After months of negotiation, Pennsylvania lawmakers and Gov. Josh Shapiro reached an agreement on a $47.6 billion budget bill in July, averting the risk of a lengthy impasse and prioritizing their spending for FY 2024-25.
Education was the defining issue for Gov. Shapiro and lawmakers this year, due in large part to a state court ruling that found the commonwealth unconstitutionally underfunds public school districts.
The budget agreement, which was signed by the governor on July 12, dedicates an additional $1 billion to K-12 schools throughout Pennsylvania. And while education funding is the headline in the press, a number of important items for PFMA and its membership were passed as well.
Ready-to-Drink Beverages
The association is very pleased to report we have crossed the finish line on legislation authorizing licensed retailers to sell ready-to-drink “canned cocktails.” A longtime PFMA priority, enabling legislation now has now been signed into law by Gov. Shapiro and will go into effect in September. The result of intense advocacy, negotiation and compromise, SB 688 by Sen. Mike Regan (R-York) settles one of the most gaping inconsistencies in Pennsylvania’s alcohol laws by allowing retailers to sell spirit-based RTDs. (Check out page 8 for more on our work on RTDs and what retailers can expect as RTD sales go online.)
In fact, it is shaping up to be a very good year overall for alcohol reform in PA.
Restoration of PLCB Backhaul Program
Several years ago, without warning, the Pennsylvania Liquor Control Board abruptly halted the longstanding discount program it had in place for retailers who coordinated with the board to pick up their alcohol orders from a PLCB warehouse. Language reauthorizing the program was included in omnibus alcohol reform legislation HB 829, which was signed into law as Act 57 of 2024. For many members who sell alcohol products, restoration of the Backhaul Program will represent a substantial savings for picking up their deliveries.
PBM Reform
Pharmacy Benefit Manager reform has long been a key issue for PFMA. Throughout the spring, the association’s Pharmacy Council worked closely with lawmakers and other stakeholders on comprehensive reform legislation that addresses some of the most egregious problems facing grocery and independent pharmacies, such as price steering and spread pricing. We are happy to report HB 1993 emerged as the legislative vehicle containing many of the reforms we have advocated and was signed into law by the Governor as Act 77 of 2024.
ORC Funding
The agreed 24-25 budget included $2.72 million in funding to support the operations of the state Attorney General’s new Organized Retail Theft Task Force. The task force was established as part of PFMA’s ORC legislation, which passed in December 2023. The task force officially came online July 1, along with new thresholds for the crime of organized retail theft. PFMA’s Loss Prevention Committee has and will continue to meet with OAG task force staff and we are extremely pleased with the level of commitment reflected in this funding amount.
Net Operating Loss Carryforward
NOL carryforward allows businesses to carry losses in a given year forward and deduct them from future profits. Pennsylvania was one of only two states to limit net operating loss deductions to a lower level than the federal limit of 80 percent. In the commonwealth, the deduction has been capped at 40 percent of taxable income. The budget agreement includes a tiered increase to the NOL cap that will ultimately bring Pennsylvania in line with the federal limit.
Fresh Food Financing Initiative
The budget includes $2 million to reboot the state’s Fresh Food Financing Initiative (FFFI), a statewide public-private financing program that helps business owners open or expand healthy grocery outlets in communities throughout the commonwealth. The program provides one-time grants and loans to nonprofits, for-profits and co-ops that help increase access to healthy, affordable food and improve economic opportunities for low- and moderate-income residents statewide. PA FFFI is overseen by the state Department of Community and Economic Development and administered by The Food Trust. PFMA supports this initiative and will communicate updates from DCED on timing and availability of grant funding.
Child Care
The budget includes funding to incentivize employers to reimburse employees for childcare expenses. For taxable years beginning after Dec. 31, 2024, employers can claim a tax credit for contributions made toward an employee’s child care expenses.
SUN Bucks / Summer EBT Program
The budget includes funding to administer a Summer EBT program, which Pennsylvania has dubbed SUN Bucks. The new benefits program will provide households with a one-time payment of $120 for each eligible child while school is out. Benefits began going out in mid-August and will be issued to all eligible children by October 2024.
PA SITES
Lawmakers approved Gov. Shapiro’s PA SITES proposal, including in the budget language authorizing $500 million to provide grants or loans to developers or local government agencies so they can prepare sites for industrial or mixed-use projects. Details on the program can be reviewed on DCED’s website.
Permitting Reform
The agreed budget language also establishes a streamlined process for businesses to apply for certain air, water, and land disturbance permits. The Department of Environmental Protection will select a third-party expert to review an applicant’s permit request if the applicant pays for an expedited review. DEP must also set up an online portal so applicants can view permit statuses.
Playing Defense
The budget includes no new fees or taxes, or changes to the minimum wage. Potentially impactful language pertaining to tobacco licensing was not included, nor were any major changes to labor laws.
The success we had in this budget would not have been possible without the involvement of our members. From feedback on individual proposals to engaging directly with lawmakers on key priorities, PFMA members play a critical role in getting positive reforms over the line.
