Region's Business - Philadelphia 7 February 2013

INSIDE CORBETT’S 2013 BUDGET HIS LEGACY IS ALMOST SHAPED

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

LOOKING FOR ANSWERS FROM

CFOs

Increasingly expected to spearhead growth & innovation, they see reasons for optimism in 2013.

WHY YOU SHOULD NOT GIVE UP ON A CLIENT BUCKS COUNTY SAYS ‘I DO’ TO WEDDING BUSINESS GOOD NEWS ABOUT THE AMT RegionsBusiness.com $2.00 U.S.

FEBRUARY 7, 2013

7 FEBRUARY 2013

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CONTENTS

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Looking to CFOs for answers Chief Financial Officers are increasingly looked to for leadership and to drive both growth and innovation. An exhaustive survey shows them to be cautiously optimistic about 2013’s opportunities and challenges.

!

As a business leader, never forget the power that a highly motivated team can deliver.”

DR. MICHAEL S. BRODER

Bucks 23Why Says ‘I Do’

to Weddings

! The tourism office knows there’s big business in wooing prospective brides to the county.

2013: YEAR OF THE INNOVATOR

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There’s No Time Like the Present

In this week’s installment, we meet a Wharton student who is capitalizing on new connections to get his business rolling, a company born out of a University of Pennsylvania classroom, advice on why you should never fire a client and a spotlight on education startups. !

GOV. CORBETT’S 2013 BUDGET

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Corbett Presents Challenge for Lawmakers The governor’s spending plan challenges lawmakers, but only time will tell if they are up to the task of making it happen. !

REGION’S BUSINESS Independence Media Corp.

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Editorial: Smart Plan, Savvy Moves ! Gov. Corbett does the right thing by ignoring sagging poll numbers to deliver a budget that addresses real problems like infrastructure and pensions while taking advantage of opportunities such as the privatization of the state’s liquor stores.

PRESIDENT AND PUBLISHER James D. McDonald EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Brandon Baker CONTRIBUTORS Karen Fratti, Don Lee, Charles Gerow,

Timothy Holwick, Eric Boehm, Melissa Daniels

2040 Market Street Precision Realty Group is pleased to announce that the Pennsylvania Liquor Control Board (PLCB) has signed a long term lease for a flagship location at 2040 Market Street. Fine Wine and Good Spirits will join National Penn Bank to complete the retail portion of the former AAA Building on the corner of 21st and Market Streets. Shaun M. Lyons, President of Precision Realty Group handled the transaction on behalf of PMC Property Group. The PLCB will occupy 10,000 SF with the premium state store set to open in late Spring of 2013.

2022-24 Chancellor Street Available For Sale Premier Mixed Use Building 2 blocks off of Rittenhouse Square First Floor Commercial Second Floor Residential Perfect for Owner/Occupier $1,975,000

PROOFREADER Denise Gerstenfield ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Deidre Affel ADMINISTRATIVE COORDINATOR Zelinda Barnes

© Copyright 2013 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited.

Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com.

The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.

1429 Walnut Street Suite 1200 Philadelphia, PA 19102

866-Walnut 4 www.precisionrg.com

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7 FEBRUARY 2013

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EDITOR’S DESK

An Open Memo To Big Banks: Please Help

Karl Smith is the Editorial Director for Region’s Business.

You can contact him at ksmith@regionsbusiness.com.

I was lucky enough to attend last week’s Philly Think Tank, a fantastic event sponsored by Dell.

Dell has been taking this show around the country, and it’s beautiful in its simplicity - get together a bunch of entrepreneurs and small business people, give them access to some experts and figure out what needs to be done to help businesses prosper.

For Dell, it’s smart business because small businesses crave technology. So if Dell can help them grow, the small businesses will have the ability to acquire technology, which is what Dell sells. And, as we learned, Dell creates its technology to scale up, not down, meaning they create it for use by small business with the intention that it can be scaled up to work for larger businesses.

For the Philly event, Dell corralled some big names, including Josh Kopelman, who talked about technology and did so in a way that made you think that we might actually be flying around in those jetpacks they all promised us as kids. Melinda Emerson (Twitter: @smallbizlady) put on a dynamic presentation, too.

However, the one that hit home for me was the most low-key of the three. Ami Kassar of Multifunding.com talked about money, which is always a great topic. He didn’t have the frenetic energy of Ms. Emerson or the big picture visions of Mr. Kopelman.

You see, Mr. Kassar helps small businesses get loans, the very lifeblood of a growing business. I’m hoping we’ll be able to get him to share more ideas in an upcoming

edition, but for now, it’s important to talk about some of the highlights of his presentation.

Most alarmingly, he said he does not deal with large banks when it comes to small business loans. Note that he didn’t say he doesn’t like to work with large banks, he does not work with large banks. Period.

Basically, each small business loan is “quirky” and “has hair” and, in Mr. Kassar’s view, big banks just can’t give them the attention they require.

Since big banks control most of the capital, the fact that it’s too difficult for small businesses to get loans there is a problem. A very real, very big problem.

Second, Mr. Kassar noted that most small businesses don’t do a good enough job (in the view of

large banks) with their books to qualify for loans with reasonable terms. He pointed to one example where the interest on a loan went up 20 points because the books were behind by six months.

Big banks talk all the time through advertising and marketing - about helping small businesses. It’s time to put that talk aside and have some action. The Fed is lending money practically for free and that should - should - allow small businesses to get the loans they need. That is not happening, which is troubling on many levels.

Small businesses can put the economy into overdrive and big banks could be the fuel that makes it happen. But not without rethinking their rules. Now is the perfect time to do that.

7 FEBRUARY 2013

REGIONSBUSINESS.COM

EDUCATION

Former Schools Superintendent Ackerman Dies

WEEKLY BRIEFING

Navy Yard Celebrates 10,000 Jobs

10,000

Jobs now at The Navy Yard

2,500

Former Philadelphia School District Superintendent Arlene C. Ackerman — a self-described “warrior for the children” whose three-year term in Philadelphia was surrounded by praise but ended in controversy — died from pancreatic cancer February 2 at her home in Albuquerque, NM.

Pa. Faculty Union Tentatively Agrees to 4-Year Contract A negotiation committe representing faculty at Pennsylvania’s state colleges and universities tentatively agreed to a four-year contract after a weekend-long negotiation session with the Pennsylvania State System of Higher Education.

The deal offers salary increases of 11.5 percent or 19 percent — bringing total salaries between $44,795 and $107,870 — for members of the Association of Pennsylvania State College and University Faculties.

$25M Donation Funds Political Science, Economics Center University of Pennsylvania alumnus Ronald O. Perelman donated $25 million to his alma mater to establish the Ronald O. Perelman Center for Political Science and Economics.

The center, located in the West Philadelphia Trust Building at 36th and Walnut Streets, will be the new home of the Political Science and Economics departments in the School of Arts and Sciences.

“Ron Perelman’s extraordinary generosity will enable us to create an outstanding center for political science and economics, two of Penn’s most popular undergraduate majors,” Penn President Amy Gutmann said.

BY THE NUMBERS

Employees added since 2008

30,000

Target number of jobs at The Navy Yard

130

Companies located at The Navy Yard Pat Woody, department head of NAVSSES, speaks at The Navy Yard Friday.

The Philadelphia Industrial Development Corporation (PIDC), Philadelphia’s citywide economic development corporation, was joined by Mayor Michael A. Nutter and many of the public and private sector partners and tenants to celebrate reaching 10,000 employees at The Navy Yard, and to unveil an updated Master Plan to accommodate the phenomenal investment and job growth that has made The Navy Yard the most successful Navy base redevelopment in the country.

The 10,000-employee milestone confirms the rebirth of The Navy Yard as it exceeds pre-closure employment levels at the former Navy base.

The Navy Yard is a 1,200-acre business campus with 130 companies occupying more than 6.5 million square feet of office, industrial, manufacturing, and research and development space.

“Make no mistake—The Navy Yard is a major engine of economic growth, and it promises to be better than ever in the years to come,” said Mayor Nutter, who was the keynote speaker at the celebratory event.

John Grady, PIDC president, said the campus would formally reach the 10,000-employee mark Monday, when GlaxoSmithKline began to transition into its new, 208,000 square-foot building.

“We want to thank all 130 companies and 10,000 employees for helping us reach this historic point in The Navy Yard’s

FACEBOOK.COM/THENAVYYARD

MAKE NO MISTAKE — THE NAVY YARD IS A MAJOR ENGINE OF ECONOMIC GROWTH, AND IT PROMISES TO BE BETTER THAN EVER IN THE YEARS TO COME.’ —MAYOR MICHAEL NUTTER

rebirth,” Mr. Grady said. “This achievement reflects the commitments made by private employers, universities, developers, and the Navy, who have all taken the risks to locate and grow their businesses at The Navy Yard, as well as the people who come to work here every day.”

The Master Plan 2013 Update allows for an expansion of the campus, based on historic preservation, sustainability, and smart growth.

The Plan’s vision includes environmentally friendly workplaces, notable architecture, industrial and commercial development, public spaces, waterfront amenities, improved mass transit, and residential development.

The Navy Yard will support up to 13.5 million square feet of facilities, attract $3 billion in private investment, and employ more than 30,000 people.

65%

Companies at The Navy Yard that are new to Philadelphia

1,200

Acres covered

by The Navy Yard

6.5M

Square feet of office space now at The Navy Yard

$3B

Targeted private investment in The Navy Yard

13.5M

Square feet of facilities in the Master Plan for The Navy Yard PHILADELPHIA INDUSTRIAL DEVELOPMENT CORPORATION

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7 FEBRUARY 2013

WEEKLY BRIEFING: DEVELOPMENT

COMMERCIAL REAL ESTATE

Brandywine Realty To Redevelop Office at 1900 Market St.

REGIONSBUSINESS.COM

DRWC Moves Foward With Penn’s Landing Makeover

Brandywine Realty Trust, of Radnor, Pa., purchased 1900 Market Street in Philadelphia for $34.8 million in the fourth quarter and plans to redevelop the site to be a Class A office building by late 2015, the company announced.

