keepingSCORE January 2012 - BIPAC

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Budget Energy Environment Health Care Infrastructure Labor Legal Tax Workforce DEFINING SUCCESS Oppose increasing taxes on the job creators. Oppose increasing the Personal Income Tax rate and the Sales & Use Tax. Oppose ―Combined Reporting.‖ Cut spending. Limit General Fund spending growth. Limit irresponsible debt. Change the budgeting process. Reinstate ―sunset‖ review and termination. Conduct performance audits. Although the Corbett Administration was able to enact a no tax increase budget in spite of a $4.2 billion deficit, the work of returning the Commonwealth to fiscal stability is far from complete according to State Budget Secretary Charles Zogby in his mid-fiscal year review. Zogby said that because of the continuing weakness in the national economy revenues for the 2011-2012 fiscal year will be $500 million below estimated levels and that this anticipated shortfall combined with projected growth of $800 million in Medical Assistance, debt service, and school employee pension costs will lead to serious budgetary challenges for Pennsylvania this year and next. According to Budget Secretary Zogby, the greatest challenges to budget stability are from factors that are largely beyond the Governor’s control, such as: The persistent weakness in the national economy. Since the current budget was enacted most economists have lowered their forecasts for growth in the national Gross Domestic Product from 3.0% in May to 1.7% in December. Forecasts for growth in consumer spending and for wages and salaries have also been revised downward. The ongoing economic crisis in Europe. Uncertainty about the fate of the euro and the European Union and the growing debt crisis in Europe have created global economic uncertainty and prolonged stagnation of the US economy and delayed its recovery. GETTING IN THE GAME Click here to be directed to the Pennsylvania Office of the Budget website and explore the mid-year update as well as other documents that explain the Commonwealth’s budget process and background. Governor Corbett’s FY 2012-2013 budget proposal and materials will be posted here in coming weeks. Uncertainty over federal funding. Last month’s failure by the Congressional Supercommittee to trim federal spending triggered automatic sequestration cuts to the states of 8.8% which could take place in January 2013. Health care cost inflation. In 2012-13 the cost for Medical Assistance and long-term care costs alone are expected to be $400 million. Commonwealth pension costs. Pension cost growth in 2012-13 budget will be $520 million: $320 million for public school employees’ retirement and another $200 million for state employees’ retirement. Debt service. This cost is expected to grow by $80 million in 2012-13, providing additional impetus for the Administration and the General Assembly to develop a capital spending plan that put this item on a sustainable path. The Governor’s Budget address for FY 2012-13 is scheduled for Tuesday, February 7, 2012. Pennsylvania Business Council 116 Pine Street, Suite 201 Harrisburg, Pennsylvania 17101 717-232-8700 www.pabusinesscouncil.org
Budget Energy Environment Health Care Infrastructure Labor Legal Tax Workforce DEFINING SUCCESS To be competitive, Pennsylvania businesses must be able to procure plentiful, reliable, and affordable energy. This requires the infrastructure and regulatory climate that fosters generation, transmission, and distribution systems throughout the Commonwealth. Specifics: Develop and exploit all energy sources and technologies allowing market forces to determine eventual ―winners and losers‖ without government favoritism or sanction. Facilitate the development of Marcellus Shale natural gas reserves. Oppose severance tax until the industry is successfully rooted in the Commonwealth and then consider only in light of competitiveness with other states. GETTING IN THE GAME Call your state lawmakers. Tell them to pass legislation soon that provides certainty to Pennsylvania’s growing natural gas industry by setting standards, defining the role of municipal governments in drilling and industrial operations, and establishing the parameters of an impact fee. Click here to find the contact information for your state lawmakers. Marcellus Shale Impact Fee legislation has been voted in both the House and Senate and appears to be moving toward a consensus resolution between the two chambers. House Bill 1950, introduced by Rep. Brian Ellis (R-Butler), passed the House 107-76 with twenty members not voting. Likewise, SB 1100, introduced by Senate President Pro Tempore Joseph Scarnati (R-Jefferson), providing similar impact fee language, passed the Senate by a 29-20 vote in November. Both of these bills provide for the assessment of so-called impact fees which are intended to offset any adverse impacts resulting from drilling for natural gas in the Marcellus Shale gas fields which underlie a large portion of Pennsylvania. Both of these bills create a special fund within the General Fund and prohibit any impact fee revenues from being placed in the General Fund. The Pennsylvania Business Council, Pennsylvania Chamber and others in the business community have been working aggressively to ensure that any impact fee legislation is competitive with fees and taxes in other states, and provides a uniform regulatory framework for Marcellus Shale gas wells preventing individual municipalities from imposing their own ordinances and fees. Legislative leaders are working on a deal to take to a formally convened conference committee. House Bill 1294 was adopted by the House in October on a 184–17 vote and now awaits action in the Senate Consumer Protection and Professional Licensure Committee. This legislation would authorize the PUC to approve alternative ratemaking mechanisms for regulated utilities, including gas, electric, water, and wastewater utilities allowing them to begin to recover their capital investments in a more timely way and enable them to proceed with important Pennsylvania infrastructure improvement. These charges should be used to make distribution and collection systems that maintain and improve the reliability and safety of utility services, and that protect the environment of the Commonwealth. The Legislature provided a similar financing tool – known as a Distribution System Improvement Charge, or DSIC – to water companies in 1996 and it has been working well. Other states have followed this example and expanded the authorization for electric, gas, and wastewater infrastructure improvements. The legislation and the PUC would provide adequate safeguards for customers to just and reasonable rates. Alternative ratemaking would also protect customers from sudden rate spikes for infrastructure. The proposed XL Pipeline to transport crude oil from Canadian tar sands in northeastern Alberta to multiple distribution points in the United States has been halted by President Obama. The XL Pipeline is an extension of the Canadian Keystone pipeline which was proposed in 2005 by TransCanada Corporation and completed in 2010 after five years of delays. Construction of the Keystone XL pipeline is supposed to create at least 20,000 jobs in the US and is supposed to help make America less dependent on oil from the Middle East. The President blamed his decision on a requirement to reroute the pipeline because the original route would have passed through the environmentally sensitive Sand Hills of Nebraska. Policymakers in Nebraska report they would have been able to find an alternative route well before construction would have reached the state. TransCanada is now considering a route to Texas, rather than the Gulf Coast, that might not require Federal Government approval. Pennsylvania Business Council 116 Pine Street, Suite 201 Harrisburg, Pennsylvania 17101 717-232-8700 www.pabusinesscouncil.org
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keepingSCORE January 2012 - BIPAC

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