credit as the Film Industry Incentive and increase funding for the program from its current level of $70 million to $125 million. We anticipate their bill language to be identical to Senator Bartolotta’s SB 321 referenced above.

As we move closer to the June 30^th budget deadline, we expect busier days ahead in Harrisburg. PAFIA will be watching and advocating for the industry. Now get outside and enjoy the sun and warmer weather.

And quiet on the set……….Action!

PAFIA Lobbyist Update for March 2021

On February 3, Pennsylvania Governor Tom Wolf delivered his 2021-2022 state budget address virtually. The $37.8 billion proposal contains a sizeable increase in the state’s personal income tax (PIT) and a substantial increase in education spending. This year’s general fund budget is $33.1 billion. The Governor’s proposal is an increase of $3.78 billion, or 11.1% over the prior year. The Governor is proposing to raise the PIT from 3.07% to 4.49% starting July 1, the first increase since 2003. The increase would raise more than $3 billion annually, a 20 percent increase when compared to 2019 tax data. $1.3 billion raised from a higher income tax would go to basic education funding, boosting that total to about $8.1 billion. Special education would be increased by $200 million to a total of $1.4 billion. The new revenue will also be used to address the multi-billion dollar deficit in the state budget. The Governor’s proposal would result in a tax hike for 60 percent of Pennsylvania taxpayers. Residents with incomes at or below $15,000 for single filers; $30,000 for married filers; and $10,000 allowance for each dependent – will receive total 100% personal income tax forgiveness.

In addition, the Governor is proposing to reduce the 9.99% corporate net income tax to 9.49 percent on January 1, 2022, then continue to reduce the tax incrementally to 6.49 percent by 2026. The governor is also proposing to shift to combined reporting to tax corporations as a single entity. Like several previous budgets, the governor is again calling for a severance tax on natural gas drillers. Currently, Pennsylvania imposes an impact fee that is assessed on each drill site. According to the state’s Independent Fiscal Office, the 2020 impact fees equaled an effective tax rate of 3.3%.

The Commonwealth continues to deal with the COVID-19 challenges with vaccine rollout and case count statewide holding steady. On February 9^th, Governor Wolf announced the creation of a joint task force aimed at improving the state’s vaccine rollout, including Republican and Democratic members of the General Assembly. Senators Ryan Aument (R-Lancaster) and Art Haywood (D-Philadelphia) and Representatives Tim O’Neal (R-Washington) and Bridget Kosierowski (D-Lackawanna). The task force will share vaccine information and communicate solutions on behalf of and to the broader General Assembly. Pennsylvania’s vaccine rollout has been the focus of multiple hearings last week in the state legislature. Through February 22, vaccine providers have administered 2,034,123 doses of vaccine. 1,474,479 million Pennsylvians have received their first does and 559,644 people have received both doses and are now fully vaccinated.

Budget hearings in Harrisburg have started. The state House Appropriations Committee held the first of several hearings to discuss Governor Tom Wolf’s budget proposal. Of note: (1) The Department of Revenue was questioned about the Governor’s proposal to increase the state personal income tax. (2) The Department of Environmental Protection was questioned about the Governor’s proposal to join the multi-state Regional Greenhouse Gas Initiative. (3) The Department of Community and Economic Development answered questions regarding the business shuts downs last year due to the Covid pandemic and the mitigation measures still in place today. The full schedule of House hearings can be found here. The state Senate Appropriations Committee will begin its budget hearings on Monday, March 8^th. The full schedule of Senate hearings can be found here.

Film Caucus Update

There are currently 24 members of the Film Caucus.  Additional outreach to encourage more members of the House and Senate to sign up is currently taking place. Senators Camera Bartolotta and Jay Costa and Representatives Kathleen Tomlinson and Joe Ceresi are leading the caucus this session.

A listing of the current membership is below:

Representatives: Daley, Tina Davis, Howard, Longietti, Malagari, Matzie, Merski, Mizgorski, Mullins, Pisciottano, Sanchez, Silvis, Sturla and Webster.

Senators: Collett, Fontana, Kane, Santarsiero, Stefano, and Lindsey Williams.