The 456,922-square-foot office space is 76 percent occupied, but Cozen O’Connor — which occupies more than 200,000 square feet — is expected to leave the building when its lease expires in December 2015.

REAL ESTATE

City’s Most Expensive Zip Codes Analysis conducted by Point2 Homes shows in which zip codes homes are listed at the highest prices.

$649,900 Median asking price of homes in zip code 19118 (Chestnut Hill)

$637,000

Liberty Property Trust to Build $5M Office

Median asking price of homes in zip code 19107 (Chinatown)

$560,000 Rendering of the plan for Penn’s Landing

BY ISAAC RIDDLE Liberty Property Trust is planning to spend about $5 million to develop a sixstory, 200,000-square-foot office building for The Vanguard Group at the Great Valley Corporate Center in Malvern, Pa. Construction of the building, which was designed by D2Ca Architects, will begin in March with an estimated completion date of mid-2014.

US GSA Moving Into Historic City Office The U.S. General Services Administration, which is currently at 8th and Market Streets in Philadelphia, will move into the Dow Chemical Company’s historic city office in late 2014, Dow announced recently.

Leasing the 122,000 square feet in the Dow building allows GSA to keep its about 600 employees in downtown Philadelphia.

The Dow office building was added to the National Register of Historic Places in 2007, according to a company statement.

P

enn’s Landing is on its way to a long-needed makeover. The Delaware River Waterfront Corporation has submitted requests for qualifications by reputed firms to conduct preliminary design and engineering for a makeover of Penn’s Landing.

Interested firms will need to follow the guidelines set for Penn’s Landing in the Delaware River Master Plan adopted by the city in March 2012.

According to the DRWC press release, the Master Plan identifies Penn’s Landing as one of three priority sites that are intended to spur development along the waterfront.

The selected firm will have the task of designing a way to connect Penn’s Landing to the Old City neighborhood. Currently, Interstate 95 and the busy Columbus Boulevard serve as barriers between the park and the historic neighborhood.

The current plan for Penn’s Landing is to cap the four acres over I-95 between Chestnut and Walnut streets. A four-acre sloping park will further connect the newly capped portion of the freeway to the waterfront.

DELAWARE RIVER WATERFRONT CORPORATION

Penn’s Landing’s infamous concrete landscape will also be replaced with a large lawn surrounded by trees.

Apart from eliminating barriers between Old City and the waterfront, DRWC is also asking firms to engineer an extension South Street so that it no longer stops at Columbus Boulevard but instead connects directly to the waterfront.

The DRWC is also considering removing the Market Street scissor ramp and surface parking lot and replacing that space with a mixed-use development.

Proposals will be due to the DRWC on March 4, with interviews taking place March 18.

According to the DRWC, the design process will be done in two phases. The first phase will be the preliminary design and engineering phase. Phase two will include a feasibility study as well as plans for implementation of the selected firm’s proposal.

Construction will not begin until the first two phases are complete and the necessary funding and support is acquired.

The study is being funded by the William Penn Foundation.

This article originally appeared on the Philadelphia Real Estate Blog.

Median asking price of homes in zip code 19103 (Center City West)

$408,700 Median asking price of homes in zip code 19102 (Center City)

$399,000 Median asking price of homes in zip code 19106 (Society Hill)

$388,800 Median asking price of homes in zip code 19123 (Northern Liberties)

$329,900 Median asking price of homes in zip code 19147 (Passyunk Square, Queen Village, Bella Vista/ Southwark)

PHILADELPHIA REAL ESTATE BLOG

7 FEBRUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

@PPDJoeMurray Joseph Murray This Philadelphia Police detective is as entertaining as he is informative about crime and dangerous conditions in the city.

RT @PPDJoeMurray: Disclaimer: I don’t pretend to know how hard it is to carry a purse around.

Please don’t berate me for the following tweet. I’m sensitive.

RT @PPDJoeMurray: Hanging purses on the back of your chair is a very very bad idea. Putting your purse on the ground? Bad idea.

Purse unzipped? Awful idea.

Creativeship In his new book, Creativeship: A Novel for Evolving Leaders, noted author and business consultant Bob Kelleher reveals the meaning of Creativeship and the six interdependent business pillars that create sustainable businesses and cultures.

Mr. K e l l e h e r, the founder of The Employee Engagement Group and former Fortune-500 C hie f Human Capital Officer, has t r av e l e d the globe sharing his insights on employee engagement, leadership, workforce trends and, most recently, Creativeship.

Based on Mr. Kelleher’s own experience and the current issues facing today’s businesses, the story in Creativeship is supported by learning points, suggested readings, best practices, and examples.

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RESTAURANT ROUNDUP

MUST-HAVE APP

Cozi Family Organizer Cozi, a free app on both the Android and iOS markets, includes a shared calendar, shopping lists, to-do lists and a family journal.

An ad-free version of the app is available for purchase.

Cozi was given a 2012 Appy Award for Best Family/Parenting app and was named the No. 1 iPhone app for moms by Circle of Moms.

GOTTA-HAVE-IT GADGET

Amiigo Unlike other fitness trackers, Amiigo ($99-$119, Amiigo.co) actually knows what exercise is being performed and sends information to your smartphone.

Sensors in the bracelet correlate with upper body exercises and sensors in the shoe-clip focuses on the lower body.

Philly Cooks Week Philadelphia magazine’s Philly Cooks Week is offering three restaurant tours each night between February 25 and 27. The final four tours were announced this week.

Rittenhouse Tour #2 (5:15-7:45 February 26) Zama, Lacroix and Il Pittore Washington Square West Tour (5:15-7:45 February 26) Kanella, Talula’s Garden and Chifa South Street Tour (5:15-7:45 February 27) Supper, Percy Street, Brauhaus Schmitz Fishtown Tour (5:15-7:45 February 27) Kraftwork, Fette Sau, Frankford Hall FOOBOOZ.COM

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7 FEBRUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

BANKING

Lower Bucks Bank Names New CEO Bucks County’s oldest bank has named Daniel J. Schaffer its new chief executive officer, PhillyBurbs.com reported.

Mr. Schaffer had been president of First National Bank and Trust Co., of Newtown, since November 2011.

He took over as CEO on January 15.

Controversial Gas Tax Shift Could Rebuild State’s Roads

Blatstein Dumps Hard Rock for Provence

Pennsylvania’s aging bridges and roads could receive necessary improvements if Governor Tom Corbett’s fundraising proposal is supported by the state legislature. CHRIS CONNELLY

Blatstein Pays Overdue Taxes

TAXES

Philadelphia’s Suit: Yuengling Owes $6.6M in Taxes The City of Philadelphia filed a suit in the Court of Common Pleas January 30 claiming D.G. Yuengling & Son Inc. owes $6.6 million in business-related taxes, fees and penalties.

Yuengling’s chief operating officer, David A. Casinelli said it likely has to do with a dispute between the brewery and the city over the business privilege tax, the Associated Press reported.

HEALTH CARE

Parents Magazine Names CHOP No. 1

Parents magazine named Children’s Hospital of Philadelphia the No. 1 pediatric hospital in the United State.

The results of the complete survey will appear in the March 2013 edition of the magazine. The hospital’s cancer center and emergency medicine division also earned No. 1 rankings.

Neonatology ranked second, and orthopedics and pulmonology ranked third in their respective categories.

GAMING

BY MELISSA DANIELS HARRISBURG — Pennsylvania could finally see some serious improvements in roads and bridges, but only if lawmakers are willing to follow the governor’s plan to raise funds through a plan that might also boost gas prices.

On the same day Gov. Tom Corbett introduced his 2013-2014 budget proposal, he announced a plan to generate more than $5 billion in transportation funding over five years, mostly from a change in the way gas taxes are levied.

Under Gov. Corbett’s plan, funds would come from lowering the flat tax paid by consumers while increasing the tax gas stations pay on fuel.

Gov. Corbett and other administration officials maintain this wouldn’t necessarily raise gas prices, as pump prices are determined by a variety of factors, including the price of crude and location.

Next year, Gov. Corbett predicts, the state

will spend about half a billion dollars on roads, bridges, public transportation, locally owned roads and other system-wide improvements.

By the fifth year of the plan, the state’s transportation system would see about $1.8 billion worth of improvements.

The Corbett plan may go nowhere in a state with dozens of lawmakers who have taken the no-newtaxes pledge.

House Majority Leader Mike Turzai, R-Allegheny, said lawmakers on both sides of the aisle want to discuss solving the state’s transportation funding issues.

Rep. Turzai said he did not think “the governor’s proposal is necessarily the definitive proposal” or that it will get passed by the June 30 budget deadline.

But he promised to give the proposal a “very, very serious look,” he said.

“I think there’s going to be a significant discussion about what the size and shape of funding, any

additional funding, for transportation would be,” Rep. Turzai said.

House Appropriations Chairman Bill Adolph, R-Delaware, said that if lawmakers can pass a transportation bill, it would have to have bipartisan support.

During his budget address, Gov. Corbett said transportation is the “bloodstream” of the state’s economy. About a half-trillion dollars worth of goods and services move across the sprawling Keystone State annually, along with 1.5 million school children riding on buses, he said.

“If it fails, our economy fails,” he said.

Gov. Corbett maintained that he does not think this proposal is a tax increase.

The oil company franchise tax applies to gasoline sold at the wholesale level. The cap is applied to the first $1.25 of a gallon.

Gov. Corbett’s proposal would phase that down and remove it completely within five years.

— PA Independent

Saying that working with Hard Rock Resort & Casino and the Seminole tribe of Florida “wasn’t practical,” Tower Investments founder Bart Blatstein said he would be using the Isle of Capri as the operator of his proposed North Broad Street entertainment complex, The Provence, The Philadelphia Inquirer reported.

Isle of Capri operates 15 casinos across the country and serves 2 million visitors annually, according to its website, islecorp.com.

Mr. Blatstein recently paid a $120,274.89 debt to the City of Philadelphia for back taxes owed on a Northern Liberties building.

However, according to WHYY’s NewsWorks, Mr. Blatstein should not have been charged more than $120,000. He will reportedly receive a refund of about $24,250, so long as he is up to date on his other properties’ taxes.

