General Fund revenues surged in April, exceeding the official estimate for the month by $464.7 million, or 11.8 percent. Through 10 months of the fiscal year, revenues are now $828.2 million more than expected, or 2.9 percent; a major increase from March. Almost all tax types performed well this past month, with the real story coming from the personal income tax. Many taxpayers file their final payments in April, and these remittances exceeded the estimate by $328.5 million or 34.0 percent. One possible explanation is that taxpayers paid less than normal with their quarterly estimated payments in December and January, but made up the difference with the final payments in April. This shift is a significant change from usual patterns, but federal tax changes have affected normal taxpayer behavior.

In addition to the personal income tax, the other two largest tax categories had strong months. The corporate net income tax finished $76.1 million above estimate, or 31.1 percent – also driven by strong final payments. The sales tax saw collections $43.2 million above estimate, or 4.6 percent.

Looking ahead, May is a much smaller revenue month compared to March and April. The Independent Fiscal Office will issue a new revenue estimate for 2019/20 later in the month.

According the Senate Republican Leaders, “PA revenue collections have soared to a healthy surplus, thanks in part to Republican economic policies that have focused on holding down spending and rejecting proposed tax increases, according to Senate Republican leaders.” Senate President Pro Tempore Joe Scarnati (R-25), Senate Majority Leader Jake Corman (R-34) and Senate Appropriations Committee Chairman Pat Browne (R-16) said Republicans’ commitment to fiscal restraint, rather than supporting massive spending increases and higher taxes proposed by the governor, has improved Pennsylvania’s financial position and kept more money in taxpayers’ pockets.” 

That all said, any appetite by leaders to take this strong financial position and re-invest in tax credits programs like the film tax program, is undecided at this time. There is a strong push by many democrats to fund education more, both via capital improvements to facilities, but also putting more into the classroom. The Speaker of the House is seeking a significant increase in the Educational Improvement Tax Credit (EITC) allocation.

PAFIA will continue to advocate – arm in arm with the Pittsburgh and Philadelphia Film Offices – to increase the film tax credit, supporting the industry that continues to grow throughout the state.

While the temperatures outside are dropping, things are starting to heat up with the new session.

On Tuesday, January 15th, the Governor and Lieutenant Governor were each sworn in, which marks the beginning of a 4 year term for the new Lieutenant Governor and a second term for Governor Wolf. THe Inaugural party was held that evening at the Farm Show, and thousands of supporters enjoyed the party.

House and Senate leaders have announced Committee Chairmen and are starting to announce members of the committees. The House and Senate will be in session January 28-30, then again February 4-6, with the Governor providing his annual budget address on Tuesday, February 5th. The House and Senate will adjourn for more than a month for Appropriations Hearings. The House returns on March 11th and the Senate on March 18th.

On January 24th, the House and Senate hosted a joint hearing with the Performance Based Budget Board, where the Independent Fiscal Office presented its findings on three tax credit programs, including the film tax credit.

The IFO report provided the following recommendations:

• Policymakers need to establish explicit goals and objectives. A moderate tax credit can incentivize mobile productions to film in the state, but a much larger credit is necessary to attract long-term investment.
• The tax credit should be targeted more towards workers who reside in the state. That will increase the multiplier effect of the tax credit and the economic impact.
• The credit should be made refundable. The fees and discounts charged by third parties represent leakage and do not contribute to the economic output of the industry.
• Policymakers should consider different allocation pools for television and film productions. A separate allocation pool might also be used for small, independent productions.
• A temporary higher credit could be offered to television productions that relocate to the state.

Please share any questions or concerns with PAFIA at info@pafia.org

Happy December PAFIA members! I hope your holiday season will be full of joy and happiness.

Speaking of joy and happiness, 2018 was a productive year for advocacy of the Film Tax Credit (FTC) in Pennsylvania. Legislators from both sides of the aisle supported the program during the 2017/2018 annual budget process, voting overwhelmingly to fund the FTC at $65 million. Support from the General Assembly and the Wolf Administration is due in large part to the industry's growth and success, and the advocacy from PAFIA and its members.