The 2021-22 legislative session is officially underway in Harrisburg. Legislative committees have been assigned, bills are being introduced, and floor votes are being taken.

Legislative Update

The state Senate voted on COVID-relief legislation (SB 109) to provide $912 million in housing, rental, education and business assistance to Pennsylvanians impacted by COVID-19 pandemic. The majority of the federal funding – $570 million will go to rental and utility assistance. Money will be allocated proportionally to all 67 counties. In addition, some $200 million will go toward education, with $150.023 million in funding for non-public schools and $47.075 million for Pennsylvania’s discretionary allocation which includes $17.5 million for career and technical centers and $17.5 million dedicated to intermediate units. The measure also creates a Hospitality Industry Recovery Program for grants to hotels, restaurants, and bars. Certified local economic development agencies will be responsible for administering the program.

The state Senate also passed a constitutional amendment to limit gubernatorial disaster emergency powers. Senate Bill 2 states that emergency disaster declarations by the governor would last no more than 21 days. In addition, the declaration can be extended by the governor for additional 21-day periods, but only with the approval by the General Assembly of a concurrent resolution to do so.

If approved by the House, the proposal would go to Pennsylvania voters in the form of a ballot referendum question during the state’s May primary.

Legislation (HB 38) that would establish appellate court voting districts within the Pennsylvania Constitution, may be considered by the state House in early February. The measure would divide the state into nine Commonwealth Court districts, fifteen Superior Court districts, and seven Supreme Court districts, with candidates for those judgeships required to reside in the district they seek to represent on the court. Districts would be drawn with compact and contiguous geographic boundaries, and comporting with the federal Voting Rights Act of 1965. The same language was already approved by the General Assembly last session. A constitutional amendment must be approved by lawmakers during two consecutive two-year legislative sessions before it can be put to the voters as a ballot question.

Budget Update

In anticipation of his February 2^nd budget address to the Legislature, Governor Wolf outlined his legislative priorities for the session. While highlighting past bipartisan successes on criminal justice reform, medical marijuana, and mail-in ballots, Wolf said he wanted to begin negotiating anew with the Republican-controlled General Assembly to lower barriers for Pennsylvanians in need of assistance amid the COVID-19 pandemic. He expressed his desire to increase the state’s minimum wage, pass a severance tax, and the authorize adult-use recreational marijuana. In response to the Governor’s press conference, House Majority Leader Kerry Benninghoff and Senate Majority Leader Kim Ward released statements expressing frustration that the Governor was not focusing getting Pennsylvanians vaccinated.

State Senator Appropriations Committee Chair Pat Browne (R-Lehigh) has delayed budget hearings this winter. The Senate is now scheduled to be in session Feb. 22, 23 and 24, dates that in previous years were used for budget hearings. A revised budget hearing scheduled will be released within the next two weeks.

House Appropriations Committee Majority Chairman Stan Saylor (R-York) said he will conduct hearings as originally planned the weeks of Feb. 16^th, 22^nd, and March 1^st. A detailed schedule will be released shortly.

Film Update

On January 21, the four chairs of the film caucus circulated a memo inviting members of the 2021-22 legislative session to join. Senators Camera Bartolotta and Jay Costa and Representatives Kathleen Tomlinson and Joe Ciresi will lead the caucus this session.

The intent of the Legislative Film Caucus is to:

• Support research and analysis of the role that Pennsylvania’s film industry plays in economic development, job creation and revenue enhancement.
• Promote avenues of growth for this industry in Pennsylvania, ultimately leading to better economic outcomes for the state, local governments and the industry as a whole.
• Seek to optimize Pennsylvania’s incentive structure to promote growth in production, wages and downstream activity.

We will share the names of the caucus members in a later legislative update once members have more time to join the caucus.

On January 27, Senator Wayne Fontana (D-Allegheny) introduced SB 133. The bill uncaps the film tax credit to further incentivize the TV and film industry to relocate in Pennsylvania. The bill was referred to the Senate Finance Committee. Co-sponsors of SB 133 include Senators Sharif Street, Maria Collett, Vincent Hughes, Steve Santersiero, Mario Scavello, Camera Bartolotta, Tim Kearney, Amanda Cappelletti and Jay Costa.