Slot Revenue Drops Slightly

$188M

Gross revenue at Pennsylvania’s 11 casinos in January

1.19%

Decrease in slot machine revenue when compared to January 2012

7 FEBRUARY 2013

REGIONSBUSINESS.COM

DEALBOOK PET CARE

HEALTH CARE

Velcera Acquired for $160 Million

JLL Partners Buying BioClinica For $123M

Perrigo Company, of Allegan, Mich., recently announced it has agreed to acquire Velcera, Inc., of Yardley, Pa., for $160 million within the calendar year.

The deal is subject to regulatory approvals and closing conditions, according to a statement.

Velcera sells pet health products such as PetArmor flea and tick products.

Retail sales of the PetArmor franchise exceeded $100 million during calendar year 2012, the value-brand’s first full year on the market, having launched in April 2011.

entered into an agreement to be acquired by private equity firm JLL Partners, Inc., for about $123 million, the companies announced recently.

JLL Partners has also reached an agreement to acquire CoreLab Partners, Inc., of Princeton, NJ. The two acquired companies are to be merged “ to create a leading provider of medical imaging services and best-in-class eClinical solutions for clinical trials,” according to the statement.

Current BioClinica CEO and President Mark L. Weinstein will lead the combined company.

ACCOUNTING

IN OPPOSITION

Robbins Arroyo Investigating BioClinica, Inc., of Newtown, Pa., has Acquisition Attorneys at Robbins Arroyo LLP are investigating the acquisition of BioClinica by JLL Partners, Inc. Pursuant to the agreement, BioClinica shareholders will receive $7.25 in cash for each share of common stock.

The investigation focuses on whether the board of directors at BioClinica is undertaking a fair process to obtain maximum value and adequately compensate its shareholders or seeking to benefit themselves.

Smart Devine Acquires Wayne’s EAC Evaluations Philadelphia-based accounting, tax and advisory firm Smart Devine announced that it has acquired the assets and employees of Waynebased appraisal and valuations firm EAC Valuations LLC (Enterprise Appraisal Company).

The combined offices will remain at Smart Devine’s current location at 1600 Market Street.

MANUFACTURING

Vishay Precision Group Acquires George Kelk Malvern-based electronic parts makers Vishay Precision Group Inc, recently announced that it has completed an acquisition of George Kelk Corp., of Toronto, for $50 million.

The two companies had formed an agreement of acquisition on December 18, 2012, according to a statement.

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7 FEBRUARY 2013

PENNSYLVANIA POLITICS

REGIONSBUSINESS.COM

Can Pa. Lawmakers Answer $28.4B Corbett’s Budget Challenge?

BY THE NUMBERS

Total budget proposal

Eric Boehm is bureau chief/news reporter for Pennsylvania Independent.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

IN RESPONSE “He has proposed solutions that add billions more to the state’s credit card in a smoke and mirrors effort to balance his budget while kicking the can down the road.”

— PA AFL-CIO “It’s a budget that actually represents strategic investments.”

— Rob Wonderling, Greater Philadelphia Chamber of Commerce president “The bottom line is that ultimately it brings in $1.5 billion to $1.7 billion (for transportation).”

— David Patti, president and CEO of the Pennsylvania Business Council

HARRISBURG — Gov. Tom Corbett issued a serious challenge to the General Assembly on Tuesday morning.

In his third budget address, he called for a $28.4 billion budget for the fiscal year that begins on July 1. He included healthy boosts for education and public welfare after two years of reductions in those areas and also plans to tackle business tax reforms like set in motion a 10-year incremental reduction to the state’s corporate net income tax.

Getting a budget done on time is always a challenge, but the real test facing our General Assembly is the ambitious set of other initiatives Gov. Corbett outlined.

In the next five months, the governor wants to tackle transportation funding, pension reform and the privatization of the state liquor store system.

Not only are those big issues, but they are what is known in legislative parlance as “heavy lifts,” meaning issues that force lawmakers to choose between two (or more) groups they normally like to play nice with and do something that will likely cause one of those groups (or, again, more) to fund an opponent when the next campaign rolls around.

I’m not convinced they are up to the task. And I’m not the only one.

A state senator — a Democrat, mind you, but not a particularly partisan one — told me he has never seen a series of tough lifts like this. And he’s been around for more than three decades.

He told me he is doubtful the General Assembly has the stones — my word there, not his — to step up to the plate and get it done.

“These guys haven’t had to take a hard vote in years,” he said. “I don’t think they know what it’s like.”

He’s right. These are the kind of

NOW IS NOT THE TIME TO BE TIMID IN OUR APPROACH. NOW IS NOT THE TIME TO CLING TO OLD IDEAS AND THE STATUS QUO.’ —GOV. TOM CORBETT

issues that scare lawmakers.

It’s always easier to avoid a vote than face a scary issue. And most members of the General Assembly like to take the easy route whenever possible, because the easy route doesn’t end with your crucial vote being plastered all over a campaign flyer and stuffed into 50,000 mailboxes by your opponent in the next election cycle.

But Gov. Corbett challenged them on Tuesday to avoid taking the easy route.

“Now is not the time to be timid in our approach. Now is not the time to cling to old ideas and the status quo. Now is not the time to make small changes and expect big results,” Gov. Corbett said.

And the heaviest lift of them all is, fittingly, the most important.

Part of Gov. Corbett’s overall outline for the year includes making changes to the future pension benefits of current state employees. That, coupled with changes to how new hires are given retirement benefits, will start to chip away at Pennsylvania’s $40 billion-and-growing pension liability.

But the unions have already vowed to fight it tooth and nail, and to take the issue to court if the General Assembly passes changes to pensions for current employees.

And though they haven’t said it, every member who votes for such a change knows the unions will also paint a target on their backs.

That’s part of the reason why Republican legislative leaders spent most of the day trying to slowly back away from that proposal — all while still seem-

ing supportive of Gov. Corbett’s agenda — in the legislative equivalent of how you might react if a Doberman was showing its teeth and growling.

No sudden moves, just keep smiling.

In both the House and the Senate, the refrain is that no one is sure whether “we have enough votes” to enact pension reform.

Again, it’s easier to avoid a vote than to face a tough issue.

But failing to pass pension reforms mean deep cuts to other parts of the budget, and that’s a scenario that also scares lawmakers, who pretty much keep their jobs by delivering more funding, not less.

So, yeah, it’s a thorny issue.

Gov. Corbett has been criticized by many of his Republican allies in the General Assembly, loudly at times, for failing to lead during his first two years in office. Since the beginning of the year, Gov. Corbett and his team have taken a noticeably more active posture on these high-profile issues.

That culminated on Tuesday with his call to action.

“Now is the time to embrace new ideas, and now is the time to be bold,” Gov. Corbett said. “Our job isn’t to explain why things can’t be better. Our obligation is to make things better.”

Gov. Corbett has to keep the pressure on, and the General Assembly has to be willing to take up those heavy lifts now that they have a governor trying to lead.

Politically, this is the beginning of the most important five months in Gov. Corbett’s tenure.

For the future of Pennsylvania, they will be pretty important too.

$1.6B

Proposed budget for colleges and higher education grants

$1B

Financing for public schools over four years if liquor and wine sales are privatized

$60M

Proposed funding for the film tax credit program

80

Films that will benefit from the program

$7.4M

Increase in funding to tourism programs

$28.4B

Total budget proposal

295,700

Seniors whose prescription drug coverage is financed by the Pennsylvania Lottery

4,000

Structurally deficient bridges in Pennsylvania

290

State troopers to be hired PENNLIVE.COM

7 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

13

Remembering The Man Who Changed The World

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Earlier this week (February 6) marked the 102nd anniversary of the birth of Ronald Wilson Reagan or, as only he could put it, the 63rd anniversary of his 39th birthday.

As tributes roll in I’d like to add a few about the man for whom I once worked.

The character of Ronald Reagan was at the core of his success, personally and politically. His personality was a reflection of his character.

In the sometimes bitterly contested primary race of 1980, former Texas Governor John Connally once claimed, “You want me for your president; you want Reagan for your next door neighbor.” If that’s the worst that can be said of you, you are truly special.

While many politicians made “enemies lists,” Ronald Reagan never did. Instead, like Abraham Lincoln (whom he often claimed he knew personally), he embraced his adversaries. encountered in all my years of Although President Lincoln’s public life.” ability to cobble together At a time when civility often disparate factions have been made legendary by Doris Kearns is discussed but more rarely practiced, President Reagan’s Goodwin’s “Team of Rivals” and other historical writings, Ronald example should serve as an inspiration to a new generation Reagan was every bit as adept at of political leadership. bringing together rivals, comRonald Reagan found the petitors and folks who didn’t brightest and best, and he got always agree. them to work for the good of the President Reagan named country with his famous maxim Pennsylvania’s Senator Dick that it is amazing how much can Schweiker, at the time a fairly be accomplished if nobody cares liberal senator, as his running who gets the credit. mate in 1976.

He was able to cobble together In 1980 he asked George a coalition of disparate factions H. W. Bush to run with him, within the GOP and garner the despite the fact that the two support of “Reagan Democrats” had waged a very aggressive to forge a majority that still campaign for the nomination exists. Ronald Reagan practiced just weeks before. It was during the politics of addition and multhat campaign that President Bush famously attacked Presitiplication, not subtraction and division. He famously mused dent Reagan’s economic plan as that “somebody that agrees with “voodoo economics.” me 80 percent of the time is not That was the same George my enemy.”

Bush who years later eulogized He knew what it took to win, President Reagan by saying, “I but he also knew what was learned more from Ronald required to govern. He knew Reagan than from anyone I

BRETT TATMAN

how to mend fences, build bridges and forge coalitions.

Ronald Reagan entered the Oval Office 30 years ago staring at a misery index of double-digit inflation and unemployment.

Americans were held hostage by foreign enemies, and a national malaise led many to believe that our best days were behind us.

Through his infectious optimism, steadfast courage of his convictions and strength of character, Ronald Reagan led us back. He made America stronger and more prosperous. He made us proud to be Americans again.

He possessed a strong faith in the American system of limited government and free enterprise as the best hope for all people.

He believed it had made us the most prosperous and generous nation in history. He knew that as the power of the federal government expanded, individual liberty shrank.

