Analysis Highlights Heavy Burden of Wolf’s Budget Proposals

The state’s Independent Fiscal Office released an analysis last week that anticipates the tax increases proposed by Gov. Tom Wolf in his 2016-17 budget plan would generate $2.66 billion for new state spending. This is slightly less than the $2.7 billion that the governor’s budget office estimates would be the full amount of tax hikes under his proposal. The IFO estimates that the proposed retroactive Personal Income Tax increase would generate the most revenue, netting $1.27 billion.

The IFO analysis also examined the impact of the governor’s proposed severance tax – a 6.5 percent levy that maintains the current impact fee but allows drillers to claim impact fee payments as a credit against the severance tax. The IFO notes the significant discount that Marcellus drillers are being paid compared to that of other major national hubs, and projects that this discount will remain in effect for the next several years. Because the governor’s proposal does not allow for deduction of post-production costs, the effective rate of the proposed severance would be the highest among other states that, along with Pennsylvania, lead the country in gas production: Ohio, West Virginia, Texas and Oklahoma.

FO also examined the employment effects of raising the state’s mandated entry wage to $10.15 per hour. The analysis projects a loss of nearly 30,000 jobs due to the increase, with the job losses felt disproportionately by part-time employees, as well as a “slower rate of hiring compared to a counterfactual where minimum wage did not increase.”

The final piece of the 2015-16 budget becomes law following an announcement by the Wolf administration last week that the governor will not veto or sign H.B. 1589, the Fiscal Code Bill. Per the Pennsylvania Constitution, legislation passed by the General Assembly automatically becomes law if the governor does not act on it within 10 days.

PPL Continues to Improve Reliability

PPL_DudkinPPL Electric Utilities has made significant improvements to customer reliability in recent years through line clearing, capital investments, and new technology. Assisted by mild weather, 2015 service reliability was the best in more than 20 years across its 29 county service area. The company plans to invest nearly $1 billion per year over the next five years to further improve reliability.

An overview of the company’s service performance was provided to business and community leaders at the Pine Barn Inn recently by Greg Dudkin, President of PPL Electric Utilities. Mr. Dudkin explained that the company is responsible for transporting electricity from power generation facilities to 1.4 million customers in Pennsylvania. Once a part of PPL Corporation, the power plant at Washingtonville and the Susquehanna Steam Electric Station are now owned by Talen Energy, created in June of last year.

According to Dudkin, PPL customers experienced 30 percent fewer outages than in 2007, with tree-related outages down 37 percent compared to an average of the previous 10 years. The company expects to improve overall reliability another 15 percent. In addition to line clearing, reliability has improved through installation of new lines, rebuilding older lines, and installing technology to allow power to be rerouted automatically in a matter of minutes during an outage. During an outage, customers receive alerts and have access to outage maps and better estimated restoration times. These resources are available at www.pplelectric.com.

Dudkin also talked about their energy conservation programs. In the past six years, customers have saved enough electricity to power over 240,000 homes for a year, and saving $218 million annually. Programs are available for residential, government, non-profit, education, commercial and industrial customers. The company and its employees continue to be highly engaged in the community. More than $2 million has been donated to United Ways by their employees, retirees, and corporate giving. Employees volunteered over 15,000 company-supported hours last year. PPL Corporation has supported over 90 organizations in the Susquehanna region, including the Chamber, its Foundation, and other economic development organizations.

Mr. Dudkin’s presentation is available here.

Will the 2016-17 Budget Process be Any Better?

With the State’s 2015-16 budget finally completed, legislators are well into the 2016-17 process. Will the next budget be passed on time? Get insights from our State delegation and the Pennsylvania Chamber of Business and Industry at an upcoming breakfast.

Jennifer Reis, Manager of Government Affairs with the PA Chamber, will provide an overview of the 2016-17 budget proposal, highlighting issues which impact business. Representatives Kurt Masser and David Millard with provide updates on the negotiations. Attendees will also be invited to ask questions.

The program will be held Friday, May 6th from 8:00 to 9:30 a.m. at the Pine Barn Inn, Danville. Cost is $18 for members and includes a buffet breakfast. Register for the event online or by calling the Chamber office at 570-784-2522.

General Assembly Sends Governor Veto-Proof Fiscal Code Bill

Last week, an overwhelming majority of House and Senate lawmakers sent Gov. Wolf an amended version of the Fiscal Code Bill that provides direction for how certain state funding should be spent. The governor vetoed a previous version of the legislation in March, based on his resistance to provisions relating to school funding distribution, environmental regulation and other issues – an action that led to the loss of $439 million to public schools and the threat of lawsuits. The newly passed Fiscal Code – H.B. 1589 – contains borrowing to reimburse for school construction costs and the distribution formula that was approved last year by the Basic Education Funding Commission and earned bipartisan support. In his veto last month, Governor Wolf bypassed this formula in favor of funding schools through his own distribution formula, which left legislative leaders questioning whether he had the authority to do so.

Unlike last month, the governor has made no threat to veto H.B. 1589. This is perhaps because the broad-based support for the measure in both chambers indicated that there would be enough votes for a two-thirds veto override in the legislature. A number of members in the governor’s own party voted with Republicans to pass the bill. It passed by a 149-45 vote in the House; and cleared the Senate in a 37-11 vote. Should the governor choose to veto the bill, a veto override would require a total of 136 votes in the House and 33 votes in the Senate (although this will jump to 34 following the special election on April 26).

While the administration was mum on what action Gov. Wolf intends to take with the new Fiscal Code bill, Wolf spokesman Jeff Sheridan told reporters that the governor plans to review the legislation in its entirety.

New Kiosks in Danville Showing Results

On March 1st, the Columbia-Montour Visitors Bureau unveiled two new interactive kiosks located in the Danville area. The first kiosk was placed at Geisinger Medical Center in the Atrium Café, which is a heavily trafficked area of the hospital complex.  The other kiosk is located in the lobby of the Pine Barn Inn.  These displays are linked to the Visitors Bureau website to assist users in finding information about local businesses, upcoming events in the area, dining and shopping options, local attractions and other activities in Columbia and Montour Counties.  Jim Wilson, Executive Director of the Danville Business Alliance, highlighted the impact of the new technology on the area. “The kiosks are strategically placed in two of the busiest pedestrian locations in Danville and Montour County:  Geisinger Medical Center and the Pine Barn Inn.  Literally thousands of people (patients, their families, visitors) will pass by them every day.  They will provide an unparalleled opportunity to promote the many natural, historic, cultural and commercial assets of both Columbia and Montour Counties.”

Data trends show that the new kiosks are indeed having an immediate impact on the area.  In the months preceding the installation of the new kiosks, the Visitors Bureau website averaged 300-400 unique page views from the Danville area every month.  In the one month after the kiosks were placed, this number dramatically increased to reach nearly 2,000 unique page views in the month of March.  Several local business owners have expressed their excitement about the new installations, and hopes are high that downtown Danville will see greater foot traffic in the upcoming summer months.