Huntingdon County Commissioners Connie Kough Pittenger and William Hoover will update attendees on Huntingdon County activities and plans. Commissioner Dean Fluke has not confirmed his participation.  A brief question and answer period will follow the Commissioners’ remarks.

This Coffee Connection is sponsored by Penn Highlands Community College. PHCC President, Dr. Walter Asonevich will give a brief update on the Huntingdon County Campus. 

Contact the Chamber by January 21 at (814) 643-1110 or visit http://www.huntingdonchamber.com/ for the event fee and to register. A hot breakfast buffet is included in the fee.

                          

Pennsylvania

                          

The $28.05 billion budget was adopted without broad-based tax increases, as lawmakers rejected new taxes on smokeless tobacco and cigars, as well as the implementation of combined reporting, which would have been a tax increase for many Pennsylvania businesses. The governor

                          

The study also noted that for every $1 invested in the state by Marcellus Shale producers, $1.90 of total economic output is generated as a result.

Despite the clear benefits to the Commonwealth of the industry, if some state lawmakers have their way, Pennsylvania would have the highest severance tax rate in the nation among comparable states. Many other states that have severance taxes in place have also offered tax breaks, delayed implementation or discounts in areas, like the Marcellus Shale formation, that are difficult to drill.

The PA Chamber opposes the severance tax proposal under consideration in the state House.

“It’s appropriate to debate the severance tax issue,” PA Chamber Vice President Gene Barr said. “But the punitive rate proposed in House Bill 325 is likely to have a chilling effect on the industry’s development. A hostile business climate has already shut down development of the Marellus Shale in other states. Pennsylvania cannot afford to crush an industry that promises thousands of family sustaining jobs while delivering cleaner burning Pennsylvania fuel.”

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House Insurance Committee to examine federal health-care law
On Thursday, May 27, the House Insurance Committee will hold a public roundtable discussion on the new federal health-care reform law. James Gelfand, director of health policy for the U.S. Chamber of Commerce, will be among those testifying before state lawmakers. Others testifying include officials from the Pennsyvlania Insurance Department, Pennsylvania Association of Health Underwriters, America’s Health Insurance Plans and National Conference of State Legislatures.

The PA Chamber has prepared an issue brief explaining key provisions of the new law, its impact on employers and a timeline for implementation. The document is available here.

                          

According to the 2010 ALEC-Laffer State Economic Competitiveness Index, Pennsylvania ranked 46th for economic performance (no change from 2009) and 43rd for economic outlook (a one position drop from last year). Since 2008, the Commonwealth has dropped seven positions in the economic outlook category.

The annual study examines 15 policy variables that have a proven impact on the migration of capital — both investment and human — into and out of states. The state rankings are an equally weighted combination of these variables, and each of the factors is influenced directly by state lawmakers through the legislative process.

Pennsylvania ranked near the back of the pack in most of the 15 variables. The state received its lowest marks for its top marginal corporate income tax rate; recently legislated tax changes; debt service as a share of tax revenue; and for not being a right-to-work state.

The study is more evidence that state lawmakers must make economic growth and job creation a priority in the upcoming state budget debate. PA Chamber members are urging lawmakers to reduce government spending; resist placing additional tax burdens on job creators; and make sure that cost-control measures are part of the solutions to the fiscal challenges facing the Commonwealth. Specifically, the looming public pension crisis and the solvency concerns facing the state’ UC Trust Fund (which is broke and operating with more than $2 billion borrowed from the federal government) are two areas in which elected officials must do more than simply throw money at the problem.

The authors of the competitiveness index stressed the importance of controlled government spending in the study’s conclusion: “When government expenditures grow beyond the private sector’s ability to pay for them, economic growth suffers. Put simply, growth in government crowds out growth in the private sector. Nationwide, the burdens from total federal, state and local government expenditures have risen by more than 5 percent of GDP within the past two years — an extraordinarily high growth rate. These increased government expenditures will reduce private-sector growth and increase overall unemployment throughout the United States.”