While no previous president had challenged the Soviets to reverse their aggressive course

or open their borders, Ronald Reagan confronted them. He called them an “evil empire.” He stared down their leaders. He told Gorbachev to “tear down this wall.”

Ronald Reagan’s courage, moral fiber and human decency carried the day. The wall came tumbling down. The world was changed forever.

He did the toughest job in the world, beat a would-be assassin’s bullets with a smile, fought cancer, and survived a potentially deadly fall and subsequent brain surgery — all after he was 70 years old.

This week we pause to remember this remarkable man.

America and the world will never forget Ronald Reagan for what he did for us. He renewed our faith in our nation and our pride as Americans. He rebuilt our defenses, put us back to work and fueled our economic resurgence.

Ronald Reagan inspired freedom and changed history.

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7 FEBRUARY 2013

PHILADELPHIA POLITICS

REGIONSBUSINESS.COM

Proposed Bills Would Expand Mayor Nutter’s Budget Duties THERE’S A GENERAL FEELING...THAT THERE’S GOT TO BE A BETTER WAY [TO BUDGET].’

Timothy Holwick is a freelance writer covering Philadelphia government.

Find more coverage at citycouncilmatters.com.

—GARY VANLANDINGHAM, DIRECTOR OF THE RESULTS FIRST INITIATIVE AT THE PEW CENTER ON THE STATES

Mayor Michael Nutter prepares to give his 2012 budget address.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Two bills scheduled to be considered February 8 by the Philadelphia City Council Committee on Finance would change the way Mayor Michael Nutter’s administration prepares for the upcoming budget season.

The first bill requires a cost-benefit analysis on proposed capital projects.

The second bill requires more detailed preparation and effort to use city funds earmarked for technological advancement in government.

Each year, City Council hears testimony on the city budget, which is typically proposed in early March.

Then there is a long process of hearings culminating in a vote on the budget in June.

During the 2012 hearings, it came up repeatedly that a cost-benefit analysis would be helpful in determining whether the Nutter Administration had correctly prioritized capital expenditure projects in Philadelphia.

In the 2013 budget, the capital program funded more than $3 billion in projects.

These projects construct new facilities, repair existing ones or address degradation in other elements of city

infrastructure.

This bill describes how those resources are scarce, and cost-benefit analysis — including return on investment and payback time — could help Philadelphia “maximize the value received from the expenditure of capital funds.”

It is also clear that Council intends to use this costbenefit analysis to require a convincing rationale for project expenditures that do not expect a return on investment.

The second bill to be discussed by the Committee on Finance would require Mayor Nutter’s proposed budget to include an information technology strategic plan.

In 2010, Council had introduced a bill that required the Administration to compose a five-year plan for technological advancement, and in response Mayor Nutter created the Office of Innovation and Technology in 2011.

These initiatives supported what is now a commitment by the city to invest $120 million in its information technology infrastructure over the next five years, which would be funded by

KAIT PRIVITERA/CITY OF PHILADELPHIA

the capital program.

This bill seeks to make it an annual event that the mayor and his budget team discuss a plan to further the progress of these commitments to a more technologically advanced city government in Philadelphia.

It is the belief of Councilman Bill Green, a sponsor of both bills that were to be discussed on Friday, and other members of Council that greater efficiency can be achieved through the use of better technology.

While these bills may seem like more work for the city’s budget team, it is likely appreciated that Council tells the Administration exactly what kind of data it would like to see prior to the budget hearings this spring.

If all the material and strategies are presented to Council, the budget process actually works more smoothly as a policy discussion versus a demand for data that is either unavailable or not prepared for review.

At Friday’s hearing, the Administration will have an opportunity to explain whether it feels these requirements can be met.

UNIONS

City Asks Court to Impose Offer on DC 33 Union The City of Philadelphia filed an action in the Court of Common Pleas asking it to impose the mayor’s “final offer” on AFSCME District Council 33.

The offer provides a 2.5-percent wage increase 30 days after the agreement takes effect and a 2-percent increase on January 1, 2014.

“Our final offer is fair and reasonable, provides a real increase in take home pay for city employees while enacting pension reform and changes in work rules that help us afford those raises and prepare for a more fiscally sound future,” Mayor Nutter said in a statement.

DC 33 President Pete Matthews told the Daily News Mayor Nutter “tries to act like a dictator.”

TAXES

Business Tax Credit Application Available Business owners can now begin applying for the Sustainable Tax Credit, which will give 25 businesses tax credits of up to $4,000 against the gross receipts portion of the Business Income and Receipts Tax. Philadelphia was the nation’s first city to reward sustainable businesses with a financial incentive.

More information can be found on the Mayor’s Office of Sustainability website, www.phila.gov/green.

Mayor Unveils City’s New Delinquent Tax Collection Strategy Mayor Michael Nutter said a new delinquent tax collection strategy will use advanced technology and data analysis; increase education and outreach efforts; leverage private collection agencies; build more efficient partnerships with sister agencies; and target areas to increase capacity and effectiveness.

7 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

15

WHARTON COMPETITION

Prize Renamed for $1.65M Donor

BY TVISI RAVI The Wharton School announced that Ellen and Richard Perlman have contributed $1.65 million to the Wharton Business Plan Competition to go towards funding the grand prize of the competition, now titled the Perlman Prize.

Wharton Entrepreneurship runs the annual competition.

Launched in 1998, WBPC is open to students across Penn’s campus. Participants must go through four phases of developing a business idea throughout the semester, creating in-depth business plans and presenting to judges.

This year’s competition is currently underway. This year, more than 400 people submitted entries to the competition.

Mr. Perlman, a 1968 Wharton graduate, has served as a competition judge for the last two years.

“Entrepreneurship is in the Perlman DNA,” Mr. Perlman said in a statement to the Wharton School. “Ellen and I are extremely excited about the opportunity to support Wharton’s program to teach and encourage America’s future entrepreneurs.”

Managing Director of Wharton Entrepreneurship Emily Cieri said the gift serves as endowed funding, which will go into Penn’s investment pool. Each year, the money from the investment pool will go towards funding the grand prize as well as the operating expenses of the competition.

THE DAILY PENNSYLVANIAN THEDP.COM

FACEBOOK.COM/REALFOODWORKS

CAPITAL SEEKERS

Real Food Works The average American stays away from restaurants in the middle of the week, so two entrepreneurs are bringing restaurants to your home.

Business: Real Food Works Founder: Lucinda Duncalfe and Michael Krupit Contact: michael@krupit.com

BY BRANDON BAKER

U

pon making the switch to a vegan diet, Michael Krupit and Lucinda Duncalfe quickly realized their food options in the restaurant world were, to say the least, scarce. When it occurred to Ms. Duncalfe that many Philadelphia chefs spend a lot of time tediously counting their radishes through the week, she connected the dots.

“Lucinda realized that restaurants have a lot of downtime in the middle of the week, and she started connecting with restaurants to get them to prepare healthy foods to deliver to customers,” Mr. Krupit said.

Real Food Works, the primarily vegan-oriented food service, launched in June 2012. Since then, the service has partnered with dozens of restaurants in the Philadelphia region,

including Malvern’s SuTao Café and West Passyunk Avenue’s Miss. Rachel’s Pantry. Together with these restaurants, the plant-based food service has further grown its roots, shipping meals to more than 60 customers per week — some of whom, Mr. Krupit said, spend as much as $2,000 on a weekly food system.

“I think that [our customers] find that, first, our food is convenient; second, it tastes amazing; and third, it fits the health plan they were looking for, shifting to a plant-based diet that can reduce cholesterol, their weight, their allergies and [provide] other benefits,” Mr. Krupit said.

Moving into the second quarter of 2013, Real Food Works will expand into Los Angeles, what Mr. Krupit playfully refers to as the “mecca for the healthy food business.”

Steadily, but almost quietly, Philadelphia has become a hotspot for entrepreneurs.

The combination of great ideas, available capital and a welcoming environment have set the stage to make 2013 a breakout year for innovation and new businesses.

To Learn More ...

For more information on sponsorship opportunities or to suggest story ideas, call our main office at 610-940-1656.

The web: RegionsBusiness.com Facebook: Facebook.com/regionsbusiness Twitter: @RegionsBusiness Sponsored by

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7 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

Local Startups Selected By DreamIt Class

Two area startups — TrendKite, of Philadelphia, and Fig Labs, of Haddington, NJ — were selected by DreamIt Ventures’ inaugural class in Austin, Texas, Business Insider reported.

TrendKite (seen above) is a “media dashboard reinventing media monitoring.”

Fig Labs is a “cloud-based mathematical platform for engineers and scientists.”

Both will demo at this year’s SXSW.

REGIONSBUSINESS.COM

Wharton Student Not Waiting For Graduation

BY BRANDON BAKER

M

ore and more, university students are realizing their entrepreneurial ambitions don’t need to begin the moment their MBA diploma enters their hand and, accordingly, are launching businesses on their own timeline.

David Wynne is one such student.

A first-year graduate student at Wharton, Mr. Wynne arrived in Philadelphia understanding that he was presented with a unique opportunity.

“I got here, and I realized I had access to people I wouldn’t have access to without being at Wharton,” Mr. Wynne said.

“I went to an event where [CommonBond CEO] David Klein gave a speech, and he said something that stuck with me: ‘The biggest risk you can take as a Wharton student is to not take a risk at all.”

From that moment, Mr. Wynne, alongside his business partner Evan Hamlin,

decided it was time to move forward with his ambitions.

Recently giving the ambition a name — AutoAlpha — Mr. Wynne hopes to develop a transparency service intended to streamline the investment process for private equity firms by managing their operating portfolio.

“We’re looking to generate insights so [investors] don’t have to do the math,” he said. “They don’t have the time to do it themselves, and we’d like to simplify the decision-making process to a ‘yes or no’ phone call.”

Mr. Wynne has spent much of the past month traversing the region in search of expert business advice by attending seminars, meeting privately with successful startups in Philadelphia and New York, as well as meeting with his former private equity employer to get a short-list of talented developers for their website.