Happy September,  I hope that this update finds you with memories of a healthy and enjoyable summer. A summer that was certainly unlike no other, attempting to make lemonade from the daily bag of lemons that COVID was delivering to us all. As of the beginning of September, more than 133,000 Pennsylvanians have been infected with COVID-19, with unfortunately more than 7,000 passing away. Businesses, school districts, state & local governments, and everyone in between are trying to deal with this new reality, along with anticipating what might come when flu season arrives in November and December. The country has people that have directly experienced COVID and are petrified of getting sick, and others feel this is just another illness that mostly affects those who are in poor health.

On August 31, Governor Tom Wolf renewed the state’s disaster declaration for the Covid-19 pandemic for another 90 days on Monday. “As we approach the six-month mark of this crisis, I continue to be amazed at the resiliency and strength shown by Pennsylvanians during this pandemic,” Wolf said in a statement. “We are going to continue to combat the health and economic effects of COVID-19, and the renewal of my disaster declaration will provide us with resources and support needed for this effort.” The declaration also comes at a time when the Pennsylvania House returns to voting session with a renewed effort to try to stop the Governor’s emergency powers by overriding Wolf’s veto of a previous bill that would allow the Legislature to force the governor end the disaster declaration. PennLive has more.

In a press release recently issued by Revenue Secretary Dan Hassell, Pennsylvania collected $2.5 billion in General Fund revenue in August, which was 8.9% more than expected. The Department of Revenue estimated the majority of revenue collected in August can be attributed to extending the due date to August 14 for corporations that had annual corporate net income tax payments due in April, May, June or July. Penn Live has more.

Expectations are the state budget deficit will be approximately $5 billion and many state lawmakers are hoping that federal funds will be made available to plug some or all of that gap. Depending on what financial relief comes from Washington,  that will determine how much in additional revenue will need to be generated or identified. Some options for new revenue being proposed includes adult use marijuana, and the Governor has recently called on legislators to legalize as a way to boost the economic recovery.

In other news, and in response to Covid-19, PennDOT is extending expiration dates for certain products including commercial driver licenses, learner’s permits and Hazardous Materials Endorsements. The extension for non-commercial driver licenses, photo identification cards, and camera cards ended Monday. Triblive.com has more. Governor Wolf today also recently announced his support for mandating a paid sick leave program for all PA workers, saying it can help workers avoid coming in sick and spreading diseases as well as reduce costs associated with employee turnover and absence. Democratic lawmakers acknowledged the difficulty they will face passing the legislation in the Republican-majority legislature. For more please see the Governor’s press release.

Over the last few weeks, Governor Wolf and the PA Legislature have been focused on COVID-19 related legislation. The initial bi-partisan work accomplished at the beginning of the state’s health emergency order has transitioned to partisan positions on the appropriate way to re-open the Commonwealth. Governor Wolf and the Democratic Caucuses of the House and Senate want to take a more cautious county-by-county approach to ensure there is appropriate testing and contract tracing capabilities while the House and Senate Republican Caucuses are pushing for individual industries to be re-opened regardless of geographical locations.

Governor Wolf’s May 1^st announcement that 24 counties in the northwest and north-central regions of the state can begin to re-open on May 8^th has shifted the focus to establishing what the Commonwealth’s “new normal” will be. As other parts of the state await word on when their counties will turn from red to yellow, the reality of the Commonwealth’s budget deficit is setting in.

The Independent Fiscal Office issued a report in early April stating that the coronavirus could cost Pennsylvania upwards of $2.7 billion in lost tax revenue over the next 15 months. That was the best case scenario, assuming that businesses can reopen by April 27 (which they did not). If the statewide shutdown remains in place for another six weeks, the IFO estimates the state would be facing a financial hit of $3.7 billion in lost revenues. The IFO’s report represents the first attempt to put a number to the financial toll the outbreak will take on the state’s finances. But, with so much uncertainty, the fiscal office acknowledges that its forecasts come with caveats and will likely need to be revised later in the year.