As we bask in the success of 2018, we must quickly look towards 2019 and the 2019/2020 budget. The Governor is scheduled to give his budget address on Tuesday, February 5th at noon. It is yet to be seen what the revenues are for the year versus what was projected. There is optimism that the tax cuts at the Federal level will have generated more individual and business incomes (which means more income tax collected), as well as more revenue from increased spending (sales tax collections). However, there are concerns that growing pension and Medicaid costs will offset some of those gains and require either cuts or a proposal to find revenues elsewhere (i.e. new or increased taxes).

That all said, PAFIA will need your support as we continue to advocate with legislators and the Wolf Administration. As the result of retirements and election losses, there will be 45 new Senators and Representatives....45!!!! That means a significant amount of those 45 men and women don't know much or anything about the film industry or the film tax credit. It will be the job of PAFIA membership to share YOUR stories about what the film industry means to you and/or your family.

Please have a safe holiday season and best wishes for a healthy and prosperous new year. PAFIA looks forward to continued growth in 2019!

 The Fall legislative session was very quiet with only 10 session days, as legislators returned to their districts to campaign.

On Tuesday, November 6, Governor Wolf easily won re-election, garnering almost 58% of the vote and defeating former Senator, Scott Wagner. The Governor's running mate, Braddock Mayor, John Fetterman, will be the Lieutenant Governor after defeating incumbent Lt. Governor, Mike Stack, in the primary.

Here is some information about the numbers:

• Leading up to the election, 31 Senators and Representatives announced they would not be seeking re-election.
  
• In the primary, 4 incumbents lost - 1 Republican Senator from Allegheny County and 3 Democrat Representatives.
  
• In the general election on November 6, 10 incumbents lost, including 2 Republican Senators and 8 Representatives (7 Rs and 1D).
  
• Democrats in the Senate have gained 5 seats, bringing the makeup of the Senate to 29R - 21D
  
• Democrats in the House have gained 11 seats, bringing the makeup of the House to 108R - 95D
  
• Democrats won 13 seats previously held by Republicans, and Republicans won 2 seats previously held by Democrats (net 11 seat gain)
  

Finally, the makeup of Pennsylvania Representatives in Congress changed as well and now reflects an even split of 9Rs and 9Ds.

Click here for the write-up for further information on the election.

Pennsylvania
2018 General Election Results

Governor

Democratic Governor Tom Wolf easily won re-election to a second a term in office by defeating Republican challenger Scott Wagner by a 58-41 margin. Pennsylvania will have a new lieutenant governor, the current Mayor of Braddock, John Fetterman.

United States Senate

Incumbent Democratic Senator Bob Casey won a third term in the United States Senate by beating Republican Congressman Lou Barletta by a 56-43 margin.

United States Congress

Democrats took control of the U.S. House of Representatives. In Pennsylvania, five Congressional seats flipped party control from Republican to Democrat. Below is a breakdown of the Commonwealth’s 18 Congressional races:

• 1st Congressional District: Incumbent Republican Brian Fitzpatrick edged out Democrat challenger Scott Wallace by just over 2 points.
• 2nd Congressional District: Incumbent Democrat Brendan Boyle won handily over Republican challenger David Torres 79-21.
• 3rd Congressional District: Incumbent Democrat Dwight Evans easily defeated Republican challenger Bryan Leib by a 93-7 margin.
• 4th Congressional District: In an open seat, Democrat Madeleine Dean won convincingly against Republican candidate Daniel David a 63-37.
• 5th Congressional District: This was an open seat. Democrat Mary Gay Scanlon beat out Republican Pearl Kim.
• 6th Congressional District: Democrat Chrissy Houlahan beat Republican Greg McCauley in this open seat formerly held by Republican Ryan Costello.
• 7th Congressional District: Democrat Susan Ellis Wild defeated against Republican Marty Nothstei by double digits to take this open seat formerly held by Republican Pat Meehan who retired.
• 8th Congressional District: Incumbent Democrat Representative Matt Cartwright held off a challenge from Republican John Chrin 55-45.
• 9th Congressional District: This was an open seat formerly held by Republican Lou Barletta who ran for the United States Senate. Republican Dan Meuser (former Pennsylvania Secretary of Revenue) defeated Democratic challenger Dennis Wolff by nearly 20 points.
• 10th Congressional District: Incumbent Republican Scott Perry held off Democratic challenger George Scott to win by 2 points.
• 11th Congressional District: Incumbent Republican Lloyd Smucker handily defeated Democratic challenger Jess King by a nearly 60-40 margin.
• 12th Congressional District: Incumbent Republican Tom Marino garnered over 66% of the vote in beating Democrat Mark Friedenberg.
• 13th Congressional District: In this open seat, Republican candidate John Joyce beat out Democratic candidate Brent Ottaway by a 70-30 margin.
• 14th Congressional District: In another open seat, Republican and State Senator Guy Reschenthaler defeated Democratic Bibiana Boerio by 16 points.
• 15th Congressional District: Incumbent Republican Glenn Thompson cruised to victory against Democratic challenger Susan Boser, 68-32.
• 16th Congressional District: Incumbent Mike Kelly narrowly outpaced Democratic challenger Ronald Dinicola by five points.
• 17th Congressional District: This race was between two incumbents as a result of redistricting. Democrat Connor Lamb defeated Republican Cong. Keith Rothfus by a 56-44 margin.
• 18th Congressional District: Democratic candidate Michael Doyle ran unopposed.