“You have a limited time to take advantage of these opportunities,” Mr. Wynne said. “I figure that if I fail miserably, the

DIARY OF A STARTUP

worst case scenario is that I’ll graduate from Wharton. But if I succeed, I’ll be able to help thousands of entrepreneurs in the Philadelphia region.”

For now, Mr. Wynne and Mr. Hamlin are looking for funding from private equity and venture capital firms. In the meantime, they’ll continue preparations as they gear up for participation in the Wharton Venture Awards, a competition that would award $10,000 to sustain them over the summer.

7 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

FINDING

BY BRANDON BAKER

ETHICS IN BUSINESS

THE WAY WE LOOK AT IT, WE’RE OPERATING A BUSINESS WHILE ADDRESSING A GLOBAL WATER PROBLEM.

twitter.com/HydrosBottle

The Hydros Bottle started as a class assignment, but has turned into a solution for a global problem

facebook.com/HydrosBottle

F

or the team at Hydros Bottle, their water filtration system is as much about ethics as it is about being in the black.

The business, which involves manufacturing the only water bottle that filters the moment water enters the container, originally began as a class project at the University of Pennsylvania.

Its three founders realized during the process of working on it that it had more legs than they initially gave it credit for.

“I was taking a course on social entrepreneurship, learning how to use for-profit business models to solve societal issues, and I was really interested in the water crisis, particularly the bottled water dilemma where 60 million water bottles end up in landfills each day,” said Aakash Mathur, one of Hydros Bottle’s co-founders. “It’s an industry worth billions of dollars, and yet it’s just so wasteful.

“So the way we look at it, we’re operating a business while addressing a global water problem.”

Located at 2400 Market Street, Hydros Bottle now has six employees and has tripled its year-over-year sales since the bottle was introduced to the market in 2011.

Part of each water bottle sale, Mr. Mathur said, is donated to water development projects.

Mr. Mathur also touted that the filtration and BPA-free technology used to make the bottle — which is manufactured in Philadelphia plants — is currently patentpending.

“Our filtration system and materials set us apart from some of our competitors, who make really cheap plastic bottles known as ‘squeeze bottles’ — our bottles are premium by the nature of how they’re made,” Mr. Mathur said.

Content with the company’s fast-paced growth, Mr. Mathur made special note of the perks of being based in Philadelphia.

“We’re fortunate to be surrounded by a lot of universities, investors and confidence-boosting advisers,” he remarked.

“Philly is underrated for the amount of entrepreneurial energy it has. It’s really a great place to start a company.”

hydrosbottle.com

17

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7 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR PACT

Startup Leaders Speak at Event The Greater Philadelphia Alliance for Capital and Technologies will host an event with local startup leaders 5:30 to 7:30 p.m.

February 7 at the University City Science Center, 3711 Market Street, Suite 800, Philadelphia.

Speaking at the event will be Coley Brown, CEO and co-founder of VisionMine. com; Lev Greysman, senior software engineer of Iron Mountain; Cristina Greysman, director of partner program management at SunGard Availability Services; Rick Rasansky, founder and CEO of Yorn; and Brendan McCorkle, CEO of Cloudmine.

REGIONSBUSINESS.COM

EDUCATION

MARKETING

EdTech Smackdown!

Highlights Education Startup Companies

SEER Interactive Opening Office in California

The Philadelphia EdTech Meetup group met last week for EdTech Smackdown!, a chance for enterpreneurs to demonstrate their ideas in two minutes or less, at incubator Seed Philly.

Technology teacher Mary Beth Hertz and group founder Donna Murdoch had the two dozen attendees introduce one another before inviting six groups to pitch their products.

ProfessorWord — introduced by co-founders Betty Hsu and Ivan Chang — is a free bookmarklet that can be used on any website to help students identify and define more than 5,000 SAT and ACT vocabulary words.

The technology takes the learning experience to where the students are spending most of their time: online.

TeacherCom — presented by Dan Lopez of web development company Defined Clarity — is an app that allows teachers to contact

Online marketing agency SEER Interactive will open an office in San Diego in May, less than a year after opening an additional office in Northern Liberties, TechnicallyPhilly.com reported.

The expansion is to “tap West Coast talent” and to be closer to clients, spokeswoman Stephanie Beadell told Technically Philly.

“One of the main reasons we decided to launch the San Diego office is that great people wanted to work with us, but they couldn’t make it to Philly. We decided to come to them.”

Four of SEER’s 58 employees will move to California, and CEO Wil Reynolds will spend three months in the new location, according to the Technically Philly report.

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Betty Hsu and Ivan Chang present ProfessorWord at the EdTech Smackdown! last week.

MARY BETH HERTZ

students’ parents simultaneously, using email, texting or recorded voice messages. The program also keeps a log of the sent messages.

Slate is an open source web platform for schools that keeps track of grades, attendance and other data and make it all accessible to faculty and administration with one log-in.

The EdTech Meetup group will meet again at 6:30 p.m. February 12 at the Science Leadership Academy, 55 North 22nd Street, Philadelphia, for a panel discussion.

7 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

19

No-Firing Zone: Never Give Up On A Client

Joseph Callaway and JoAnn Callaway are coauthors of the New York Times bestseller “Clients First: The Two Word Miracle” and founders of the real estate company Those Callaways.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

The business world is full of corporate gurus who advise you to get rid of the “bottom 10 percent” — of employees, stores, suppliers, and yes, even clients. We disagree.

In more than 14 years, we have never gotten rid of a single client and we believe this no-fire strategy has contributed significantly to our ultimate success.

Putting clients first has the power to change your life, to transform your business, and to bring about financial security.

Here are seven tips to help you get started: Make the Clients First commitment Really putting clients first is a big commitment — and not firing customers is only a small part of it.

You need to put your own needs second, base all of your interactions on transparency and honesty, and make it your priority to always do what’s best for the client.

Realize that keeping clients is just plain practical Yes, the economy may be slowly pulling itself out of The Great Recession, but business is

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still far from booming. To put it bluntly, you probably need all the clients and commissions you can get.

When you make the choice to stand by all of your frazzled, frustrated clients, you will eventually reap financial and personal rewards.

Learn to like people Your goal should be to invite clients within arm’s length and make each one less of a stranger.

Ask about their kids, their pets, their hobbies, and their jobs.

Expect out-of-control emotions It’s no secret that people are emotionally attached to their homes. So instead of dreading emotional outbursts and using them as reasons to sever a business relationship, think of alleviating the client’s worries, insecurities, and fears as part of your job description.

And remember, putting the client first means not reflecting their turmoil back to them.

Look for opportunities to help and to grow your business Here’s the silver lining to gritting your teeth

and persevering when you feel like throwing in the towel: When you truly succeed in helping a client — which could be alleviating anxiety in the short term, and selling or buying a house in the long term — you will have won a fan for life.

Consider your “karma bank” And guess what? While we’ve learned not to have firm expectations when it comes to karma, our efforts and goodwill usually come back to us multiple times over.

When all else fails, look for the lesson Occasionally, you’ll encounter a client who isn’t acting out, — he’s just a downright nasty person.

Just keep working hard, telling the truth, and seeking the client’s best interest. And in the process, look for a lesson that might help you in the future.

Overall, the most important thing you can learn from dealing with awful people is the art of letting it go. To do otherwise — to continually engage with a toxic person — is to let him or her win…often at the expense of your peace of mind and sanity.

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7 FEBRUARY 2013

REGIONSBUSINESS.COM

A survey of Chief Financial Officers reveals that an increasing number of companies are turning to their CFOs to help lead innovation and drive change.

As their roles continue to grow in importance, their insight into the challenges and opportunities becomes more relevant. This year’s survey shows that CFOs, in general, are cautiously optimistic about 2013.

Text By Karen Fratti Illustration by Don Lee

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7 FEBRUARY 2013

REGIONSBUSINESS.COM

GROUNDED IN REALITY, BUT SHOOTING FOR THE

STARS W

e take it for granted that everything is quantifiable these days. Want to know the valuation of a company? Google it. What’s the backstory of that CEO? Wikipedia is your best bet. How is a company faring and innovating through a recession? Well, you get the idea.

But some things, like the real pulse of a market, just can’t be put into an infographic. Or can it?

That’s what the CFO Alliance has set out to do. Philadelphia based CFO Alliance President Nick Araco describes the organization as an “intelligence gathering” enterprise. It’s a special kind of social network, catering to middle market CFOs, hosting networking events, conferences, and a vibrant discussion community that facilitates information sharing and peer advice.

And of course, there’s the Sentiment Study.

The Sentiment Study is a survey of CFOs the organization has put together annually for three years. They ask CFOs about their projections for the year, to rank how internal and external forces affect their decisions, to explain how their jobs change.

They publish the results and tailor the year’s events and roundtables around the key issues that come out of the study.

CFOA membership has skyrocketed from a few hundred to over 3,000 members in the three years the CFOA has run the study, illustrating how valuable the information is among peers. This year, with help from Drexel University’s LeBow College of Business and TBM Consulting, they have surveyed 425 middle market CFOs. This year’s outlook? Financial officers across the country and in the region report a market in flux, filled with economic uncertainty, greater responsibility, and changing pat-

terns in recruitment and innovating.

Jacks and Janes of All Trades Being a middle market CFO means you work in a company that’s too small to be large, and too large to be small. And the issues that come up working in such an environment are unique. How they deal with those issues even more so.

“We define middle market as companies with annual revenues of anywhere from $20 million to half a billion dollars,” Mr. Araco says. “But the common denominator is that they are all overwhelmingly privately held, and driven by a select and focused group of C-suite executives. The CFOs are not in ‘functional silos.’” Instead, he explains, “They have their hand in a bit of everything and are more nimble in thinking and creative approach.”

According to the study, 72% percent of CFOs expect their roles to expand this year, meaning they will have to be ever more nimble.

Chris Hughes, CFO of Shunra, a software testing company headquartered in Philadelphia, jokes that middle market CFOs are ‘“jacks of all trades and masters of nothing.”

Peter Kaye, the VP of Finance at Procurian, based in King of Prussia, notes that he “increasingly relies on outside expertise to assist with the learning curve” since he has a hand in operations he heretofore had little experience with.

The anxiety around these increased levels of responsibility and greater uncertainties in terms of external economic factors is palpable throughout the data. Araco noted a stark difference in attitude this year compared to prior ones.

