Governor Rendell Answers the Business Community’s Queries

Earlier this year, the Chamber presented a new event, “A Conversation with the Governor,” in which Philadelphia’s business leaders met with The Honorable Ed Rendell.  At the event, which was co-sponsored by Sovereign Bank, Governor Rendell was able to directly address questions asked by audience members and met personally with the business community after the structured portion of the event. 

Unfortunately, the Governor could not answer every inquiry posed to him, as more questions were submitted than time permitted. The following are his answers to the remaining questions he did not have time to touch on at the event.

What is going to be done about Philadelphia’s crime rate?

To successfully reduce the crime rate in Philadelphia, we need to reduce the number of illegal guns on the streets, and stop straw purchasers from buying guns and selling them to people who are not permitted to possess them.  On average, more than one person is killed per day in Philadelphia.  This is simply unacceptable. 

About 85% of those homicide victims in Philadelphia are killed with firearms.  Therefore, we must stop gun violence in order to reduce crime rates in Philadelphia.   There are several legislative steps to accomplish this important goal:  1) increase the penalties for theft of a gun so that the crime is always a felony.  Unfortunately, it is sometimes a low-level misdemeanor to steal a gun and often the punishment is less serious for stealing a gun than it is to steal a television; 2) require that lost and stolen guns be reported to law enforcement.  Our prosecutors are often unable to prosecute a case against straw purchasers, who typically claim that the gun that they illegally sold was either lost or stolen.  Having this reporting requirement would give our prosecutors an important tool to get straw purchasers off the street; 3) limit the number of handguns that an individual may buy to one per month.  This will reduce the number of handguns that are illegally sold by straw purchasers; and 4) allow our counties to pass their own firearms measures, so that they can address firearms-related issues that may be contributing to gun violence in their area.

Another critical component is to have more officers patrolling our streets.  Last year, Governor Rendell announced the Police on Patrol program, which provides funding to 20 cities with gun violence throughout Pennsylvania, including Philadelphia, to hire officers to patrol the streets to stop gun and drug-related violence.   Philadelphia will be hiring 100 new officers with the money it has received. 

Finally, we can reduce the crime rate if we reduce the cycle of recidivism.  This will mean fewer victims and safer neighborhoods.  Governor Rendell’s FY 07-08 budget would provide the critical resources that will make it less likely that offenders will victimize anyone else and ultimately return to prison.  The budget specifically provides more than $2 million in additional funding for drug and alcohol funding for county prisoners, more than $3 million in additional funding for drug and alcohol treatment for certain offenders convicted of drug or alcohol related non-violent crimes, nearly $4 million for additional beds in Pennsylvania’s community corrections centers to treat parole violators addicted to drugs, and $ 4 million to provide additional parole officers to effectively supervise parolees.  This funding will reduce the likelihood that many offenders will commit new crimes and victimize anyone else.  This will reduce crime in Philadelphia, as well as across Pennsylvania.

How and on what schedule do you intend to solve the public transit funding crisis?

As I stated in my Budget Address, I am committed to providing adequate funding for public transportation and ending the long-standing financial crisis facing public transit. The lack of an adequate dedicated funding source is crippling public transit systems across the Commonwealth - systems that provide 400 million rides a year and enable many Pennsylvanians to get to work, or wherever they need and want to go. These systems are facing 25% funding cuts; they need to be improved and expanded rather than contracted in order to serve quantifiable needs.

I am also committed to funding the upgrade and maintenance of Pennsylvania's extensive network of highways and bridges. The bi-partisan Transportation Funding and Reform Commission concluded that $1.7 billion a year is needed to fully fund and adequately maintain Pennsylvania's highway, bridge, and public transportation systems. Of that, the Commission identified $760 million more a year as the amount needed to fund public transit at a level that would improve and adequately maintain these systems. Nearly everyone who commented on the Commission's recommendations favored the highest level of funding proposed for both public transportation and highways and bridges.

After carefully weighing the Commission's proposed array of taxes to pay for highways and transit, and mindful of the other demands facing the state for property tax relief, education, and health care needs, I have looked for innovative ways to fund these needs without further burdening Pennsylvania's taxpayers. As a result I have proposed to the General Assembly two major funding options that would accomplish the Commission's funding recommendations:

• Entering into a lease of the Pennsylvania Turnpike, if favorable conditions can be agreed to, in order to fund the $965 million annual need for highway and bridges transportation projects;
• Placing a 6.17% tax on oil profits generated in Pennsylvania, based on combined reporting, which would produce the $760 million needed for dedicated funding for public transportation.

I believe this dedicated tax for public transportation would put the burden of paying for Pennsylvania's transportation needs squarely on the shoulders of those who benefit most from transportation revenues generated in Pennsylvania.

To achieve this result I will need your help, and the help and leadership of the Chamber working with legislators to educate them about the needs and the importance of public transportation to the health of our economy and the well-being of our citizens. The schedule for achieving dedicated funding for public transportation depends on the General Assembly's willingness to entertain and pass these measures.  

On improving roads, for example Route 76, what federal dollars are coming into our area?