PA Chamber members recognize the tremendous challenges ahead in the effort to restore the Commonwealth to fiscal and economic health. They are prepared to roll up their collective sleeves and work with state lawmakers to do what is needed to move Pennsylvania forward and ensure a prosperous private sector.

2010 ALEC-Laffer State Economic Competitiveness Index 10 best states:
Utah, Colorado, Arizona, South Dakota, Florida, Wyoming, Idaho, Virginia, Georgia and Tennessee

2010 ALEC-Laffer State Economic Competitiveness Index 10 worst states
Oregon, Ohio, Pennsylvania, Maine, Rhode Island, California, Illinois, New Jersey, Vermont and New York.

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Federal stimulus
Lawmakers are concerned about the certainty of federal stimulus money, which the governor is relying on to fund his proposed 2010-11 state budget. Budget Secretary Mary Soderberg said that the current allotment of federal stimulus money is set to expire on Dec. 31, but noted there has been vigorous discussion about continuing the Federal Medical Assistance Percentages (FMAP) funds for the next calendar year.

FMAPs are used to determine the amount of federal matching funds for state assistance payments for certain social services, and state medical and medical insurance expenditures. The Social Security Act requires the U.S. Secretary of Health and Human Services to calculate and publish the FMAPs each year.

Soderberg said President Barrack Obama has included two full quarters of FMAPs in his budget, for a total of $850 million. She also said 42 governors have signed a letter requesting a FMAP extension. Soderberg said most states have included these funds in their budgets and they are optimistic it will be passed. However, several lawmakers expressed concerns that the governor’s budget relies too much on federal funds that might not materialize.

Public pension crisis
In responding to questions about the looming public pension crisis, Soderberg said the administration is asking for an “incremental, predictable strategy” for funding the Commonwealth’s pension obligations. She said there will be a $3.5 billion increase in contributions in 2012, and the administration is asking for a $400 to $700 million contribution each year in order to lessen the burden in the next few fiscal years.

Some lawmakers pointed out that it doesn’t make sense for the Department of Education to ask for a $350 million increase in spending when none of it will be directed toward pension obligations.

Other lawmakers expressed concerns with the governor’s plan to address the pension crisis. The administration’s budget calls for several tax increases on business, the revenues of which would be placed into a reserve account to be used in 2011-12 to meet pension obligations. The PA Chamber believes focus should be placed on addressing some of the contributing factors that helped to create the funding crisis.

Film tax credit
During the Revenue Department hearing, House Appropriations Committee Minority Chairman Bill Adolph, R-Delaware, asked Acting Revenue Secretary Dan Hassell why the Film Tax Credit is proposed to increase at a time of economic downturn and when the Education Improvement Tax Credit is being decreased.

Hassell said the education tax credits were not reduced, but fixed in the October budget.

Adolph stressed that the education tax credit has been a successful program, and said he believes that with less money available for the program, more children will attend public schools, which will place a greater strain on the system.

Combined reporting
Lawmakers also inquired about the revenue that would be generated by adopting combined reporting. Hassell said combined reporting is estimated to generate $400 million to $500 million in revenue with the current base, but noted there could be other factors in proposed legislation that could change the exact amount of revenue generated. Hassell said he is aware of the business community’s concerns with combined reporting, and expressed his desire to work with the General Assembly to make combined reporting “as painless as possible.”

State Rep. Gordon Denlinger, R-Lancaster, said contrary to the governor’s argument, under combined reporting, 60 percent of corporations would still be non-taxpayers. He cited as reference at letter from former Revenue Secretary Thomas Wolf. Hassell said the number of non-taxpayers would go down, even if slightly. However, upon further questioning from Denlinger, Hassell said he did not have an updated list of active C-corporations in the Commonwealth.

Article courtesy of the Pennsylvania Chamber of Business & Industry