Author: Lindsay Andrews

On August 21, the PA Chamber Foundation hosted a meeting to update stakeholders about progress made on development of the Keystone Initiative, a guide that will ultimately serve as a long-term economic strategy to make Pennsylvania more competitive.

The meeting featured an overview of Gov. Shapiro’s recently unveiled 10-year economic development strategy, Pennsylvania Gets It Done, including the plan’s assessment of the commonwealth’s strengths, areas of concern, top industry sectors, and five strategy areas.

Attendees were also briefed on responses to a survey of PA Chamber members focused on Pennsylvania’s competitiveness.

Overall, PA Chamber members rate the Pennsylvania economy as “good,” with room for improvement. They stressed that we are not realizing our full economic potential. Respondents said that Pennsylvania needs to be more welcoming to business activity and improve our business climate through permitting modernization, tax reform, and legal reform, among other areas.

This information, along with additional research and data collection conducted during the Keystone Initiative’s Phase 2, will inform the final phase, during which the PA Chamber Foundation, Keystone Initiative Co-Chairs, PA Chamber Policy Council members and other contributors will develop a final report with recommendations to improve Pennsylvania’s competitiveness.

For more information, visit www.pachamber.org/keystone_inititiative/.

See Serena at the 40th PA Chamber Annual dinner in Hershey, too!

As we cheer on Team USA at the ongoing Paris Olympics, the PA Chamber is gearing up to welcome a storied Olympian to the PA Chamber Annual Dinner stage – the greatest tennis player of all time and four-time Olympic gold medalist, Serena Williams!

Join us on Monday, October 7, at the Hershey Lodge, where the international sports icon will join PA Chamber President and CEO Luke Bernstein for a fireside chat about her storied career. Serena’s Olympic dominance is legendary. She won three gold medals in women’s doubles—an all-time joint record in tennis, shared with her sister, Venus – and a gold in women’s singles. But just as impressive as her on-court accolades have been Serena’s off-court accomplishments, overcoming adversity, and launching a successful business career!

From Paris to the Hershey Lodge, Serena knows how to deliver – and we can’t wait to hear all about it during a program you won’t want to miss!

For sponsorship and registration information, email Carly Dubetsky at cdubetsky@pachamber.org or visit our website at www.chamberdinner.com!

Photo credit: Jonathan Nackstrand

Pennsylvania’s nonpartisan Independent Fiscal Office recently issued a research brief that updates its revenue projections against expenditures based on the FY 2024-25 enacted budget. And, according to the IFO, spending is now outpacing revenue and the revenue estimate for the current fiscal year is $320 million lower than the official estimate certified by Gov. Josh Shapiro. This has the office warning that, unless steps are taken to lower spending or boost revenue, the result could be a budget deficit of close to $1.6 billion by next year.

The IFO projects that if education spending increases by 2.4 percent, human services spending increases by 5.2 percent, and personnel-related spending increases by 4.2 percent, the state budget will be close to $50 billion in 2025-26 even though the state is projected to only bring in about $45 billion in revenue.

“For FY 25-26, revenue growth is modest (1.4 percent) due to the ongoing corporate rate cut, the reduction in interest that accrues on General Fund balances (-$240 million) and the deduction of newly enacted tax law changes (-$304 million),” the IFO said in its analysis.

The IFO notes in its analysis that the Shapiro administration has projected that Pennsylvania will get $300 million more in revenue in this fiscal year than the IFO has projected, meaning the deficit would be slightly less (if the administration’s estimates hold true.)

The 2024-25 budget will require about $3 billion of surplus cash to balance, leaving about $10.5 billion in reserve.

The IFO’s analysis warns that the cost of tapping into its reserves to pay for this year’s budget will leave the state with just under $3 billion in general fund surplus at the end of 2024-25. That surplus is on pace to become a $1.57 billion deficit by the end of 2025-26.

The state ended 2023-24 with a $6.6 billion surplus, plus almost $7 billion in the Rainy Day Fund.