“In 2011, the attitude was ‘cautious optimism.’ They wanted to put the year to bed and start 2012 with renewed opportunities,” he says.

This year? The attitude is more hesitant.

Because of continued uncertainties in the macro economic level, there’s a sense of hesitation across the nation and especially from those CFOs based in the Philadelphia region.

Healthcare Reform and Fiscal Cliffs

SURVEY HIGHLIGHTS

CFOs see risk, opportunity The CFO Alliance’s Sentiment Study revealed what CFOs perceive as the biggest concerns and opportunities for 2013. A few highlights:

According to the study, 24.2 percent of the CFOs reported that the Healthcare Reform Act is a major issue moving forward in 2013. The HCRA is going to ! When it comes to the impact businesses at the mid-market level greatest internal influence and it’s keeping some of them up at night. on budget and business Mr. Kaye says that costs are “spiraling planning, finding and out of control and significantly increasing retaining talent easily our overall compliance costs.” topped the list.

Chris Hughes agrees. Sort of. “The best we can do is to stay informed of the ! Healthchare reform changes and timing of the implementation ranked as the second of the law.” biggest internal influence.

The worst case scenario? “Outside of unexpected material premium charges, ! When it comes to the another concern is the cost of compliance,” external influences, Mr. Hughes offers. competition and consumer Mark Fehnel, of Telerx headquartered in confidence topped the list Horsham, is still calm. “[I see] some cost for CFOs. They expressed increase, but hopefully not an extensive least concern over impact. We have more employees than inflation, the European many middle market companies, so we Union’s instability, experience less volatility than the compacommodities and currency nies with fewer employees.” fluctuations.

It’s not just healthcare. According to the CFOs “were not shy about study, CFOs “were not expressing frustration shy about expressing and lack of confidence in frustration and lack of confidence in the fedthe federal government, eral government, many many citing this as their citing this as their bigbiggest concern.” gest concern.”

None of the CFOs seem more positive about the state of the C.E. KENT general economy since taking the survey this November. One CFO is just “fed up,” claiming it would “take a miracle” for both sides of the Hill in Washington, D.C. to adjust spending levels and tax revenues to reduce of CFOs surveyed said they the deficit - and his stress. expected revenue growth To feel more secure about making long in 2013. That’s down from and short term strategic decisions, Hughes 67.5% last year. isn’t holding his breath, either. “[They] need to make a major step in the direction of controlling and adjusting spending.”

Despite this sense of impending doom on the macro level, the CFOs surveyed were somewhat optimistic about their of CFOs surveyed said they own companies’ growth. There were only expected growth in margins, slight differences between this year and up from 35.5% last year. the last. Thirty-seven percent, down from

66% 37%

THECFOALLIANCE.ORG

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7 FEBRUARY 2013

REGIONSBUSINESS.COM

I BELIEVE SOME OF THIS RELATIVE CONSISTENCY IN GROWTH, OR LACK THEREOF, IS BASED ON RATHER CONSERVATIVE GROWTH PROJECTIONS TO BEGIN WITH.’ —PETER KAYE

35 percent last year, see margin improvements. Sixty-six percent, down from 2012’s 67.5 percent, expect revenues to grow.

“I believe some of this relative consistency in growth, or lack thereof, is based on rather conservative growth projections to begin with,” posts Mr. Kaye. “Most companies are predicting ‘more of the same’ for 2013.”

Mr. Fehnel agrees, “We have been living with uncertainty for a while. The question is could [companies] grow faster if uncertainty would lift and they could more aggressively deploy the cash that many have been stashing away.” Taking all of the external forces in stride has caused him and his organization to see how they can innovate internally. Innovation for 2013 means “responding to the market with new approaches and finding ways to be more productive internally and do more with less.”

Recruitment and Retainment Another key issue from the study is employee recruitment and retainment. Many CFOs ranked recruitment as a top three “major concern” moving forward in 2013.

Mr. Araco explains, “Because the sentiment is still cautious, and as the economy starts to come back, people are concerned they’re going to start losing people.”

That’s also due to a generational gap. Across the nation, millennials just have a different view of the job market than their predecessors, and are statistically less loyal to companies. They are more likely to move around not just for higher pay levels, but also across industries.

Regionally, this is a bigger issue. “The first question we are asking people when they

Timely updates

A Philadelphia Story One thing the study shows is that those middle-market CFOs in the Philadelphia region are very different from those across the country.

“It’s not like in D.C., for example, where NGOs and companies have ‘industry blinders’ on. In Philadelphia, there is a willingness, ability and a genuine interest in the mindset of the region,” notes Mr. Araco.

Our region is not so much a region of transplants, like our neighbors in New York City, D.C., or even San Francisco, Mr. Araco explains. And something about that makes

Original blogs

RegionsBusiness.com Philadelphia, 24/7

@RegionsBusiness

apply for a position is ‘Why do you want to be [in Philadelphia]?’ says Mr. Araco. “It’s a sort of mentality that comes with being in Philadelphia.”

Mr. Hughes notes that recruitment has always been a problem. Especially in Philadelphia. Although, luckily, his company, Shunra, is a tech company. “And it appears there are some positive changes in the tech industry in Philadelphia. In fact, [we] were a New York software company.” Until they moved here in 2006.

Mr. Kaye agrees recruitment is increasingly difficult for Procurian. “We’re growing rapidly and struggle to find solid candidates with relevant experience in our industry,” he says.

Mr. Fehnel elaborates that the “pickings are slim.” One aspect of getting the same sorts of people with the same sorts of concerns is that it can turn into a loud town hall type gabfest.

That’s why Mr. Araco knows its important to center future roundtable events around some of the issues that come from the Sentiment Study. “So we can look in the mirror and define the mission,” he says.

RegionsBusiness

executives more interested in what’s going on in industries other than their own. By looking at what’s going on around them, it helps them make decisions for their own company and look for partnerships and collaboration.

That, of course, is the point of The Sentiment Study. By sharing frustrations, members gain confidence.

“They say, ‘Ok, I’m not alone!” And because we are discussion oriented, there’s lots of talk about not accepting the status quo and looking for ways to lead, not just respond, to the environment,” says Mr. Araco, describing the mission of the study and the CFOA. “It’s actually an opportunity to be progressive,” he says.

Mr. Kaye sums the study up as a valuable way to ‘acid test’ his agenda against his peers’ agendas.

Fehnel, too. “It provides me with a barometer on how my sentiments relate with the marketplace, where I am in sync or out of sync. [I see] if other CFOs are feeling the same pain or progress in the areas I am feeling pain or progress.”

And that’s not the sort of thing you can just Google search.

The CFO Alliance is holding a roundtable event at the Philadelphia Country Club on March 7, 2013 titled “The Outward Facing CFO: Identifying Opportunities to Spur Growth” facilitated by Stephen Mullin of Drexel University. Attendance is always complimentary for first timers. See thecfoalliance.org for more details.

Freelance writer Karen Fratti lives in Brooklyn.

Archived print content

23

7 FEBRUARY 2013

REGIONSBUSINESS.COM

BUCKS COUNTY SAYS

YES TO THE DRESS(ES) PHOTO COURTESTY OF VISIT BUCKS COUNTY

The Bucks County Visitors Center has embraced prospective brides as part of its core mission, capitalizing on the county’s unique offerings to tap into the wedding industry.

BY REGION’S BUSINESS STAFF

D

uring (and even after) The Great Recession, a lot of people put off a lot of expenses, everything from keeping that aging sedan another year to staycations over that cruise to a fresh coat of paint rather than a larger home.

But people continue to get married and continue to spend a lot of money doing it. In fact, the average price tag for a 2012 wedding in Bucks County came in around $30,000 according to costofwedding.com’s proprietary surveys.

It doesn’t take a lot of extrapolation to show that weddings are a mult-million dollar business in Bucks County, even in a down economy. The Bucks County Visitors Center has seized that opportunity, providing prospective brides with lots of one-on-one attention.

For most of the past year, that attention has come from Rachel Wolkiewicz.

“The overall goal of the visitor’s bureau is to increase hotel room occupancy, overnight stays in Bucks County,” Ms. Wolkiewicz said. “So the wedding market just feeds into that in Bucks County because of our unique venues.”

Sometimes the assistance might be as simple as providing brochures or destination guides to the hotel accommodating the wedding guests. But

@VisitBucksPA

VisitBucksPA

to really have an impact, the visitors center staff goes further, covering everything from sourcing venues to securing flowers and transportation and everything in between.

“People can call me and say, ‘I have 150 guests.

Where can I fit?’ ” Ms. Wolkiewicz said. “But it’s any part of the wedding, the rehearsal dinner, I can give them references for transportation or help their guests find things to do.”

The county’s venues are a selling point - wineries, barns, even a castle (Fonthill Castle at Doylestown’s Mercer Museum).

“We have such a wide array of bed and breakfasts and cultural venues. I’ve had a few people, just in the last few months, call me and say, ‘I’d like to get married in a barn. Can you help me?’

And I can, because we’re in Bucks County. We have the run-of-the-mill barn with bugs and hay still in there to barns that are built for weddings.”

Brittany Booz, who manages private parties at The Golden Pheasant Inn in Erwinna, sees a growing demand for what Bucks County can offer.

“I’m seeing more people looking for smaller, intimate weddings and a mini-honeymoon instead of a destination,” she said. “People gravitate to Bucks County for its charm, history and seasonality ... There’s so much brides can give to their guests.”

VisitBucksCounty.com

VisitBucksPA

BY THE NUMBERS

Brides in Bucks The staff at the Bucks County Visitors Center say the county is able to offer a variety of unique (or nearunique) opportunities for wedding parties.

1

Castle in the county - the Fonthill Castle and Mercer Museum in Doylestown.

10

Wineries, including many that offer event space well-suited for a wedding, reception and/or rehearsal dinner.

52

Length in feet of the pontoon boat operated by the Bucks County Riverboat Company, used for scenic cruises along the Delaware River.

Agency’s Show Part of Strategy Bridal shows aren’t all that unusual, but they usually aren’t staged at a tourism agency.