Pennsylvania Senate

Republicans will retain control of the Pennsylvania Senate, but Democrats gained 5 seats, mostly in southeastern Pennsylvania. The Senate majority now stands at

• 10th Senatorial District: In an open seat currently held by retiring Republican Chuck McIlhinney, Democrat Steven Santarsiero defeated State Representative Margarite Quinn by a 53-48 margin.
• 12th Senatorial District: Republican candidate Stewart Greenleaf, Jr lost his bid to replace his father in this open seat, getting defeated by Democratic candidate Maria Collett.
• 26th Senatorial District: Democrat Tim Kearney won in an upset over incumbent Republican Tom McGarrigle 8 points.
• 38th Senatorial District: Democratic candidate Lindsey Williams outpaced Republican Jeremy Shaffer by less than 1 percentage point in this Allegheny County seat. This was the seat formerly held by Republican Randy Vulakovich, who was defeated by Shaffer in the May primary election.
• 44th Senatorial District: In a surprise victory, Incumbent Republican John Rafferty lost to Democratic challenger Katie Muth by a margin of 52-48.

Pennsylvania House of Representatives

Democrats picked up thirteen seats in the Pennsylvania House of Representatives, closing the Republican majority to a 108-95 margin. Notably, ten Republican incumbents were defeated by Democrat challengers.

• 53rd House District: In a race to replace retiring Republican Bob Godshall in Montgomery County, Democratic Steve Malagari upended Republican George Szekely.
• 61st House District: Republican Kate Harper, an eight-term incumbent, lost to Democratic challenger Laura Hanbidge by 8 points.
• 71st House District: Incumbent Democrat Bryan Barbin was defeated by Republican challenger James Rigby 52-48.
• 74th House District: In an open seat vacated by retiring Republican Harry Lewis, Democratic candidate Dan Williams handily defeated Republican Amber Little-Turner by a 62-38 margin.
• 76th House District: Democratic candidate Mike Hanna Jr., who was trying to win the seat left open by his father’s retirement, lost to Republican candidate Stephanie Borowicz 54-46.
• 146th House District: Incumbent Republican Tom Quigley lost to Democratic challenger Joseph Ciresi 56-45.
• 150th House District: Democrat Joe Webster defeated Republican Nick Fountain by a 56-44 margin in this open seat previously held by Republican Mike Corr.
• 155th House District: Democratic challenger Danielle Otten handily defeated Republican incumbent Becky Corbin by a 55-45 margin.
• 157th House District: Incumbent Republican Warren Kampf has always faced strong challenges in this seat. He lost to Democratic challenger Melissa Shusterman by a margin of 54-47.
• 158th House District: Freshman incumbent Republican Eric Roe was defeated by Democratic challenger Christina Sappey 53-47.
• 163rd House District: Two-term incumbent Republican Jamie Santora lost to Democratic challenger Michael Zabel 53-47. This is the first time in 40 years this seat will be held by a Democrat.
• 165th House District: Incumbent Republican Alex Charlton was narrowly defeated by Democratic challenger Jennifer O’Mara 52-48.
• 167th House District: Incumbent Republican Duane Milne lost to Democratic challenger Kristine Howard.
• 178th House District: Incumbent Democrat Helen Tai lost to Republican challenger Wendi Thomas. Tai previously defeated Thomas in a May special election.