To read the full report, click here.

During a panel discussion hosted by the American Bar Association last week, PA Chamber Vice President and General Counsel Megan Martin voiced the business community’s opposition to House Bill 2012, proposed legislation under consideration in the state legislature which would establish Pennsylvania’s first state antitrust law. Other panelists included Michael Finio of Saul Ewing LLP, Tracy Wertz from the Pennsylvania Attorney General’s Office, and William Devinney of Briglia Hundley.

The PA Chamber’s objections to HB 2012 reflect the concerns of a broad coalition of Pennsylvania employers and 13 other leading industry organizations across the Commonwealth.

“[House Bill] 2012 harms consumers and businesses both large and small, adds uncertainty, and increases the risk of frivolous suits in our Courts of Common Pleas,” the coalition argued in a recent letter to state lawmakers.

Martin criticized the one-sided nature of this complex bill in that it was drafted with extensive input from the Office of Attorney General, but that no hearings were held before the bill was considered in the PA House of Representatives.

Martin contended that no members of the General Assembly, to her knowledge, are experts in antitrust, and it would have been incredibly helpful to the process had legal scholars and experts been afforded the opportunity to weigh-in with their expertise and insight. “As with all things in life, we need a balanced approach” to this process, she said.

Martin also criticized HB 2012 for its vague definitions of antitrust actions, which subject Pennsylvania’s employers to severe criminal penalties, including serving up to four years in prison and fines up to $1 million. She explained that the goal is to welcome businesses to Pennsylvania, not to drive them away. She also criticized the bill’s provisions mandating that the OAG will recover costs and fees if successful in a lawsuit, but that businesses will not be able to recoup those costs if they are successful.

Martin explained how the potential for expensive antitrust litigation, including mandatory treble damages, creates a litigation environment that will result in fewer businesses remaining, locating, or expanding in Pennsylvania. She cited the U.S. Chamber of Commerce’s recent study and conclusion that 89 percent of senior in-house attorneys and executives at large U.S. companies have reported that a state’s litigation environment is likely to impact important business decisions at their companies, such as where to locate or do business.

Martin also criticized the bill’s disproportionate focus on the healthcare industry – which she says would be subjected to “excruciating” regulatory oversight. She further pointed out that these healthcare notification requirements are premature, given that the Uniform Law Commission is still drafting model legislation on state Attorneys General’s access to pre-merger notifications and acquisitions. She urged Pennsylvania to wait for these recommendations before pursuing any changes.

“Healthy market competition benefits consumers through lower prices, higher quality products and services. The economic success of our Commonwealth is built on the fact that the market, not the government, maximizes economic efficiency for the benefit of Pennsylvania’s consumers,” Martin argued.

To learn more about the PA Chamber’s advocacy efforts on this issue, please click here.

Last week, a new Workforce Hub launched in Philadelphia as part of the Biden-Harris Administration’s comprehensive approach to training Americans for essential jobs that grow the nation’s economy while providing access to good careers through high-quality training and education.

Philadelphia was one of four cities chosen this past April by the White House for this workforce-focused investment, which will focus on clean water infrastructure and improved roadway safety in the region. Senior members of the White House were in Philadelphia last Thursday to announce major components of the hub, which has been the culmination of work between Philadelphia Mayor Cherelle Parker and key stakeholders to identify opportunities to grow and retain the skilled workforce needed for major infrastructure projects in the city. They include:

• Equitable Hiring Policy: Philadelphia will introduce a Geographic and Economic Hiring Preference pilot program that establishes goals for hiring 50 percent of apprentices and 20 percent of journeypersons on select public works projects from economically disadvantaged neighborhoods.
• Pre-apprenticeship investments: Philadelphia Works received a Good Jobs Challenge Grant from the U.S. Department of Commerce, and recently announced that $4 million of this funding will be set aside for infrastructure training and supportive services.
• Employment Services: Philadelphia Works and Southeast Pennsylvania has awarded more than $22 million to connect over 3,000 job seekers to good jobs across the healthcare, energy, and infrastructure sectors.
• Apprenticeship investments: Everybody Builds – which is a partnership of developers, contractors, and unions focused on diversifying Philadelphia’s construction industry – is launching a new Construction Trades Career Fund with $500,000 in seed funding from a foundation.
  • The Construction Trades Career Fund will support new apprentices from Philadelphia with services, including mentorship, childcare, housing, and hardship assistance. The fund will also address one of the biggest challenges facing construction workers: the need to have a reliable personal vehicle and auto insurance.

The Pennsylvania Chamber of Business and Industry is serving an ace for the biggest event of the year.

The PA Chamber announced that Serena Williams, the greatest tennis champion of all time and global icon, will be the keynote speaker at its 40^th PA Chamber Annual Dinner, which will be held on Monday, October 7, 2024, at the Hershey Lodge.

“Serena Williams is the G.O.A.T. And, it’s fitting that in the same year we’re celebrating 40 years of our revered Annual Chamber Dinner, our keynote speaker is a world champion who for decades withstood the test of time, forged her own destiny, served as an inspiration to millions, and seamlessly transitioned into a life of business leadership,” PA Chamber President and CEO Luke Bernstein said. “We can’t wait to host one of the world’s most recognizable and dominant public figures for a program that will also celebrate the Chamber Dinner’s history and highlight Pennsylvania’s important role in shaping America’s future.”

A four-time Olympic gold medal winner, the Associated Press named Serena Williams the Female Athlete of the Decade for her dominance and success in the 2010s, which was highlighted by her winning the 2017 Australian Open while expecting her first child.  Serena has not only reshaped women’s sports, she has been a trailblazer and inspiration for countless individuals throughout the world.  And while many know Serena Williams for her incredible tennis career, including 23 major (Grand Slam) women’s singles titles – the most in the Open Era – off the court, she has overcome adversity, fought for social justice reforms, and launched a successful business career. During the height of Serena’s tennis career, her passion for fashion design led her to fashion school and the development of her own clothing line, S by Serena. In the years since, Serena’s brands have expanded to include makeup with the launch of WYN BEAUTY in partnership with Ulta Beauty, jewelry and more, while her venture capital firm, Serena Ventures, seeks to advance businesses and innovation that promotes diverse leadership and opportunity.

Last week, ESPN premiered the first episode of IN THE ARENA: SERENA WILLIAMS, an 8-episode docuseries in which Serena shares a personal account of her most meaningful Grand Slam appearances and deconstructs the milestones of her legendary career. Each episode explores the pivotal moments in Serena’s life on and off the court, illustrating the series of steps that when reflected upon, show the incredible distance traveled over the course of her career. This premiere was followed by ABC’s broadcast of the 2024 ESPYS, which Serena hosted on July 11^th.

“I’ve taken on many titles throughout my life – athlete, CEO, investor, founder, author, wife, mother, the list goes on,” Serena Williams said. “I’ve been lucky over my career to have been uplifted by my family, my mentors and some of the world’s greatest thought leaders who have helped shape my life’s path and brighten my vision for the future. I look forward to sharing my experiences at this milestone occasion for the Pennsylvania Chamber.”

Stay tuned for additional details on the 40^th PA Chamber Annual Dinner, which will again serve as the most anticipated and memorable night in PA.

Sponsorship opportunities for this milestone event in Chamber Dinner history are now available. Visit www.ChamberDinner.com for more information.

Below are key highlights from the FY 2024-25 budget and elements important to the business community.

Total Spend

• Total General Fund spending of $47.6 billion for Fiscal Year 2024-25, representing a six percent increase in state spending over last year.
• Spends $740 million less than what Gov. Shapiro proposed in February.
• Makes a $740 million deposit into the Rainy-Day Fund, bringing the fund to over $7 billion.