The Delaware Valley Regional Planning Commission (DVRPC) is the metropolitan planning organization in Southeastern Pennsylvania for transportation planning and prioritizing funding.  DVRPC reports that for the Transportation Improvement Program (TIP) for the fiscal years 2007-2010, the region has $1.049 billion in federal highway funds, $397 million in state funds, and $70 million "other" funds for special projects, including funds for the new Interstate Highway Maintenance Program. There is a need in later fiscal years for $3.6 billion to complete current TIP projects, plus a needed $744 million to complete Interstate Maintenance Program projects, which include reconstruction projects for I-95, I-76, and I-476.

No new projects were added to the TIP for FY07 because of the extreme need for funding existing projects in the program.  Some of the planned expenditures for the Schuylkill Expressway (I-76) in the current TIP are: $23 million for Intelligent Transportation systems that control ramp access and advise drivers of congestion and alternate routes; and $35 million for reconstruction of bridge or interchange structures. A small amount of funds outside the TIP have been committed to advance initiatives such as safety, bridge design and roundabout projects.

What is the state going to do to help small businesses thrive in Philadelphia?

My economic stimulus program offers a wide range of initiatives targeted to help small businesses compete.  The Ben Franklin Technology Partner of Southeastern Pennsylvania provides funding for small, young technology companies developing new products for commercialization or new processes, as well as providing tech companies with a variety of technical assistance program.  BioAdvance, the Life Sciences Greenhouse of Southeast Pennsylvania provides early-stage funding and technical assistance for Pennsylvania start-up and small life sciences companies.  We have also launched six Keystone Innovation Zones (KIZs) in the region that provide funding to develop local partnerships around colleges and universities which funds and services are targeted to create and support start-up tech companies.  These programs help small business by improving access to capital, a skilled workforce and technical assistance. 

But beyond business finance and technical assistance, small businesses need relief from the pressures of continually rising health care costs. Since 2000, the cost of family health insurance premiums has risen by 76 percent, leaving businesses with the unenviable choice of reducing or eliminating coverage, passing costs along to workers or absorbing the increases themselves.  I have proposed a new program called Cover All Pennsylvanians that will provide relief to the small businesses that need help the most.  Cover All Pennsylvanians will offer affordable health insurance at a cost to employers at $130 per month to qualifying small firms with fewer than 50 employees.  Employees will contribute between $10 and $70 per month and the balance of the costs will be paid by federal and state contributions.  Cover All Pennsylvanians will not only improve access to health care coverage, but it will also improve Pennsylvania’s business climate by making basic insurance more affordable for small business and workers.

Please comment on specific business tax proposals you plan on including in the 2007/2008 budget.

In my first term, I cut business taxes by $1.1 billion to improve our economic climate and help create job growth.  To continue to make Pennsylvania more competitive, we need to implement my proposal for comprehensive business tax reform.  My plan will reduce our Corporate Net Income Tax from 9.99% to 7.90%, bringing us from the highest tax rate of surrounding states to the third lowest.  We can make this gigantic improvement in one year, and we can pay for it by closing the Delaware loophole which will level the playing field for Pennsylvania businesses.  We will also continue to phase out the Capital Stock and Franchise Tax.

These tax cuts are important, but I believe that the best way to improve the business climate is through my Prescription for Pennsylvania – our plan for meaningful health care reform.  I have put forward a comprehensive strategy to drive down health care costs for businesses while improving access to quality affordable health care for all Pennsylvanians.  The Prescription for Pennsylvania will improve the competitiveness of the Commonwealth’s employers, and we cannot afford to wait.

Polls suggest that a large number of the 42% of African Americans in Philadelphia supported your reelection campaign for Governor and despite prior efforts African Americans in Philadelphia are still plagued with double-digit unemployment, an alarming 50% high school drop out rate, drugs, guns and an ever increasing risk of violence.  With that, what new efforts of innovative policy measures will be implemented to address the concerns of these constituents?

I am thankful for the support I received from the African American community and believe it is a vote of confidence that we are headed in the right direction.

In order to give every child a good start in school, we need to make sure that African American children have access to quality early childhood education. We have already invested $40.3 million to make full day kindergarten available to 14,870 youngsters in Philadelphia in the most recently completed school year. We also need to prepare older students for the jobs of tomorrow by making technology and integral part of learning in every subject.  This year Classrooms for the Future will put a laptop on every desk in every classroom in thirteen Philadelphia high schools. These investments are helping to close the achievement gap. Since 2002, African American students have posted double digit gains in proficiency rates at the 5th and 8th grade levels in both reading and math.

Our economic recovery is benefiting job seekers across the commonwealth. According to a recent analysis by the Center for Workforce Information and Analysis, 90,000 more African Americans living in Pennsylvania have jobs today than in 2003.  Pennsylvania’s unemployment rate has come down from 5.8% to 4.6% and we have gained a total of 162,000 jobs since January 2003.

I am especially proud that last year I signed a bill to increase the minimum wage. This legislation provides for an increase in the minimum wage to $6.25 an hour on January 1, 2007 then to $7.15 on July 1, 2007.  A total of 423,000 persons will directly benefit from a rise in the minimum wage to $7.15, and nearly 72,000 of them are black or Hispanic. 

