Moving Pennsylvania In The Right Direction

State Senator Jane Earll

We are more than halfway through the first year of a new Administration and Legislative Session. I will take this opportunity to provide an update on some of our activities.

For the first time in almost a decade, the budget passed on time. Faced with a daunting $4 billion deficit, this certainly did prove to be the toughest budget in my sixteen year tenure. While tough choices had to be made, I believe we have passed a fiscally responsible budget that put the reins on spending, uses our tax dollars wisely, and allows Pennsylvanians keep more of what they earn.

There is much to be done to improve the business climate in Pennsylvania. There’s probably no need to remind folks that our system was designed to move slowly to ensure all aspects of an issue are examined and properly vetted. Getting consensus from four caucuses, working legislation through the House, Senate, and ultimately the Governor and balancing competing interests is often a difficult and tedious task. We have, however, started off this new Legislative Session with some improvements that I believe will move Pennsylvania in the right direction.


Unlike the Federal Government, PA law requires the state budget be balanced. With a pledge to not raise your taxes, the Legislature made some tough decisions. Just like in your businesses, there were and are no easy answers but the 2011-12 budget just signed by Governor Corbett includes a 4.1% reduction in general fund spending from the 2010-11 fiscal year.

The total state operating budget was reduced for the first time in 40 years to $64 billion; more than $2 billion less than the previous year.

This budget eliminates 66 appropriation line items, reduces funding for more than 226 appropriations and consolidates an additional 52 items. Administrative spending was reduced by four percent and more than one thousand positions in state government were eliminated.


The 2011-12 spending plan included no tax increases. It held the line on the Personal Income Tax and the Corporate Net Income Tax.

The budget continues the phase-out of the Capital Stock and Franchise Tax (CSFT). The phase-out is a popular target for those looking to generate more short-term revenue. TheCSFT had been as high as 13 mills in 1991. It is now 2.89 mills, and is scheduled to drop to 1.89 mills next year, providing job creators with $70 million in tax relief. The rate is scheduled to drop to 0.89 mills in 2013 and be completely eliminated by 2014.

At the same time, the budget has maintained important tax credit programs, and increases the Research and Development Tax Credits from $40 million to $55 million.

This budget brings state tax policy into line with the federal tax code. It increases the bonus depreciation deduction for corporate taxpayers to 100 percent for property placed into service before January 2012. 117,000 businesses will benefit, allowing for greater capital investment and encouraging further economic growth.

The budget slashed the number of exceptions a school district can claim to raise property taxes above the inflation rate without a voter referendum. The increased use of voter referenda will benefit businesses and all property tax payers.

A Keystone Special Development Zone has been created for parcels of real property certified as Brownfields. The program provides a tax credit for employers equal to $2,100 per new full-time job created beginning in tax year 2012 and for a period of 10 tax years during the 15 year period of the zone.


Lawsuit abuse reform has long been a priority for the Manufacturer & Business Association. Currently, Pennsylvania’s legal system operates under an outdated common law rule known as Joint and Several Liability. Under such a system, every defendant found partially liable in a lawsuit can be held responsible for the entire verdict, even if they are only deemed to be one-percent liable.
Under the new law, individual defendants found to be less than 60 percent liable in most civil cases are responsible for paying only their proportionate share of the judgment.
Enactment of this tort reform was the culmination of a decade-long effort. Viewed as a critical step toward improving Pennsylvania’s legal climate, the Fair Share Act is a very encouraging sign for Pennsylvania’s businesses.


The Legislature also enacted several changes to unemployment compensation.
The new law extends unemployment compensation benefits for about 45,000 Pennsylvanians and also reforms existing law. Among the changes are the creation of a shared-work program, a requirement for some claimants to exhaust severance pay prior to collecting unemployment compensation, and a requirement that claimants actively seek new employment to collect benefits.


We realize there is more to be done. The task of governing is never ending. Taking stock after the initial months of this session, however, I am generally pleased with what we have accomplished thus far. I hope to continue this momentum into the Fall Session. As always, your comments and suggestions are appreciated. Feel free to contact my local office at 814-453-2515, Harrisburg office at 717-787-8927 or by e-mail: [email protected]

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