Finance Committee Advances Hiring Incentive

After a two month recess, the General Assembly reconvened for the fall legislative session. For the first time since the end of the Great Recession, Pennsylvania’s unemployment rate has steadily risen to meet the national average. With only one month remaining before adjourning until next year, the House Finance Committee swiftly approved legislation by Rep. Kerry Benninghoff (Centre) aimed to bolster job creation.
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Pro-Growth Tax Reform Moves to Senate

After several months of deliberation, the State House passed House Bill 2150 by a final vote of 129 to 58. This highly anticipated legislation, introduced by Rep. Dave Reed (Indiana County), will make Pennsylvania’s tax code more equitable while promoting job creation and economic growth in Pennsylvania. The bill now moves to the Senate for consideration. Lawmakers must act swiftly to deliver reforms aimed at improving the state’s dismal business climate.
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Property Tax Independence for Pennsylvania

While Pennsylvanians have enjoyed a much-needed respite from tax increases at the state level, the same cannot be said for local government. School boards across the Commonwealth continue to raise property taxes for homeowners. Considering that Pennsylvania already has the 10th highest state and local tax burden, taxpayers have just cause to be frustrated with the ever-increasing property tax rates. In recent years, lawmakers have enacted legislation intended to keep tax hikes at bay only to fall short of a meaningful solution. Fortunately, Rep. Jim Cox (Berks) has introduced House Bill 1776, the Property Tax Independence Act. This bill intends to eliminate the constant increases in property taxes in exchange for a more equitable system.
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Support HB1329: Mandate Relief for Schools and Taxpayers

Fiscal responsibility entails not only cutting wasteful spending, but even more importantly, includes the implementation of government reforms that prioritize taxpayer dollars. The Republican leadership deserves credit for producing their second sustainable budget, but in a time when lawmakers are asking school districts and local governments to do more with less funding, there must be a focus on enabling local officials with the ability to do so.

Recognizing this necessity, Rep. Fred Keller (Snyder/Union) introduced House Bill 1329 to alleviate the costly prevailing wage laws on construction and renovation projects. The bill would effectively ease the financial burden for schools and municipalities while protecting taxpayers and promoting job creation. Unfortunately, there have been significant delays in the path to reform in Harrisburg. It is absolutely essential that Pennsylvania’s taxpayers urge their Representatives to vote in favor of HB 1329.

The Commonwealth’s prevailing wage laws were enacted more than a half a century ago with the intent of protecting construction workers from out-of-state competition. The law requires local government to pay a mandated wage for construction projects exceeding $25,000. Straying far from its original intent, prevailing wage is responsible for increased labor costs upwards of 30 to 75 percent. This effectively adds more than 20 percent or $2 billion a year in extra construction costs.

In response, The Pennsylvania School Board Association (PSABA) testified before the General Assembly. They asserted that the prevailing wage law is “one of the most burdensome mandates imposed on school districts.” A PSBA representative explained that wage requirements take away resources that could be utilized to develop educational programs or provide property tax relief. The PSBA supports an outright repeal of the costly wage law.

In an interview with Rep. Keller, he proclaimed that his legislation is a compromise bill. Instead of repealing prevailing wage altogether, HB 1329 is designed to raise the minimum threshold to $185,000, accounting for inflation for the past 50 years. Rep. Keller argued that raising the threshold should not be deemed controversial, but rather common sense. The Union County lawmaker reasoned that the 1961 law exempted small-scale projects and that the $25,000 threshold in today’s prices no longer provides a meaningful exemption.

The reform measure has garnered substantial support from the PA State Association of Township Supervisors and Boroughs in addition to business interests throughout the state, but the compromise bill remains stalled in the State House. The bill, which was successfully reported out of committee for consideration this fall and scheduled for a vote last week, has been postponed yet again. Rep. Keller shared that the vote count is in the mid 90s, just shy of a 102 member majority, and there is a great possibility for the bill to receive a House vote shortly after the April primary elections.