The Commonwealth’s April 2020 revenue collections were $2.16 billion (or 49.7%) below estimates according to PA Department of Revenue. Fiscal year-to-date General Fund collections total $27.5 billion which is $2.2 billion (or 7.4%) below estimate. The department estimates that approximately $1.7 billion of the $2.2 billion shortfall in April can be attributed to moving due dates for various taxes. It is expected the majority of the $1.7 billion will be made up when those tax payments occur in the next fiscal year. The additional $395.3 million of the April shortfall is due to reduced economic activity during the pandemic.

So, “what does all this mean?” It means there will be a lot of difficult decisions to be made when the Legislature and Governor negotiate the FY 20-21 budget. The most common thinking right now is that a short-term budget will be passed before the June 30^th deadline that will provide for funding until sometime in the Fall of 2020. This plan would allow for tax revenues to be collected over the summer with their new, pushed back due dates. Then, a new budget would need to be negotiated in the Fall/early Winter to ensure funding for the remaining of the Commonwealth’s fiscal year.

The House and Senate have been holding remote session (via zoom and proxy voting) and will continue to do so for the foreseeable future. Budget negotiations will begin in earnest very soon but at this time it is not known if a budget can be passed before the June 2^nd primary election (visit www.votespa.com to sign up for a mail-in ballot).

2020 has been rather interesting so far politically.

The top two Republicans in the state – Senate President Joe Scarnati and Speaker of the House Mike Turzai – both have announced they will NOT be seeking re-election. Those announcements have left many to wonder “why?” Why now? Is there a coincidence that both are leaving at the same time? Is it an indication that the writing is on the wall and a big Blue wave is on the horizon? Maybe. But I doubt it. Senator Scarnati has been very interested in returning to private business and enjoying life after Harrisburg. Speaker Turzai is rumored to have a new opportunity in the private sector that will require less travel away from his family, and that is very appealing to him as well. The departure of both Leaders will create tremendous opportunities for others within the ranks to move up.

So, that leads to the obvious questions: who will assume those roles and what impacts will there be on those caucuses. Assuming that the House and Senate both stay in Republican control, the second highest ranking members – Senate Majority Leader Jake Corman and House Majority Leader Bryan Cutler – are both the most likely options to ascend to the tops spots. The other possibilities would be: Senate Majority Appropriations Chair Pat Browne and Majority Whip John Gordner, and on the House side it may be House Majority Whip Kerry Benninghoff and Majority Appropriations Chair Stan Saylor. And as any of those members vacate their current leadership roles, others will jockey into those empty positions. The remainder of the year will be full of rumors, retirements, and losses I am sure.

What does all of that mean for the political characteristics of each chamber? I don’t see the Senate changing much with any of the members I previously identified. The House will likely become a bit less conservative with Mike Turzai leaving. That could mean more spending as a possibility. I stress COULD.

PAFIA, with the help and Support of Senators Camera Bartolotta & Costa, as well as Representatives Millard & Donatucci are forming the Film Caucus. PAFIA leadership will work diligently to get members to join the caucus and show their support of the film industry.

Briefly, on the budget side, the House and Senate are currently in the process of budget hearings and will return to session March 16^th and commence the process to a June 30^th budget deadline. With a primary election date of Tuesday, April 28^th, I expect a pretty quiet spring legislatively.

Yours in film,

Jim

2019…. A look back
In June of 2019, the state increased the film tax credit allocation nearly 10%, raising the annual cap to $70 million. On June 4th, PAFIA, along with QVC, the Motion Picture Association of America (MPAA), and our friends at the Pittsburgh and Philadelphia Film Offices, hosted a legislative reception in the Capitol. More than 50 elected officials attended, including the Senate Majority Leader Jake Corman. The event was co-hosted by Senators Camera Bartolotta and Tom Killion, along with Representatives Tim Briggs and Steve Barrar, who helped to make the event a great success. PAFIA looks forward to making this event bigger and better in 2020.

