Rob Wonderling, President and CEO of the Greater Philadelphia Chamber of Commerce, and Dennis Yablonsky, CEO of the Greater Pittsburgh Chamber of Commerce, explore the opportunities behind Governor Tom Corbett’s 2011-2012 budget in the below op-ed.
Pennsylvania Governor Tom Corbett has presented a 2011-2012 budget that brings spending back to pre-recession levels by following 3 key principles: it does not contain new taxes, the projected spending is kept in line with the available revenue, and cuts that were made were targeted rather than across-the board.
Pennsylvania is not alone in facing cuts and difficult choices on state spending. The National Association of State Budget Officers describes these as the worst financial times for states since the end of World War II. States across the US are seeing revenues and expenditures that remain below pre-recession levels.
But, tough times are also good times to stop and think about what’s important in growing the economy of Pennsylvania. We are turning the corner and we want to be ready for the opportunities ahead.
To create a more competitive business climate and produce jobs, Governor Corbett’s proposed budget continues the phase-out of the Capital Stock and Franchise Tax, resuming the scheduled elimination of this onerous tax on Pennsylvania’s employers. This phase-out sends the right message to business decision-makers who are considering an investment in Pennsylvania.
As a strong and consistent advocate for civil justice reform, the Governor is also encouraging the General Assembly to re-enact the Fair Share Act, a reform measure to improve the state’s legal environment that will help to attract and retain employers.
The Governor has also indicated a willingness to consider improving our business climate in future years with the elimination of the cap on the Net Operating Loss carryforward, which is important to start-up companies and those in cyclical industries and in addressing the high Corporate Net Income (CNI) tax rate. Most of the time, we want to be Number One. But our position as having the highest CNI rate in the country is one we’d like to leave behind.
The business leadership of our two largest regions, Philadelphia and Pittsburgh, is also focusing on the opportunities ahead.
People often think of the Philadelphia and Pittsburgh regions as very different places – with little in common. In the lingo of state politics, some things are brushed off as ‘a Pittsburgh issue’ or ‘a Philadelphia issue.’ We think that growing our statewide economy is everybody’s issue.
We both have some important rivers and some pretty good sports teams and an impressive concentration of colleges and universities. What may be surprising to some, is that we also have regional economies with similar strengths in financial and business services, advanced manufacturing, eds and meds, and information and communications technology.
Together, we represent over half of the state’s population and employment and more than 60 percent of its gross metro product. We have economies that have benefited from innovation and collaborative R&D activity that begins in university labs and ends up in the marketplace. We’re both home to one of the most creative and successful approaches to growing startup companies in the country – the Ben Franklin Partnership – which has been followed by the Life Science and Digital greenhouses. Researchers, administrators and the media make field trips to both sides of our state to see these national models and learn how to bring a great idea to market and create jobs. With pride, we recognize the advances and achievements of our colleges and universities, and their important contributions in workforce development, innovation and community service.
In recognition of our similar regional economies and shared policy agenda, our two organizations recently conducted an unprecedented joint meeting of our leadership that included the chief executives from more than 20 of Pennsylvania’s most prominent employers. In sum, we agreed that the proposed budget takes important steps to foster a more competitive business climate – east and west — that will encourage further investment by businesses already here and attract new investment in the years ahead.
Now that legislative hearings on Governor Corbett’s proposal have concluded, the process will continue. On behalf of our regions’ employers, we look forward to ongoing communication with lawmakers and remain hopeful that budget negotiations between the General Assembly and the Administration will produce a timely spending plan that reflects an adequate state investment in the economic drivers and competitiveness issues we have detailed.
Once the budget is passed, we look forward to working with the Governor, his team and the members of the General Assembly on the critical issues of pension reform and transportation and transit funding. We are pleased that the Governor has already expressed his interest in addressing these important challenges to the competitiveness of the Commonwealth and we welcome the opportunity to work together in resolving them.
