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The three state legislators representing Columbia and Montour Counties gave Chamber members an update on what is going on in Harrisburg with respect to both the state budget for 2019-20 as well as other proposed legislation of significance to the business community at the Chamber’s annual state legislative breakfast on June 13, held at the Pine Barn Inn.
Representatives David Millard and Kurt Masser, as well as Senator John Gordner all relayed optimism that the state budget would be done on time and delivered to Governor Tom Wolf’s desk by the constitutionally-mandated deadline of June 30. With an expected surplus in this year’s budget of nearly $800 million, negotiations have gone smoothly and both the state House, Senate and Governor’s office have all sounded positive tones about the process, and none anticipate the extended budget disagreements that were featured in Gov. Wolf’s first three years in office. Both sides would like to use some of that surplus to make a contribution to the state’s rainy day fund. Some of it will be used to help cover cost overruns in the current fiscal year, for which the governor has already made a supplemental request (Update: On June 24, an agreement was reached between the legislature and the governor on the framework for a $33.9 billion budget, coming in just shy of the governor’s original $34.1 million request).
The legislators along with PA Chamber of Business & Industry representative Alex Halper, also discussed the governor’s Restore PA proposal, which would impose a severance tax on the natural gas industry to fund various infrastructure, blight, environmental cleanup and other community projects around the Commonwealth. Although all can agree that many of these projects are necessary, particularly as it relates to flood protection in this local area, there is general consensus among the Republican majorities in both the Senate and House that a severance tax is not the best way to approach this issue (read more about the PA Chamber’s stance against a severance tax). Sen. Gordner noted that gas companies already pay an impact fee, which is essentially a tax and is unique to Pennsylvania, as well as a corporate income tax rate of nearly 10%, which is one of the highest in the country. Other states that have severance taxes, such as Texas, don’t have an impact fee and have no state income tax. So, gas companies are already paying an effective tax rate that is more than double what they would pay in a state such as Texas. The delegation expect this to be an issue that will continue to be negotiated into 2019-20 and will not be a part of the budget deal.
Minimum wage was also discussed, and although the legislature has indicated it may be open to a modest increase to somewhere in the $8-9/hour range in order to be more in line with surrounding states, the governor’s proposal of raising it to $12 this year with incremental raises in future years until it gets to $15 does not appear to have support in either legislative body. If such a deal is made in the future, there will likely be some exemptions put into place such as for restaurant and food service workers and others that rely on tips for their income. There was also talk of consideration for some type of student exemption for those working their first jobs while still in school. There likely will be ongoing discussions through the coming fiscal year about this issue (Update: the tentative deal announced on June 24 does not include a minimum wage increase).
The program concluded with a presentation from Keith Welks of the PA Treasury Department, who spoke about a new automatic IRA (Individual Retirement Account) program that would help millions of Pennsylvanians that don’t have access to workplace retirement account save for retirement. This proposal came out of a Retirement Security Task Force that met recently, and this proposal is now being circulated through the state legislature. The program, if passed, would be modeled similarly to the PA 529 College Savings Program, and would allow private employers not currently offering a retirement savings vehicle for employees, the opportunity to provide access to portable retirement savings options at no cost to the employer. More information on this program can be found on the PA Treasury’s website.