On October 31st, the House Democratic Policy Committee hosted a Film Tax Credit hearing at the Museum of the American Revolution in Philadelphia. Philadelphia Representatives Maria Donatucci and Joe Ciresi were the local “hosts” of the hearing. Past PAFIA Board Member Mike McCann was part of a panel during the hearing. PAFIA advocated for an increase to the annual allocation, which would provide for more certainty and predictability. The House Democratic members who attended were very enthusiastic about increasing the cap.

In addition, Mike McCann, M. Night Shyamalan provided testimony and spoke to how the decisions are being made about filming locations. He shared information about programs in Georgia and other states. Carrie Lepore from the Pennsylvania Film Office, the Motion Picture Association of America, and others testified in favor of the credit and the economic benefits to the state and local communities where productions are shot.

As we wrap up 2019, PAFIA would like to thank all the members of the association for your support. Those of you who are actively engaged can attest that PAFIA is making a difference in Harrisburg, as well as back home in the legislative districts. If you are involved, stay involved. If you are thinking about getting involved, PLEASE GET INVOLVED.

2020…. Looking Ahead
As the Legislature returns to session in January, PAFIA looks forward to building off of all the great things we did in 2019.

The Governor will provide his annual budget address on Tuesday, February 4th. Following the Governor’s Budget Address, the House and Senate will host 5 weeks of hearings on what the Governor has proposed. PAFIA will be advocating and monitoring all aspects of the process, but especially when the Department of Community and Economic Development and the Film Office testifies about the benefits of the film industry in the Commonwealth.

PAFIA will be ready to advocate and fight for a SIGNIFICANT increase to the program in 2020!

PAFIA wishes everyone a happy, healthy, and prosperous new year.

On Thursday, October 31, the House Democratic Policy Committee hosted a hearing on the Film Tax Credit at the Museum of the American Revolution in Philadelphia. Philadelphia Representative Maria Donatucci and Joe Ciresi were the local “hosts” of the hearing.

The Pennsylvania Film Industry Association (PAFIA) was invited to testify, and PAFIA’s very own Mike McCann was part of a panel. M. Night Shyamalan also provided testimony and spoke to how the decisions are being made about filming locations. He shared information about programs in Georgia and other states.

Mike McCann was fantastic and the hearing went well. Mike advocated for more certainty and predictability, which an increase to the annual allocation to the program would provide.  The House Democratic members who attended were very enthusiastic about increasing the cap.

The following House members attended:

Rep. Maria Donatucci
Rep. Joe Ciresi
Rep. Mike Sturla
Rep. Tim Briggs
Rep. Mark Longietti
Rep. Dan Williams
Rep. Steve McCarter
Rep. Movita Johnson-Harrell
Rep. Margo Davidson
Rep. Mary Jo Daley
Rep. Steve Malagari
Rep. Kristine Howard
Rep. Mike Driscoll

In addition to M. Night and Mike McCann, Carrie Lepore from the Pennsylvania Film Office, the Motion Picture Association of America, and others testified in favor of the credit and the economic benefits to the state and local communities where productions are shot.

The House and Senate returned to Harrisburg on Monday, November 18^th for the week. Both chambers are then scheduled to reconvene in December. The House and Senate have not been in session very much this Fall, so things have been fairly quiet.

Greetings PAFIA members, I hope this message finds you all well and busy with work this Fall.

The House and Senate returned to Harrisburg last week after summer recess. The House and Senate will return to session October 2. The House will be in session for 6 days in October, 6 days in November, and 6 days in December. The Senate, as of now, is scheduled to be in session 6 days in October, 3 days in November, and 3 days in December.

This fall, the legislature is expected to take up criminal justice reform, statute of limitations (Catholic Church scandal),  and possibly gun violence measures. It will likely be a quiet Fall.

On October 31, the House Democratic Policy Committee will host a policy hearing in Philadelphia on the film tax credit program. PAFIA will be testifying. If possible, please put this event on your schedule and try to attend to show your support.

Additional Information:
Thursday, October 31 at 10 a.m. at the Museum of the American Revolution, 101 South 3rd Street, Philadelphia, PA 19106