But Bucks County Visitors Center will put on its fifth annual show on Sunday, February 17 from 12:30 p.m. to 4:30 p.m.

It’s all part of the agency’s strategy to leverage the wedding market and increase hotel occupancy and drive ecnomic activity in the county.

More than 40 exhibitors will have a chance to impress about 700 visitors during the afternoon and the center’s location and facilities are a big draw.

“Our venue is neutral because we’re not a wedding venue,” said Jessica Lawlor, marketing and communication manager for Visit Bucks County.

This allows many venues to be represented. The center’s theater is utilized for panel discussions and a fashion show and another space will be used this year for a “relaxation room,” highlighting an array of spa services.

The visitors center is located at 3207 Street Road in Bensalem.

24

7 FEBRUARY 2013

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26

Q&A

7 FEBRUARY 2013

REGIONSBUSINESS.COM

BY MELISSA BROOKS

What’s the elevator pitch for Einstein Medical Center Montgomery?

We did a very large marketing campaign before we opened (in September 2012), and we were very focused on saying that we wanted to be the medical destination for the residents of Central Montgomery County.

We believed we were building a facility that would provide high-quality care services that hadn’t been offered in this community, and that is still what we are very focused on. It’s what we have been doing for the 120-some days that we’ve been open, and what we will continue to do in the future.

BETH DUFFY’S

MEDICAL

The Chief Operating Officer of Einstein Medical Center Montgomery brings 28 years of experience with Einstein Healthcare Network to her new role at the first hospital built in Southeastern Pennsylvania in more than a decade.

DESTINATION

facebook.com/einsteinhealth

Do you have an early understanding of your market share?

The actual market data... lags behind several months, so it’s too early for us to scientifically say what percentage of the market we’ve captured.

But our volume across the board has been higher than what we had anticipated, and we are seeing a great response from the community.

I believe that’s because we’ve been able to live up to the promise that we made before we opened the facility, and while we have not been perfect, we continue to fine tune our processes, we continue to bring more staff on board and we are raising the bar and are focused on being that medical destination.

twitter.com/einsteinhealth

Which areas of care have exceeded projections?

An area where we’ve seen significant volume has been in obstetrics. We have delivered about 40 percent more babies than what we had anticipated…and I think that’s a great example of how the community has responded to having this facility in their backyard.

What’s observation status, and how does it impact the hospital?

Insurers have said that [to reduce] health care costs, if a patient doesn’t necessarily need to be admitted…but needs to be monitored…they get put in a status called observation.

We’re paying the exact same amount than if they were admitted, but the insurance company is saying, “We will pay you a lesser amount for providing the exact same care.”

As this has become a significant part of health care, in existing facilities — unless you renovate — you have to designate some space for (observation)...

Because we were able to build from the ground up, we were able to design it that way.

What are the major initiatives for 2013?

From a programmatic perspective...building and growing our robotic surgery program, our breast surgery program, vascular surgery and our primary care network.

montgomery.einstein.edu

7 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

27

Next Few Weeks Will Shape Corbett’s Legacy, State’s Future

Politically Uncorrected™ is published by G. Terry Madonna (above) and Michael L. Young (below) twice monthly, and previous columns can be viewed at http://politics.fandm.edu.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Do we really learn more from our mistakes than our successes?

If we do, then Pennsylvania Governor Tom Corbett should be a virtual font of learning about now. Not to put too fine a point on it, but the governor has had a brutal first two years.

The ubiquitous polls tell the tale. For Corbett, it’s not a happy one. His job approval ratings are anemic, only rising above 50% once in his time in office. His “re-elect numbers” (poll-speak for “would you vote for him again?”) have been upside down for months with only a third of voters thinking he deserves another term. Barely a majority of his own party (if that) now support his reelection, while his support among women voters approaches historic lows for a major office holder.

The only really good news for Corbett is that, at the moment, he has only one potential primary opponent while rival Democrats remain far from united in choosing a candidate to run against him.

Nevertheless, Corbett’s struggles have produced considerable angst among Republicans and not a little glee among Democrats. But what it has not produced is much serious effort to explain how the governor has gotten in so much trouble with so many voters in such a short period of time.

Corbett’s problems fall into two categories: “macro-problems,” over which he has little control, and political problems mostly self-inflicted.

The macro problems would challenge any governor. Two of them are paramount.

Continuing Economic Challenges--Presidents are not the only politicians blamed for bad economic times. Governors are too. The harsh reality is that Pennsylvania’s economy is not yet in full recovery. In fact, the state’s unemployment rate is now slightly higher than the national average. Governors have survived bad times before, and Corbett can too. But he may have to do it in spite of the economy, not because of it.

The Brand problem - Corbett’s second macro problem is his political party. The GOP is struggling to define itself amid a growing public reaction with what Republican Governor Bobby Jindal termed the “stupid party.” The GOP’s problems lie predominantly with women and minorities, not coincidently also Corbett’s toughest demographic. The Republican Party didn’t

create Corbett’s problems; moreover, its leaders are not much help to solve them.

The economy and the GOP’s “brand” problems while serious are unlikely to prevent his re-election. Much more threatening are four problem areas that collectively raise questions about Corbett’s political skills.

More of a Prosecutor than a Governor— At heart, Tom Corbett is a prosecutor. In the role of attorney general, he excelled.

The political skills needed to be a successful governor, however, are not necessarily those of a prosecutor. Prosecutors declaim and declare, but governors must bargain, cajole, cheerlead, and even sometimes beg a little.

Corbett has little of that in him. What made him a good attorney general makes him a bad politician.

A Tin Political Ear--Corbett misses the sometimes subtle tones of state politics. He has often failed to explain very well why he did things or to promote his agenda.

Equally problematic has been his tendency to take on contentious issues without building consensus for them.

Weak Political Leadership--Coming into office Corbett had his party’s biggest legislative majorities in 50 years. Nonetheless, he advocated little and succeeded not at all in passing any of his big ticket items: school choice, LCB privatization, transportation funding, and the pension problem during his first two years.

Penn State & Joe Paterno--Somehow Corbett’s successful prosecution of a notorious pedophile has become a personal political liability. A vigorous debate has emerged over his handling of the case as well as the blame he received in damaging the reputation of Penn State legend Joe Paterno. Corbett was also drawn unnecessarily into a series of university controversies as a university trustee, alienating thousands of alums still aggrieved by the case.

Nor is that the end of it. The new Attorney General Kathleen Kane is committed to a thorough investigation of Corbett’s handling of Sandusky case, guaranteeing the notoriety of the case will not end soon.

The obvious

question: can Corbett recover in time to run successfully for re-election? In his favor, most economists expect economic recovery to accelerate over the next two years, while the “brand” problems of the GOP alone are not likely to cost Corbett re-election.

Developing the political skills necessary to recover his political support remains more problematic. Certainly, there are signs that the governor fully understands his political situation. He has been waging a vigorous media blitz over the past several months, providing more details as well as providing a rationale for some of his proposals. Nevertheless, he is far from achieving his legislative goals and still lacks the enthusiastic support of many key lawmakers for aspects of his privatizing agenda.

Corbett’s challenges are plain, his choices few. As he begins his third year in office, Corbett stands poised at his personal Rubicon, with both destiny and destination in the balance. What he does in the coming weeks and months will not only determine his fate but almost certainly the course of state politics through 2014 and beyond.

28

7 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Here’s Why You Should Love the Alternative Minimum Tax

Matthew R. Hilbert manages the tax department and is in charge of tax services for Pitcairn, a family office.

Learn more at www.pitcairn.com.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

For years, the mention of AMT (alternative minimum tax) put shivers in taxpayers and preparers alike. But many high-income taxpayers with adjusted gross income (AGI) greater than $500,000 and less than $1,700,000 may find a silver lining in being subject to the AMT. From the most recent IRS statistics for the 2010 tax filing year, this group includes approximately 400,000 taxpayers.

With the passage of the American Taxpayer Relief Act of 2012 (ATRA), higher-income taxpayers face higher marginal tax rates, limitations on deductions and exemptions, and other revenue enhancers. These tax increases are in addition to the new Medicare taxes imposed by The Affordable Care Act of 2010 (ACA) effective for 2013 tax returns. Taxpayers with earned income from wages and self-employment in excess of $250,000 (MFJ) and $200,000 (S) will pay an additional Medicare tax of 0.9% on the excess. A Medicare surcharge of 3.8% will be applied to Net Investment Income (NII) in excess of $250,000 and $200,000, respectively. Both of these tax increases were targeted to higher-income taxpayers and are independent of the changes under ATRA. Beginning in 2013, a 39.6% tax rate, up from 35%, applies to taxable income in excess of $450,000 for married couples filing jointly (MFJ) and $400,000 for single tax payers (S). Capital gains above the threshold will be subject to a 20% capital gains rate, a 33% tax rate increase over the existing 15% rate.

There are two other significant provisions in ATRA that impact higher-income individuals after 2012. The phase-out of itemized deductions, named the “Pease Limitation” after its originator, Congressman Donald J. Pease, which was eliminated from 2010 through 2012, is permanently reinstated beginning in 2013. This rule reduces allowable itemized deductions by 3% of the taxpayer’s adjusted gross income (AGI) in excess of the threshold amounts: $300,000 for married couples and $250,000 for single individuals.

ATRA also permanently reinstated the phase-out of personal exemption deductions for higher-income individuals. Those deductions are completely phased-out at AGI greater than $422,501 for couples and $372,501 for single taxpayers.

When the tax bill comes due for 2013 and beyond, most high-income taxpayers will see an increase in their total tax liability. Assuming

the same income and deductions for 2012 and 2013, the capital gains Exhibit 1 tax, the Medicare tax, and the NII Description 2012 2013 Diff. surcharge will increase. But there Ordinary Income 1,150,000 Same -0may not be an increase on the tax Long Term Capital Gain 450,000 Same -0computed on ordinary income.