We all know the grim statistics about gun violence – there were 406 homicides in Philadelphia last year and about 85 percent were committed with firearms.  This year the state will spend $30 million in new funds to help Philadelphia address gun and drug-related violence, including funding to put more police on patrol and support for the Blueprint for a Safer Philadelphia, a 10-year prevention effort focused on Philadelphia’s youth.  These strategic investments are important, but we also need stronger gun laws, including:

• Making the crime of theft of firearms a felony in every case 
• Limiting number of handguns that can be sold to an individual to one handgun per month
• Allowing localities to pass their own firearms related measures
• Requiring handgun owners to report guns that have been lost or stolen – to thwart straw purchasers

I outlined these priorities in my Budget Address in February. It will be an uphill battle, but one we must fight. I will need help from both sides of the aisle to get these bills to my desk. 

What can be done to improve the current way we choose judges?

As I stated in my inaugural address, we must select our state appellate court judges based on merit.  We need an independent citizens’ panel to ensure that our judiciary includes only the most qualified and talented jurists.  Judicial candidates should not have to raise campaign funds from those who may appear before them, but that is often what they must do.   In addition, many who would be qualified jurists do not run because they would have to raise large sums of money to run a statewide race.  Merit selection would encourage such talented individuals to try to be nominated as a judge. 

What is your perception of PA higher education in terms of its strengths and what you would like to see changed or improved?

Pennsylvania is fortunate to have so many world-class colleges and universities.  Our higher education institutions are both a source of education for our residents and an economic engine for the Commonwealth in terms of the students they import and the research and innovations they generate.  We can build on these great strengths by:

• Continuing to make higher education more affordable for Pennsylvania families.  I am proud that we have kept tuition at the State System of Higher Education as low as possible, with tuition increases below the rate of inflation in each of the last two years.  At the same time, we have increased financial aid so that for the average family on state financial aid, it is now less expensive to attend a state system school than it was when I took office.  We need to do even more to help students afford college by maximizing the amount of PHEAA resources that are dedicated to financial aid each year.
• Expanding opportunity for higher education in under-served areas.  This year, I proposed investing $2 million in new Technical College Programs that will offer industry certifications and associate degrees to prepare students for high-demand occupations in areas of the Commonwealth that do not have access to community colleges.  Although the direct benefit will be felt in rural areas outside of the Southeast, the students who graduate from these new programs will be better equipped to transfer to four-year institutions in this region without the need for costly remediation or the risk of dropping out due to lack of preparation.
• Using the intellectual power of our higher education institutions to grow our economy.  In my first term, we launched Keystone Innovation Zones to help universities turn academic research into jobs and business opportunities.  The next step is the $500 million Jonas Salk Legacy Fund that I have proposed to invest in breakthrough medical research and lifesaving cures – and in the process attract the best and brightest to Pennsylvania and generate thousands of new, well-paying jobs.  The Fund will be paid for using a small portion of our Tobacco Settlement, at no expense to taxpayers.

Private institutions of higher education are now facing limits in funding availability because state schools are aggressively targeting traditional private sources.  Do you have a plan to help PA’s private higher education so it can maintain its place, and grow in PA’s economy?

I have no doubt about the ability of our excellent private institutions to compete for funding.  I believe that these institutions have a vital role to play in generating economic growth through the Jonas Salk Legacy Fund and the Keystone Innovation Zones.  I also see a larger role for our higher education institutions in the emerging alternative energy economy.  My $850 million Energy Independence Fund will create economic opportunity for the Commonwealth while moving us towards energy independence.  I believe that our colleges and universities will play an essential role in the research and development that will create new technologies and strategies for energy innovation.

How can the state increase funding to Arts and Culture for the Greater Philadelphia area to equal Pittsburgh and other great cities?

Funding by the Pennsylvania Council on the Arts to the Greater Philadelphia region currently exceeds funding for Pittsburgh by about a two to one ratio. Of the top 300 arts organizations funded by the Pennsylvania Council on the Arts, grants to organizations in Greater Philadelphia comprise about 51% of the funding, Allegheny 26%, and the rest of the state 24%.  In addition to great work by the Pennsylvania Council of the Arts, the Commonwealth has directly invested nearly $50,000,000 in Redevelopment Assistance Capital Program funds in regional arts and culture projects.  These include major investments to relocate the Barnes Museum to the Parkway and the Please Touch Museum to Memorial Hall in Fairmount Park as well as funding for significant projects by the Jewish History Museum, Philadelphia Theater Company, Kimmel Center and Mural Arts Project.

A recent study by the Greater Philadelphia Cultural Alliance found that corporate and local government support for the arts in the Philadelphia region lags behind other major metropolitan areas. Local government support for the arts in Southeastern Pennsylvania is about 3 percent of cultural revenues. By comparison, it’s 5 percent for Pittsburgh, 9 percent in Denver and Charlotte and more than 10 percent in New York and San Francisco. The Cultural and Commercial Corridors Program bond issue passed City Council on an 11 to 3 vote last fall.  I am following this issue with great interest and look forward to the City’s upcoming announcement about the program.