For the first time in a long time, Pennsylvania has an on-time budget. Well in advance of the June 30 deadline, lawmakers and the Wolf administration announced that they had reached agreement on a $32.7 billion budget for the 2018-2019 fiscal year, which is $560 million more than the current year's spend total (a 2% increase).

The General Appropriations Bill, House Bill 2121, passed the House in a 188-10 vote last Wednesday and the Senate in a 47-2 vote on Friday. Late Friday evening the bill was signed by the Governor and reflects an increased amount of education funding; providing an additional $100 million for basic education, $20 million more for pre-K counts, $5 million more for Head Start, $15 million more for special education, $25 million more for the Educational Improvement Tax Credit Program, and a $30 million increase for the career and technical education appropriation in the Department of Education. The budget will also increase funding to the State System of Higher Education and state related universities by 3%. Another $70 million is dedicated toward school safety ($10 million of which will be allocated to an existing safe schools initiative), which became a priority for lawmakers this year following the mass school shootings in Florida and Texas. There is also more funding to help people with intellectual disabilities receive services and funding to help combat the state's opioid crisis by granting 800 more families access to evidence-based home visit services.

The film tax credit remained funded at $65 million. The good news is that an on-time budget means film tax credit applications for projects won't be delayed in being reviewed/approved due to budget delay.

The House and Senate are now adjourned for the summer, returning in September. Looking forward to next summer (2019), expectations are already being set for a late budget - well past June 30.

May 31 is here. June starts tomorrow. Place your annual state budget bets now: on time or late? Changes to the program or not? Your 30-day clock starts tomorrow. Good luck!

With the annual pilgrimage to state budget bliss begins, please pray for state revenues to exceed expectations resulting in a surplus. Notwithstanding that scenario, expect state budget spending to be slightly above the current year's $32 billion budget. As previously reported, the Governor proposed increasing the annual allocation to $32.9 billion, representing an increase of nearly $1 billion. During the days and weeks leading up to June 30th, PAFIA will be actively advocating for an increase in the annual film tax credit allocation. This continued outreach to various members of the General Assembly (House & Senate, Republican & Democrat) has been an integral part of PAFIA's government relations strategy and advocacy. It allows for PAFIA leadership to routinely be introduced to new members of the legislature, as well as outreach to elected officials who have been in office for years. PAFIA will be coordinating with many stakeholders, including the Philadelphia and Pittsburgh Film Offices, to increase to the $65 million film tax credit allocation.

PAFIA is very appreciative for the support that legislators and the Governor have for the program, but feel it is a very good time to invest further in the industry - bringing more films and shows to the Commonwealth and creating additional jobs throughout the state. Growth in the industry means more economic activity and investments in the communities where the shoots are taking place.

A brief May 15 primary election update: Four incumbents lost, with the most significant being the Democratic nomination for Lieutenant Governor. Mayor John Fetterman from Braddock beat current LG Mike Stack, who finished 4th in that race. Three incumbents from Western PA lost: Republican Senator Randy Vulakovich and House of Representative Democrats Paul Costa and Dom Costa. Three special elections were held for vacant House seats: a seat in Washington County (formerly held by Brandon Neuman) changed from Democrat to Republican, a seat in Bucks County (formerly held by Scott Petri) changed from Republican to Democrat, and a seat in Tioga County (formerly held by Matt Baker) stayed Republican.

May 31 is here. June starts tomorrow. Place your annual state budget bets now: on time or late? Changes to the program or not? Your 30-day clock starts tomorrow. Good luck!

With the annual pilgrimage to state budget bliss begins, please pray for state revenues to exceed expectations resulting in a surplus. Notwithstanding that scenario, expect state budget spending to be slightly above the current year's $32 billion budget. As previously reported, the Governor proposed increasing the annual allocation to $32.9 billion, representing an increase of nearly $1 billion. During the days and weeks leading up to June 30th, PAFIA will be actively advocating for an increase in the annual film tax credit allocation. This continued outreach to various members of the General Assembly (House & Senate, Republican & Democrat) has been an integral part of PAFIA's government relations strategy and advocacy. It allows for PAFIA leadership to routinely be introduced to new members of the legislature, as well as outreach to elected officials who have been in office for years. PAFIA will be coordinating with many stakeholders, including the Philadelphia and Pittsburgh Film Offices, to increase to the $65 million film tax credit allocation.

