Gov. Tom Wolf Unveils Budget, Outlines Extensive Economic Development Agenda
By Colin McEvoy on March 3, 2015
Pennsylvania Gov. Tom Wolf unveiled his state budget proposal today and, as foreshadowed by his visit to the Lehigh Valley last week, a great deal of his address was focused on economic development and job creation.
His ambitious $33.8 billion plan seeks to reduce Pennsylvania’s business taxes, provide tax credits for the state’s manufacturing sector, partner businesses with higher education institutions to improve workforce, and expand funding for economic development programs. Gov. Wolf’s budget proposal would also increase the state income tax rate from 3.07 to 3.7 percent, raise the sales tax from 6 to 6.6 percent, increase education funding by $400 million, and impose a 5 percent severance tax on natural gas drilling.
“Governor Wolf has unveiled a very robust and extensive economic development agenda in this budget,” said Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corporation (LVEDC), who was invited to a private briefing today by the Governor with company chief executive officers from across the state.
“The state’s role is critical in economic development,” Cunningham said. “The Lehigh Valley is at the forefront in Pennsylvania of competing with the other states of the Northeastern U.S. to attract and retain companies and jobs. We are grateful for whatever tools and engagement that the state brings to bear to help us compete for continued economic growth.”
The LVEDC is passing along some of the key points from the governor’s community and economic development agenda.
Gov. Wolf’s proposal would cut Pennsylvania’s corporate net income tax nearly in half, reducing it from 9.99 percent – which is currently the second-highest in the country – to 4.99 percent. He also intends to eliminate the capital stock and franchise tax altogether, effective February 1, 2016. The governor also proposes reducing the cap on net operating losses from $5 million (or 30% of income) to $3 million (12.5% of income). This will affect only about 290 corporations in the state, and will help facilitate the reduction in the corporate net income tax.
Gov. Wolf has proposed a new $675 million bond program to support investments in infrastructure, energy and technology, and to recapitalize existing business loan programs. This includes $250 million for Business in Our Sites (BOS) loans, which helps companies build an inventory of ready sites for growing and expanding businesses, and a $225 million initiative to ensure a comprehensive energy portfolio that supports gas, coal, oil and renewable resources, as well as encouraging conservation and clean technology alternatives.
Other elements of the $675 million bond program include:
- $50 million in competitive grants to fund projects to improve energy efficiency at small businesses, local government units, schools and non-profit organizations.
- $50 million in rebates to qualifying solar projects for homeowners and small businesses.
- $30 million in competitive grants to businesses that employ new technologies to produce heat and power on-site from oil, gas, coal, biomass, waste heat or a combination of fuel sources.
- $30 million to the Pennsylvania Energy Development Authority to support its mission of expanding the market for clean, advanced energy technologies, services and fuels.
- $25 million in matching grants to business parks and manufacturers to construct the last few miles of natural gas.
- $20 million for a program to facilitate the construction of new wind farms and support interconnection to the grid. Proposals will be evaluated based on the level of private financing, cost-effectiveness and the commitment to creating good-paying jobs with benefits.
- $20 million in grants for projects designed to make Pennsylvania farms more self-reliant through energy efficiency upgrades, bio-digesters and distributed wind generation.
Gov. Wolf’s budget plan provides $100 million for the Pennsylvania Industrial Development Authority to address current and future business growth needs. It also provides another $100 million to support entrepreneurs, established companies and manufacturing innovation. This includes $25 million for Pennsylvania First, a grant program that facilitates investments and job creation; $15 million for the Keystone Communities program, which encourages public and private partnerships to support growth in communities; and $11 million for the Infrastructure and Facilities Improvement Program (IFIP).
Additionally, Gov. Wolf is seeking to build Pennsylvania’s manufacturing sector by establishing a $5 million tax credit for a “Made in Pennsylvania” cash-back jobs program, to be distributed to manufacturing companies creating good-paying, middle-class jobs. He also wants to provide an additional $5 million to the state’s Industrial Resource Centers to leverage talent from Pennsylvania research universities to advance manufacturing technology and commercialization.
The Governor’s budget proposal now goes to the General Assembly, which under the Pennsylvania Constitution is required to adopt a budget by July 1.
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