PMA's Response to the Proposed FY 2017-2018 Budget— Paul Joker (@oilfinder321) December 6, 2016
For lawmakers who are tired of choosing between higher taxes and spending cuts, state government should focus on pro-growth policies that would help spur the economic expansion that would increase tax revenue. While spending restraint and tax relief continue to be priorities, other pro-growth advances can be made that would not reduce tax collections: limits on lawsuit abuse, re-evaluating state regulations, streamlining permitting, and modernizing Pennsylvania’s Workers’ Compensation and Unemployment Compensation systems. While we commend Governor Wolf for tacking the issue of consolidating various state departments and attempting to reduce redundancies, more needs to be done to make a meaningful impact on our current budgetary woes. What we need in order to close our budget gap is something Pennsylvania has not seen in decades: sustained economic growth. We are beginning to see that growth again through our energy opportunity and the industries that support and follow. Here is where the Governor gets it wrong. Very wrong. Despite promising to propose a budget plan that does not include broad based tax increases, Governor Wolf’s proposal contains a 6.5 percent severance tax on natural gas. Make no mistake, a severance tax on natural gas extraction is a broad based tax increase that will artificially inflate energy costs for all Pennsylvanians. This will make it more expensive to heat your home, power your business, and will also increase the costs of goods and services produced in our commonwealth. Pennsylvania already levies a local impact fee on drillers that the Independent Fiscal Office estimates the current impact fee is equivalent to a 4.7 percent severance tax—higher than severance taxes in Louisiana, Wyoming, and West Virginia. Additionally, drillers also pay our highest-in-the-national corporate net income tax, personal income taxes, and local property taxes. No other gas producing state has the tax burden already felt in Pennsylvania. By adding a severance tax the already fragile industry will be threatened and growth will be sharply constrained. Pennsylvania's economic growth is woefully inadequate compared to other states. Pennsylvania’s Gross Domestic Product continues to trend below the US average rate and the Commonwealth continues to lose its working population as people seek out new opportunities in better-performing states. Pennsylvania’s tax structure contains some of the highest rates and most restrictive provisions in the nation. Several of these tax changes were adopted as part of the 1991 tax increase that US News and World Report classified at the time as one the "Worst Economic Decisions in the Nation." As the old English proverb says, “To understand where you are going you must understand where you’ve been.” Study after study shows Pennsylvania’s business taxes to be among the highest and least competitive in the nation. The “sticker shock” of high taxes makes it difficult to show a business relocation prospect all of Pennsylvania’s many attributes. To be competitive, it is essential that Pennsylvania reform it’s business taxes to enhance our overall business competitiveness. The goal of Pennsylvania policymakers should be to make it the smart business decision for employers to locate, expand, and hire here in our commonwealth rather than in one of our competitor states. This means we must restrain state spending, enact pro-growth business tax relief, limit lawsuit abuse, improve the regulatory climate, modernize our compensation systems, enact pro-worker pro-job reforms, and ensure we have a trained workforce. Our state government cannot tax-and-spend the way to good fortune for all; but we can improve economic fundamentals so the private sector can attract the new business investments that will expand the tax base to pay for public needs. Broad-based, sustained economic growth for Pennsylvania is how we all win together.