Tax Changes

• Maintains the current phase-down schedule of the Corporate Net Income Tax (CNI), from 8.49 percent to 7.99 percent in 2025.
• Makes improvements to Pennsylvania’s treatment of Net Operating Losses moving forward by gradually increasing the amount companies are able to deduct using losses incurred after Jan. 1, 2025.  Prospective Net Operating Loss deductions will gradually increase, reaching 80 percent in 2029.  Net Operating Losses incurred prior to Jan. 1, 2025, may still be used to offset tax liabilities by up to 40 percent.
• Clarifies that any goodwill filed by banks with the Federal Deposit Insurance Corporation (FDIC) is excluded from the bank shares tax calculation. This resolves an issue where the Department of Revenue has denied goodwill deductions that involve combinations of bank holding companies which result in the combination of subsidiary banks.
• Creates a tax credit for employer contributions to employees’ 529 tuition savings accounts.
• Creates a tax credit for employer contributions toward employees’ child care costs.

Permitting Reform and SITES

• Creates the Streamlining Permits for Economic Expansion and Development (SPEED) Program, providing an option for third-party review of certain air, earth disturbance, and water permit applications, establishing permit review timelines by DEP and conservation districts, as well as a permit tracking system.
• Includes $400 million for the PA Strategic Investments to Enhance Sites (PA SITES) program, which funds site development and infrastructure to create shovel-ready sites.

Energy and Infrastructure

• Establishes a comprehensive regulatory framework for deploying carbon capture technology, which holds great potential to be added to Pennsylvania’s diverse energy portfolio. Establishing a legal and regulatory framework for carbon dioxide capture, utilization, and sequestration is vital to ensuring the deployment of billions of dollars in private capital and potentially leveraging federal infrastructure funding to innovate in low-carbon manufacturing, agricultural, and energy production projects.

• Uses $80.5 million of the current surplus to make a one-time investment in multimodal infrastructure projects through PennDOT.
• Continues the phase-out of State Police funding from the Motor License Fund with a goal to fully phase down by 2026-27.
• Implements a $200 user fee for electric vehicles that will scale up over time to ensure their contributions towards road and bridge infrastructure maintenance.

K-12 Education

• Adds roughly $1 billion in new K-12 public education funding. This includes:

• • $285 million to be driven out in the Basic Education Funding Formula.
  • A $100 million increase in special education spending.
  • $100 million for school facility upgrades.
  • A $526 million dollar increase in the Ready-to-Learn Block Grant.
    • $493.8 million of which will be driven out in a newly established “adequacy formula.”
    • $32.2 million will be granted to district with “high tax effort.”

• Increases the Educational Improvement Tax Credit allocation by $70 million, from $470 million to $540 million. This includes:

• • A $50 million increase for scholarship organizations.
  • $20 million more for educational improvement organizations.
  • Additionally, the Opportunity Scholarship Tax Credit will see a $5 million increase.

 Higher Education

• Establishes a Performance-Based Funding Council to create a formula for state subsidies to Pennsylvania’s research universities: Pitt, Penn State, and Temple.
• Creates the Grow Pennsylvania Scholarship Program: $5,000 grants for Pennsylvania students who meet degree requirements and work in an in-demand occupation in the state after graduation.
• Creates the Grow Pennsylvania Merit Scholarship Program: Offers in-state tuition to out-of-state students who commit to working in Pennsylvania in an in-demand occupation after graduation.
• Creates a new State Board of Education with the authority to:
  • Mandate broad data collection.
  • Develop procedures for an institution of higher education to follow when the institution proposes taking action to discontinue operations.
• Includes new mandatory tuition and fee disclosure requirements for all institutions.

Workforce

• Increases the Commonwealth’s investment in career and technical education by 21%, increases the investment in CTE Equipment grants, and makes it easier for qualified individuals to become a career & technical educator.
• Incentivizes employers to reimburse employees for childcare expenses by creating the Employer Childcare Contribution Tax Credit to ease the burden of child care that strains the PA workforce.
• Expands the Pennsylvania Housing Affordability and Rehabilitation Enhancement (PHARE) fund to expand the availability of workforce housing in Pennsylvania.
• Uses $80.5 million of the current surplus to make a one-time investment in transit operations, which is essential for many individuals to get to work.