PAFIA is very appreciative for the support that legislators and the Governor have for the program, but feel it is a very good time to invest further in the industry - bringing more films and shows to the Commonwealth and creating additional jobs throughout the state. Growth in the industry means more economic activity and investments in the communities where the shoots are taking place.

A brief May 15 primary election update: Four incumbents lost, with the most significant being the Democratic nomination for Lieutenant Governor. Mayor John Fetterman from Braddock beat current LG Mike Stack, who finished 4th in that race. Three incumbents from Western PA lost: Republican Senator Randy Vulakovich and House of Representative Democrats Paul Costa and Dom Costa. Three special elections were held for vacant House seats: a seat in Washington County (formerly held by Brandon Neuman) changed from Democrat to Republican, a seat in Bucks County (formerly held by Scott Petri) changed from Republican to Democrat, and a seat in Tioga County (formerly held by Matt Baker) stayed Republican.

May 31 is here. June starts tomorrow. Place your annual state budget bets now: on time or late? Changes to the program or not? Your 30-day clock starts tomorrow. Good luck!

With the annual pilgrimage to state budget bliss begins, please pray for state revenues to exceed expectations resulting in a surplus. Notwithstanding that scenario, expect state budget spending to be slightly above the current year's $32 billion budget. As previously reported, the Governor proposed increasing the annual allocation to $32.9 billion, representing an increase of nearly $1 billion. During the days and weeks leading up to June 30th, PAFIA will be actively advocating for an increase in the annual film tax credit allocation. This continued outreach to various members of the General Assembly (House & Senate, Republican & Democrat) has been an integral part of PAFIA's government relations strategy and advocacy. It allows for PAFIA leadership to routinely be introduced to new members of the legislature, as well as outreach to elected officials who have been in office for years. PAFIA will be coordinating with many stakeholders, including the Philadelphia and Pittsburgh Film Offices, to increase to the $65 million film tax credit allocation.

PAFIA is very appreciative for the support that legislators and the Governor have for the program, but feel it is a very good time to invest further in the industry - bringing more films and shows to the Commonwealth and creating additional jobs throughout the state. Growth in the industry means more economic activity and investments in the communities where the shoots are taking place.

A brief May 15 primary election update: Four incumbents lost, with the most significant being the Democratic nomination for Lieutenant Governor. Mayor John Fetterman from Braddock beat current LG Mike Stack, who finished 4th in that race. Three incumbents from Western PA lost: Republican Senator Randy Vulakovich and House of Representative Democrats Paul Costa and Dom Costa. Three special elections were held for vacant House seats: a seat in Washington County (formerly held by Brandon Neuman) changed from Democrat to Republican, a seat in Bucks County (formerly held by Scott Petri) changed from Republican to Democrat, and a seat in Tioga County (formerly held by Matt Baker) stayed Republican.

On Tuesday, February 6th, the Governor gave his annual budget address before members of the House and Senate. The Governor has proposed a $32.9 million budget, nearly $1 billion more than this current year's approved spending plan. In addition to the Governor's budget proposal, revenues for the current fiscal year are exceeding projections, resulting in a surplus. The proposal reflects an additional $225 million in funding for education as well as a severance tax on natural gas.

PAFIA is working with many stakeholders, including the Philadelphia and Pittsburgh Film Offices, to seek an increase to the $65 million film tax credit allocation. While PAFIA remains very appreciative for the support that legislators and the Governor have for the program, we feel it is a very good time to invest further in the industry - bringing more films and shows to the Commonwealth, creating additional jobs throughout the state. PAFIA will be working closely with our supporters, as well as reaching out to those legislators who don't support the tax credit or remain skeptical of the benefits and impacts.

As February ends, House and Senate Appropriations Committees will be finishing up their hearings with all the state agencies and return to session on March 12. PAFIA will continue to fight for the program.