By: Jamie Inferrera
January 6, 2015, marked the beginning of a new legislative session of the Pennsylvania General Assembly. While both chambers of the General Assembly remain in Republican control, after November’s election, Pennsylvanians elected Tom Wolf, a democrat from York County, as the Commonwealth’s chief executive. A bumpy and windy road lies ahead for any legislation looking to make its way to the Governor’s desk.
Let’s take a look at three proposals that are likely to gain some attention during the new two-year legislative session:
Liquor privatization – free the booze!
This issue has been in the forefront of discussion for at least the past four years. Supporters were hopeful to see the end of Pennsylvania’s liquor monopoly during the Corbett administration, when Republicans had control over both chambers of the General Assembly and the Governor’s office. Supporters ended 2014 empty handed; those of us looking to purchase alcohol after 9 p.m. on a Saturday can relate to that feeling.
However, almost three months into the new legislative session and the liquor bill is on the move again. It has been reintroduced as House Bill 466, sponsored by Speaker of the House Mike Turzai (R-Allegheny). This legislation would create 200 wine and spirit retailer licenses, which would be available to existing beer distributors first. The legislation also creates a grocery store liquor license, which provides that license holders could sell up to 12 bottles of wine in a single transaction. According to the co-sponsorship memo for the legislation[i], the Commonwealth will realize approximately $500 million in revenue from the privatizing of the wholesale wine and spirits business.
Many Democrat legislators and the Governor openly oppose the privatization efforts. Some Democrats, including Democratic Chairman of the House Control Liquor Committee Representative Paul Costa (D-Allegheny), would prefer to see the liquor system “modernized” versus “privatized.” Modernization would include making stores more “consumer friendly” and providing a wider variety to customers, according to Costa.[ii] The Pennsylvania AFL-CIO also opposes the legislation, fearing that over 5,000 jobs would be eliminated.[iii] Governor Wolf has indicated that he would veto a liquor privatization bill if one hits his desk. He, too, favors modernization over privatization, including expanded Sunday hours and the increased presence of liquor stores inside existing supermarkets.[iv]
The bill was voted out of the House Liquor Control Committee on February 23 along a straight party line vote of 15-10. Its next stop is consideration by the full House of Representatives, which at the time this article was written, the House was currently holding floor debate on the legislation.
Severance tax – drill, baby, drill
Governor Wolf campaigned hard on enacting a severance tax to help fund public education. However, imposing this tax is not as easy as it may sound. Perhaps surprisingly, the severance tax is a bipartisan undertaking. A proposal is planned to be introduced by Representatives Gene DiGirolamo (R-Bucks), Pamela DeLisso (D- Montgomery/Philadelphia), Thomas Murt (R-Montgomery/Philadelphia), and Harry Readshaw (D-Allegheny). This bipartisan plan would create a 3.2 percent severance tax to help fund basic education, pensions, human services, and environmental programs. The severance tax would be in addition to the impact fee enacted through Act 13 of 2012.[v]
Governor Wolf is calling for a five percent severance tax on the value of gas at the wellhead and 4.7 cents per thousand cubic feet of gas extracted. His plan, called the Pennsylvania Education Reinvestment Act, is said to be based off of a model used in West Virginia. It’s expected to generate approximately $1 billion in its first full year, with the majority of the revenues going towards education funding.[vi]
Any legislation calling for a tax increase is going to be a tough sell in the General Assembly. Legislators within both parties who represent areas with natural gas drilling may be hesitant to vote for legislation to add another tax on the industry. Further, there is a contingent of legislators who generally oppose any and all tax increases.
According to the National Conference of State Legislatures, 36 states impose some type of severance tax and 31 states specifically levy taxes on the extraction of oil and gas.[vii] As expected, the natural gas industry generally opposes the concept of a severance tax in Pennsylvania.
Medical marijuana – the cannabis conundrum
Towards the second half of the last legislative session, the issue of regulating medical marijuana use in Pennsylvania was really heating up. In fact, during the last session, the Compassionate Use of Medical Cannabis Act (Senate Bill 1182), sponsored by Senator Mike Folmer (R-Lebanon/Dauphin/York), passed the state Senate by a vote of 43-7. The legislation was never voted out of the House Judiciary Committee before the conclusion of the session.
This session, the legislation has been reintroduced as Senate Bill 3. Specifically, the legislation would allow patients, upon recommendation from their doctor, to purchased medical cannabis from centers licensed by the State Board of Medical Cannabis Licensing (an entity also created by this legislation). The legislation calls for licensing fees of $50,000 for growers, processors, and distributors, as well as access card application fee of $100 and a $50 annual renewal fee.[viii]
Supporters of the legislation claim that those suffering from epilepsy, cancer, glaucoma, and other medical conditions could greatly benefit from the use of medical cannabis. However, the Pennsylvania Medical Society is skeptical the use of medical marijuana in Pennsylvania will be the “home run” that parents of children with epilepsy may be looking for.[ix]
Further, this legislation proposes a conundrum for some Pennsylvania legislators. The federal government classifies marijuana as Schedule I substance under the Controlled Substances Act. Schedule I substances are considered “to have a high potential for dependency and no accepted medical use, making distribution of marijuana a federal offense,” according to the National Conference of State Legislatures (NCSL).[x] With the successful passage of Senate Bill 3, Pennsylvania would essentially assert its 10th Amendment right and nullify the federal Schedule I guidelines. Legislators who strongly support “states’ rights” initiatives should appreciate this statement. However, some of those same legislators may also hold social viewpoints generally in opposition to marijuana usage. Senator Folmer has seemed to move past this philosophical conundrum and it will be interesting to see where the votes end up for this legislation.
According to the NCSL, 23 states and the District of Columbia have polices regulating the use of medical marijuana.[xi] The legislation has been referred to the Senate State Government Committee, of which Representative Folmer serves as majority chairman.
Over 3,000 pieces of legislation are typically introduced during a legislative session. A fraction of those ideas make it the Governor’s desk to be signed into law. Will these proposals have what it takes to propel through the legislative process? Only time will tell.
[i] Co-sponsorship memo for House Bill 466: http://www.legis.state.pa.us//cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20150&cosponId=16812
[ii] Times Herald: http://www.timesherald.com/general-news/20150224/pennsylvania-state-house-poised-to-vote-on-liquor-privatization-legislation
[iii] AFL-CIO: http://www.paaflcio.org/?page_id=175
[iv] Penn Live: http://www.pennlive.com/politics/index.ssf/2015/02/liquor_privatization_passes_ho.html
[v] Co-sponsorship memo for bi-partisan severance tax: http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20150&cosponId=17062
[vi] Pittsburgh Tribune-Review: http://triblive.com/business/headlines/7755992-74/wolf-gas-drilling#axzz3SgSeEfXD
[vii] NCSL: http://www.ncsl.org/research/energy/oil-and-gas-severance-taxes.aspx
[viii] Co-sponsorship memo for Senate Bill 3: http://www.legis.state.pa.us//cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20150&cosponId=15539
[ix] York Daily Record: http://www.ydr.com/letters/ci_27427297/pennsylvania-medical-society-be-wary-medical-marijuana-legislation
[x] NCSL: http://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx
[xi] Id.