Alcohol Sales

• Allows private sector establishments to sell Ready to Drink beverages (RTDs), which are growing in popularity but currently may only be sold in state stores, denying local convenience stores and supermarkets the ability to respond to their customers and sell these products.

Following the enactment of the FY 2024-25 state budget last week, Pennsylvania Chamber President and CEO Luke Bernstein issued the following statement:

“On behalf of Pennsylvania’s business community, the PA Chamber thanks the General Assembly and Gov. Shapiro for passing a budget that takes important steps to make Pennsylvania more competitive. This budget includes several key legislative priorities that the PA Chamber has long championed, including eliminating Pennsylvania’s Startup Tax by raising the cap on net operating losses, modernizing our permitting processes, and advancing workforce initiatives. These provisions will help attract new economic opportunities, expedite project approvals so that businesses can grow and create jobs, help employers address workforce challenges, and equip Pennsylvanians with the skills needed for the future.”

Pennsylvania’s 2024-25 state budget addresses several of the statewide business community’s top priorities:

Permitting Reform

The budget includes significant improvements to state permitting processes that will reduce delays in development and business expansion projects. The reforms include allowing employers to work with third-party professionals to help facilitate the review of applications for many key permits, establishing timeframes for responses, and measures for easier and more transparent tracking of permit applications. These reforms will streamline the permitting process, further encouraging investment and job creation, and help ensure that the newly authorized funding for the PA Strategic Investments to Enhance Sites (SITES) Program is successful in preparing business sites for development.

The PA Chamber has worked closely with state legislators, particularly state Sen. Kristin Phillips Hill (R-York), who has advocated for permitting reform for many years, as well as Sen. Lisa Boscola (D-Lehigh), Rep. Martina White (R-Philadelphia), Senate leaders Kim Ward (R-Westmoreland) and Joe Pittman (R-Indiana), Gov. Shapiro, industry leaders, building trades, and other advocates to advance many of the bipartisan permitting reforms included in this budget.

Tax Reform

This budget gradually eliminates Pennsylvania’s Startup Tax by prospectively improving the tax treatment of net operating losses (NOLs), which allows businesses to carry losses forward and deduct them against future profits to reduce their tax liability so they can reinvest in their business and people. This change will ultimately align Pennsylvania with the federal standard and the rest of the country. As a result of this change, Pennsylvania will be a more attractive destination for new and growing businesses.

The PA Chamber has made improving the treatment of NOLs a top priority, working closely with Sen. Greg Rothman (R-Cumberland) and Senate leaders Ward, Pittman, and Scott Martin (R-Lancaster), as well as a bipartisan group of allies that also includes Sen. Ryan Aument (R-Lancaster), Sen. Nick Miller (D-Lehigh), Rep. Paul Friel (D-Chester) and Rep. Josh Kail (R-Beaver). We look forward to continuing this work with lawmakers, including efforts to improve the treatment of existing NOLs for Pennsylvania businesses that invested in the Commonwealth despite a challenging tax climate. The budget also continues the phasedown of the Corporate Net Income Tax, which will be further reduced from the current 8.49 percent rate to 7.99 percent in 2025.

Workforce Development

The budget also advances initiatives to build a skilled workforce. Initiatives include increasing the Commonwealth’s investment in career and technical education (CTE) and making it easier for qualified individuals to become CTE educators; incentivizing employers to reimburse employees for childcare expenses; creating scholarships for students who choose to enter in-demand fields; increasing the Pennsylvania Housing Affordability and Rehabilitation Enhancement (PHARE) fund to expand the availability of workforce housing in Pennsylvania; and increasing transportation funding to help Pennsylvanians get to work.