Success! But the Work Continues

Success!

But the Work Continues

By Katie Hetherington Cunfer, Director of Government & Community Relations, GRCA

Time to celebrate! With the passage of 2022-23 PA State Budget, several short and long-term pro-business policy goals were achieved. Thank you to all of members of the Berks County state delegation who voted for the budget and for the amended SB 382 that halted the Pennsylvania Department of Transportation’s plans to toll nine interstate bridges, including the Lenhartsville Bridge on I-78.

This year’s budget included the long-sought reduction of PA’s Corporate Net Income Tax (CNIT). PA’s 9.99% CNIT, the second in the highest in the country, will reduce to 8.99% in 2023, and further reduce by .5% each year until it reaches 4.99% in 2031. This was also achieved without additional riders such as combined reporting that would have reduced the impact of the tax reduction. Once fully reduced, this will make PA’s CNIT the sixth lowest in the country. If only we could fully unlock Pennsylvania’s vast energy resources, we’d really have something.

Another win in this year’s budget was PA finally allowing 1031 like-kind exchanges. We were the last state in the country to not allow this practice. Internal Revenue Code Section 1031 provides that no gain or loss shall be recognized on the exchange of likekind property held for productive use in a trade or business or for investment. This will unlock increased business investment and job creation, especially for the small business community.

The state enacted a new, permanent tax deduction for 30% of the cost of childcare for families. For people who care for one dependent, expenses claimed cannot surpass $3,000. For those with two or more dependents, it cannot surpass $6,000. This is available to married couples with up to $150,000 in annual income or a single filer who made half that were eligible for the full amount of the federal tax credit in 2021. A one-time property tax reduction for low-income, older Pennsylvanians was also incorporated into this year’s budget.

The budget also held the line on spending, only increasing by 2.9% overall and putting more money into the “Rainy Day Fund” to prepare for looming fiscal cliffs. This is extraordinary in a year where revenue as 13% above projections, and the state had billions in American Rescue Plan (ARP) funds to allocate. As part of the ARP funding, the state set aside $375 million to help address housing issues including $125 million for the “Whole Home Repair” program that will offer a maximum grant of $50,000 for people with low to medium incomes and landlords who rent to people at those income levels to fix roofs, install energy efficient windows, and other home repairs projects. This program will be good for urban and rural communities alike, and Berks County should be focused on maximizing this program to improve and expand our existing affordable housing stock.

There was a lot of good news in this year’s budget, but as my old junior high girls’ basketball coach used to yell, “Don’t watch your shot, hustle back on defense!” He coached for over 30 years and had several league, district and state winning teams so Coach Hope knew what he was talking about. In advocacy, just like in business, you celebrate the wins, identify the areas that need improvement, then put together a game plan and execute.

Some examples include the $42 million set aside to shore up the Unemployment Compensation Fund in the short term, but this program has long-term, systemic problems that need addressed. We were able to halt the bridge tolling proposal with major thanks going to the communities who brought suit against PennDOT and won in Commonwealth Court, but we still need to identify a long-term, sustainable mix of revenue sources to fund our infrastructure needs as the gas tax becomes less and less effective. We also need to work on policies and programs that will help people reenter the workforce, including reducing barriers to entry and increasing access and utilization of workforce training programs. We also have a laundry list of work related to federal policies that are exacerbating inflation and supply chain disruption.

So, cheers to a few well-fought victories, but the clock has already started on a new game, and we need your help to win again.