It is vitally important that the General Assembly pass HB 1329 in order to provide schools and local government the relief they need from an antiquated and costly mandate. The reform measure will more efficiently spend taxpayer money, thereby reducing property tax increases. This savings can then be allocated towards additional construction and renovation projects, which will create more jobs.

Budget Address: A Small Step Forward

On Tuesday, February 7th, Governor Corbett delivered his second budget address before the General Assembly. By reigning in government spending this past year, the Corbett administration successfully closed a multi-billion dollar budget gap. However, difficulties remain as tax revenues and economic growth continues to be lower than anticipated. The proposed budget is set to resemble last year’s funding with a renewed emphasis on the Governor’s commitments for fiscal restraint and taxpayer protection.

The designation of new Keystone Opportunity Zones was the first component on Governor Corbett’s 2012 agenda. Opportunity zones are areas that receive special state privileges in the form of tax incentives to foster economic growth. Governor Corbett asserts that the expansion of this successful program will bring thousands of jobs to Pennsylvania. The GOvernor’s stand is valid that strong incentives and business friendly policies are important for job creation. However, instead of narrowing the focus on job creation to particular areas across the Commonwealth, the Governor should concentrate efforts in making the entire state an opportunity zone. Pennsylvania ranks amongst the worst in the nation in overall business climate and has one of the highest state tax burdens.

The Governor then proceeded to thank the General Assembly for reaching a consensus regarding a Marcellus Shale natural gas impact fee. The impact fee was designed to provide counties compensation for local government services and additional environmental protection. On close examination, the impact fee agreement supports a tax on drillers, as the fee is partly determined by the price of natural gas. More than 40 percent of tax revenues are to be utilized for statewide initiatives with several unrelated to the industry. It is disappointing that the Governor endorses this legislation as he so eloquently proclaimed in his speech, “Every dollar taken in tax is one less dollar in the hands of a job holder or job creator. Every dollar spent by government is one dollar less in the sector that creates real prosperity.” In this instance, the action does not coincide with the principled rhetoric.

The Governor also announced his comprehensive Jobs First PA package, which is dedicated to improving the state labor market. Components of the proposal include creating a single point of access between entrepreneurs and the government to reduce barriers to entry and accelerate the incorporation of new businesses. Jobs First also allows unemployed workers to maintain benefits while being retrained for a new job. Additional components of the package include a statewide jobs matching service and increased grants offered to trade school students preparing for high demand occupations. Securing Pennsylvania as a right-to-work state is another vital labor market initiative that demands the Governor’s focus. Together, these policies will strengthen Pennsylvania’s employment outlook.

In regards to public education, Corbett announced that there will be no budget cuts. Rather than imposing bureaucratic mandates from Harrisburg, Governor Corbett proposes the usage of block grants which give local school districts the autonomy to make necessary adjustments based on their individual and unique needs. The administration’s hold on the four decade long expenditure expansion in education is a vital component in restraining government spending. To safeguard taxpayers against increased property taxes, the Governor signed a property tax reform bill to limit annual increases. In addition to tackling the issue of education spending, the administration has also sparked discussion on the important issue of poor educational performance. The Governor advocates educational competition through the avenue of school choice.

The Governor’s second proposed budget petitions a degree of fiscal responsibility that has long been forgotten in Harrisburg. For the first time in over a decade, the administration successfully produced and delivered the first budget within the allotted time constraints. They also managed to scale back the size of government for the first time in 40 years. Coupled with taxpayer protection, these accomplishments were made possible through difficult decisions and cuts that are necessary to turn the tide on an unsustainable government binge. While the Corbett administration has succeeded in several arenas, pressing issues such as the state’s deteriorating infrastructure and rapidly increasing unfunded pension liabilities lacked mention. While a promising start, prudent budgeting along is insufficient to address the challenges that lie ahead. It is now time to focus on the many necessary reforms.