Adjusted Gross Income 1,600,000 Same -0Ordinary income is generally Itemized Deductions (345,000) (306,000) 39,000 defined as all of your income that Personal Exemptions 15,200 -015,200 is not from long-term capital gains Taxable Income 1,239,800 1,294,000 54,200 or qualified dividends. It includes AMT Income 1,470,000 1,470,000 -0wages and business income, Total Regular Tax 313,070 371,870 58,800 interest, pension, rental income, Additional Tax AMT 36,530 140 (36,390) and virtually every other income TOTAL Income Tax 349,600 372,010 22,410 source that appears on the front of Tax on Capital Gain 67,500 90,000 22,500 the form 1040. Ordinary income is Tax on Ordinary Income 282,100 282,010 (90) offset by allowable deductions.

Under the present tax code, a taxpayer’s total tax liability must be computed using parallel systems – the Regular Tax and the AMT. The final tax liability is essentially the greater of the two computations, even though the AMT is reflected computed under AMT remains at only 28%. on the Form 1040 line 45 as an addition to the Until the regular tax computation exceeds the Regular Tax computation on line 44.

AMT computation, ordinary income escapes The AMT has been referred to as the “stealth the ATRA tax increases. flat tax.” While the computation of the AMT Consider the following example as shown liability on Form 6251 appears to be very comin Exhibit 1. Betty and Bogie (B&B) have two plicated and may require the services of CPAs children, ages 13 and 15. They have wage and tax lawyers, the basics of the AMT are very income of $750,000, qualified dividends of easy. In its simplest form, the AMT taxable $200,000, taxable interest and passive busiincome (AMTI) for high-income taxpayers is ness income totaling $400,000 and long-term equal to AGI minus allowable mortgage and capital gains of $250,000. The real estate taxes investment interest and charitable deductions. on their primary residence and coastal vacation All other itemized deductions and exemptions home totals $50,000 and they paid $80,000 are eliminated. The tax is then computed on in state and local income taxes. They have a the AMTI equal to 28% times AMTI minus home mortgage interest deduction of $50,000. $3,500.

They have made $80,000 in charitable conNow here’s the good news. In the American tributions and paid $117,000 for investment Taxpayer Relief Act of 2012, the AMT rate management fees and tax advice. did not increase. Moreover, for 2012, the In comparing B&B’s tax liability for 2012 AMT exemption amounts for individuals are and 2013, their capital gains tax increases increased to $78,750 for joint returns and by $22,500 or 5% of the net long-term surviving spouses, $50,600 for single filers and capital gain and qualified dividend income as heads of households, and $39,375 for married expected. However, the tax on ordinary income individuals filing separately. These permanent actually decreases by $90! This is due to the exemption amounts are adjusted for inflainflation adjusted threshold at which the 28% tion beginning in 2013. For the high-income AMT rate kicks in for 2013. The additional taxpayers the AMT exemption is completely Medicare taxes have not been added to the phased out at AMTI greater than $477,100 comparison as they are independent of the (MFJ) and $323,000 (S). income tax computation and were already the The highest marginal tax rate on ordinary law when ATRA was considered and passed. income beginning in 2013 for regular tax purSo for a not insignificant group of taxpayers poses will be 39.6%, while the marginal rate – hooray for AMT!

29

7 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Corbett’s Budget Sticks To Principles, Shows Some Finesse

A

usterity was the hallmark of Governor Tom Corbett’s first two budget proposals as he slashed (and some say burned) his way through Pennsylvania’s bloated spending practices.

He unveiled his third proposal this week and he stuck to two major themes: No one came to Harrisburg to maintain the status quo and the state will not spend more than it has.

Many have claimed to govern by those principles, but Gov. Corbett is walking the walk.

To do that, he has had to ruffle some feathers. A lot of feathers. The result has been some of the worst poll numbers on record for a sitting governor. Kudos to the governor for not ditching his principles to gain in the polls, even as opponents (including those in his own party) are plotting to unseat him in 2014.

His proposed budget attacks the pension crisis, a massive financial mess created by a number of his predecessors who were too weakwilled to address it, even though it threatens the financial stability of the commonwealth. The measures are tough, but fair and necessary.

Gov. Corbett’s previous budgets gutted education spending to help balance the books. He acknowledged that public school districts needed more money, but instead of kiting a check, he actually found the money first, using the proceeds from the privatization of the state’s liquor stores to create a massive block grant program worth $1 billion over the next four years.

Gov. Corbrett also addresses a

crucial need - Pennsylvania’s crumbling infrastructure. He did this by being a pragmatist, rather than an idealogue, shifting the way taxes are levied at the gas pump. Wonks who have committed to a strict “no tax increase” stance will balk at this, but the plan is a smart approach that will generate the revenue necessary to repair roads and bridges. Those improvements are not only vital to the general safety and welfare of residents, but to the core economy.

Transportation is no place for idealogues to stall progress for, as the governor put it, “If it fails, our economy fails.”

Making good on his promise to continue to make Pennsylvania an easier place to do business, Gov. Corbett also inclued a plan to roll back the state’s corporate tax rate.

He proposes to do so in a steady manner, taking 10 years to get the rate from 9.99 percent to 6.99 percent. It’s a great way to wean the state off that money without creating another hole for the cash-starved budget.

Like the rest of his budget, this sends a signal that Pennsylvania is getting its fiscal house in order.

Long-term obligations such as pensions and infrastructure maintenance have been addressed, while investments in education are increasing.

Gov. Corbett is to be applauded for sticking to, but smartly adjusting, his overall plan in the midst of dismal poll numbers. After all, government should be about ideas and execution, not simply re-election bids.

COMMENTARY FROM ACROSS THE WEB

Do Not Rush To Close Philadelphia Schools

@melissamdaniels

What we are experiencing in Philadelphia is the latest episode of Gov. Corbett’s onetwo strategy to starve our school district of resources. This is a manufactured crisis created to impose an extreme national Republican agenda to privatize our schools and pit Pennsylvanians against Pennsylvanians. In the process, Corbett is putting our state up for sale by privatizing a wide array of public services. What’s next, our state parks?

GABE MORGAN ON PHILLY.COM, 5 FEBRUARY 2013

Ultra-Right Destroying Good Conservatives [Former Georgia Senator Saxby Chambliss] is right about this much: Politics has become ugly and ruinous, especially inside the Republican Party. He joins a list of towering conservative figures who have left office -- or been run out -- after encountering the lunatic ravings of the crazed ultra-right. That includes Bob Bennett of Utah and Richard Lugar of Indiana, GOP stalwarts who lost to challenges by ultraconservatives.

Hearing both sides of the “expand Medicaid” coin this morning.

Ds - State will save lots of money. Rs - State will spend lots of money.

4 FEBRUARY 2013

President Obama Shows Contempt for Rule of Law As a senator, Obama railed against George W. Bush’s anti-terror wiretapping program. As president, Obama claims the power to kill any person – even US citizens – via drone strikes without congressional authorization.

In 1780, future president John Adams wrote that separation of powers was essential to maintaining “a government of laws and not of men.” As the current Chief Executive asserts dominion over the other two branches, we are in danger of losing our government of laws.

ADAM FREEDMAN ON FOXNEWS.COM

CYNTHIA TUCKER ON PENNLIVE.COM, 5 FEBRUARY, 2013

REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2012 INDEPENDENCE MEDIA 600 GERMANTOWN PIKE, SUITE 400 PLYMOUTH MEETING, PA 19462 610.940.1656 | WWW.REGIONSBUSINESS.COM

EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey

5 FEBRUARY 2013

HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

30

7 FEBRUARY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

2.4%

Increase in spending over 2012 in Governor Tom Corbett’s proposed 2013 budget, which calls for $28.4 billion in spending overall.

5,500

Approximate number of words in Governor Tom Corbett’s prepared budget address. It took him approximately an hour to deliver the speech to state legislators and a broadcast audience. Last year’s address was 4,300 words.

15

Number of times Governor Tom Corbett used the word “tax” or “taxes” in his budget address.

He also used “taxpayer” or “taxpayers” four times. He used ‘job” or “jobs” 19 times.

29

Number of times Governor Tom Corbett used the word “Pennsylvania” in his budget address. He also used “Pennylvanian” or “Pennsylvanians” 18 times.

45%

Percentage of American adults with a smartphone, according to The Pew Research Center. About 87 percent of American adults have a cell phone, up from 73 percent in 2006.

-10%

Change beween 2006 and 2012 in the percentage of adults who have a desktop computer.

+31%

Change beween 2006 and 2012 in the percentage of adults who have a laptop.

31%

Percentage of adults with a tablet computer, up from 3 percent in May 2010.

WEBN-TV

1948

First year the Philadelphia Phillies held spring training in Clearwater, Florida.

83% Percentage of Americans between 16 and 29 who read a book in 2012. About 26 percent of Americans have an e-book reader, up from 2 percent in September 2009.

133

Days since the Phillies ended their 2012 season (October 3) and open their 2013 spring training with pitchers and catchers reporting (February 13). The first full team workout is scheduled for February 17.

7

Michael Vick’s jersey number and also his rank on Forbes magazine’s mosthated athletes list. Lance Armstrong came out on top ... or bottom, depending on your perspective.

1,200

Bats brought to spring training by the Phillies.

15,000

Baseballs brought to spring training by the Phillies.

300

Batting helmets brought to spring training by the Phillies.

Cases of sunflower seeds brought to spring training by the Phillies.

600

15

Hats brought to spring training by the Phillies.

10,506,456 Number of 2 x 4 Lego bricks it would have taken to cover the playing field for Super Bowl XLVII.

SHOE THE LINUX LIBRARIAN

12

Cases of bubble gum brought to spring training by the Phillies.

30.6M

Social media comments generated by the Super Bowl according to Blue Fin Labs and Trendrr. That’s about 8 percent more than were generated on election night in November.

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20 MINUTES FROM PHILLY • PARXCASINO.COM • MANAGEMENT RESERVES THE RIGHT TO CHANGE OR CANCEL THIS PROMOTION AT ANY TIME. $75 MENU EXCLUDES TAX, GRATUITY AND BEVERAGES. MUST BE 21.

GAMBLING PROBLEM? CALL 1.800.GAMBLER

For the future we’re building…

At Philadelphia Gas Works, we’re building a better City to do business in, one conversion at a time.

That’s because, when your business makes the switch to natural gas from PGW, you’re an abundant domestic supply of cheaper, cleaner energy.

Find out how to convert to a better future at:

www.PGWEnergySense.com