Governor Rendell’s Budget Plan

On February 5, Governor Ed Rendell presented his 2008-09 budget address to a joint session of the Pennsylvania General Assembly. As he unveiled the $28.3 billion spending plan, Governor Rendell asked the Legislature to put aside differences and enact programs to extend health insurance to all state residents, promote Pennsylvania’s energy independence and borrow $1.3 billion for an economic stimulus package titled "Protecting our Progress." Among other goals, this package proposes to create new jobs through tax incentives for businesses, stimulate expansion by providing capital, and improve our aging transportation infrastructure through needed investment.

Components include:

• A tax credit program that would increase incentives for businesses creating new jobs from $1,000 - $3,000.
• Borrowing $100 million to revitalize abandoned industrial sites and make them ready for development by new businesses.
• Extending tax credits for businesses that create new jobs in the Keystone Opportunity Zones, which offers greatly reduced taxes for new and expanding businesses.
• More than $800 million over the next three years to repair structurally deficient bridges and dams, invest in flood-control projects, and to provide other targeted infrastructure improvements.

Next week, the House and Senate Appropriations Committees will begin a detailed review of the Governor’s proposal. Lawmakers face a June 30 deadline for passage of a state spending and tax plan.

Throughout the budget process, the Greater Philadelphia Chamber of Commerce will continue to urge lawmakers to improve the competitiveness of Pennsylvania’s business tax structure. In a recent "Op Ed" that appeared in the Philadelphia Business Journal, Chamber President & CEO Mark Schweiker urged Governor Rendell to include in his budget plan the continued phase-out of the Capital Stock and Franchise Tax, and two modest, yet significant improvements to the state Corporate Net Income Tax- elimination of the cap on Net Operating Losses and full implementation of a Single Sales Factor.

However Governor Rendell's current budget proposal slows the reduction in the Capital Stock and Franchise Tax and does not address the Corporate Net Income Tax. Consequently, the Chamber commends Representative Mike Gerber (D-Montgomery) and a bipartisan group of lawmakers for introducing separate legislation to implement important business tax changes.

In the coming weeks, the Chamber will work with CompetePA, a broad-based, statewide coalition of businesses and organizations, to build legislative support for Representative Gerber’s bill, as well as a companion measure in the Senate. We will also ask Chamber members to join us in contacting lawmakers. For more information, visit the Public Policy section of the Chamber's Web site.