Budget Briefing: Jobs That Pay

February 09, 2016

There are two paths we can take in considering Pennsylvania’s economic future. We can work with the private sector to make targeted investments in job creation or we can continue down a path of financial devastation caused by budget gimmickry that will result in a $2.3 billion deficit that will stifle economic growth in Pennsylvania. Governor Wolf has worked with businesses across Pennsylvania to help them grow and thrive, but inaction by the legislature has left us with a ballooning deficit. If we build on a bipartisan budget agreement and work to eliminate the deficit, we can take on the status quo and work with businesses to drive economic growth in Pennsylvania. If we fail to honestly address our deficit, we will see skyrocketing property taxes and an economic environment diminished by a lack of investment.

FAILURE TO ACT

Property Tax Increases
If we do not act to eliminate our deficit, nearly three-quarters of Pennsylvania homeowners will see their already-too-high property taxes skyrocket even further. Property taxes will continue to increase for businesses, choking economic growth. This has played out over the past four years. Since 2011, school districts have been forced to increase local property taxes by $1.2 billion dollars. In the last year alone, 83 school districts increased property taxes above the index because of budget uncertainty, and another 175 school districts are contemplating additional tax increases this year.

Lost Jobs
If we are unable to fix our deficit, key partnerships between the public and private sectors could be cut or eliminated. The PA First Program helps to secure significant job creation and retention projects through the Governor’s Action Team as well as customized job training for thousands of incumbent workers under the WEDNet Program, but if we fail to fix our deficit, this funding could be reduced or eliminated. A cut to funding to the Ben Franklin Technology Partners would decrease the number of company investments – new or follow-on investments – that each of the four regional Ben Franklin Technology Partners would make in Pennsylvania’s tech companies. These investments are crucial for the growth of our companies and are often leveraged by outside sources of capital.

The cut would also eliminate critical programming for our entrepreneurs that help provide them the skills and opportunity to create jobs in Pennsylvania. Cutting funding for the Partnerships for Regional Economic Performance (PREP) program would reduce the number of Pennsylvania companies supported by partners, including the Small Business Development Centers and regional Industrial Resource Centers. Further, organizations that use the PREP funding to match their Federal funding may not be able to raise the entire match requirement. If we want to maintain these public-private partnerships and provide critical assistance to job creators, we need to honestly address our deficit.

Elimination of Services for Local Governments
If we do not address the deficit, services that help municipalities could be cut. A cut in funding to the Center for Local Government Services’ budget will result in a decrease in the Center’s capacity to offer technical assistance to municipalities across the commonwealth as well as halt in the development of the Early Warning System. A cut in the Center’s budget would limit the Center’s staff from assisting communities in need, impacting the ability of a functioning government. Other programs, like Keystone Communities could face cuts as well. If the Keystone Communities program were to be cut by 10%, the number of communities and downtowns that would have benefited would be limited. The number of Pennsylvania’s communities and neighborhoods that could experience growth and stability would be cut. Streetscape and façade improvement initiatives would not happen. Improvements in Main Street and Elm Street neighborhoods that help drive business development and encourage residents to move into our communities, would not happen.

CHOOSING A RESPONSIBLE PATH

Investing in Proven Job Creation Programs
Since his inauguration, Governor Wolf has made “Jobs that Pay” a priority in Pennsylvania. In 2015, the Governor’s Action Team completed 58 relocation and expansion projects which created more than 4,500 new jobs and retained over 11,000 positions, announced the successful phase-out of the Capital Stock and Foreign Franchise tax, and grew the Solid Gross Domestic Product by two percent. In December 2015, the unemployment rate dipped below five percent for the first time since March 2008.

The 2016-17 Budget continues to focus on policies and investments that foster the creation of good-paying jobs, encourage partnerships among business and our education system, and lead to a strong economy.

Successful economic development requires partnerships between the public and private sectors. The 2016-17 Budget continues a two-year restoration of previous cuts in economic development programs by reinvesting in initiatives that are proven to create jobs and result in long-term economic growth. The 2016-17 Budget:

  • Provides an increase of $11 million to PA First for a total of $45 million, estimated to create at least 11,000 jobs, retain 40,000 jobs, and leverage $1.9 billion in private sector investment
  • Provides $15 million for The Keystone Communities program
  • Provides $30 million to Infrastructure and Facilities Improvement Program
  • Provides $798,000 to help prevent base realignment and closure actions by the federal government
  • Reallocates $125 million in existing Commonwealth Financing Authority (CFA) resources to recapitalize Business in Our Sites.

Making Work Pay: Increasing the Minimum Wage
Pennsylvanians who work full time at the minimum wage earn $15,080 annually, leaving them below the poverty level for a family of four and unable to afford basic necessities. The current minimum wage of $7.25 purchases about one-quarter less than the minimum wage did in 1968, although low-wage workers now are better educated and more skilled.

The 2016-17 Budget proposes to raise Pennsylvania’s minimum wage from $7.25 to $10.15 per hour, while tying it to inflation to maintain its purchasing power over time. A minimum wage increase to $10.15 per hour supports local businesses, creates new jobs, and would boost state revenue by roughly $60 million annually.
Training Pennsylvania’s Workforce for Jobs That Pay
The federal Workforce Innovation and Opportunity Act (WIOA) seeks to strategically align workforce development programs and match employers with qualified skilled workers. Through an unprecedented effort to bring together multiple state agencies, employers, and education and training providers to increase the number of high-paying jobs and better prepare Pennsylvanians for those jobs, this plan aims to:

  • Make job training more responsive to employers’ needs by engaging with industry-driven workforce partnerships;
  • Increase the number of Pennsylvanians who have college degrees or industry-recognized skill credentials or certificates so that by 2025, 60 percent of
  • Pennsylvanians will possess those credentials or certificates;
  • Link job training to career pathways, so that training leads to jobs that provide higher pay over time;
  • Enable youth to gain skills and work experiences by providing opportunities for summer jobs, internships, apprenticeships and other types of work-based learning, and
  • Improve the ability of state agencies and training providers to better understand jobs of the future and the education and training to prepare Pennsylvanians for those jobs.

To complement the provisions in the proposed WIOA State Plan, the 2016-2017 Budget will provide:

  • $11.6 million to Pennsylvania Industry Partnerships program to enable workers to earn industry-recognized credentials and move up into better jobs,
  • A $2 million increase for vocational rehabilitation programs that help persons with disabilities prepare for, obtain and maintain employment, and \
  • A $12 million to continue an initiative that combines the knowledge and experience of the state’s Industrial Resource Centers with the technological advances of our higher education sector through The IRC Manufacturing Initiative.

Read more posts about Governor Wolf’s 2016-17 budget.

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