Pennsylvania’s Tom Corbett: Facing Historic Challenges With Real Reforms

Tuesday, June 18, 2013 - 15:33

The Editor interviews Tom Corbett, 46th Governor of the Commonwealth of Pennsylvania.

Editor: What were some of the challenges you faced when coming into office?

Corbett: When I came into office in 2011, we faced historic challenges. A $4.2 billion deficit and an economy shedding jobs threatened progress in Pennsylvania. Our business confidence was low, and our taxes were too high.

We made some very tough choices that are now paying off. Today, Pennsylvania’s economy is recovering. We eliminated the deficit, we’ve lowered taxes, we’re creating jobs, and we’ve invested more state money in basic education than ever before. We were able to accomplish all of this without raising taxes.                  

Editor: How serious do you believe the pension problem is?

Corbett: This isn’t a Republican or Democratic problem, it’s a math problem. And the numbers do not lie. In 2012, the state had an unfunded pension debt of $41 billion. This year, that number has grown to $47 billion. In another five years, that number will rise to $65 billion. Those are big numbers, and they aren’t going away. And as these numbers grow, that means less funding for education and human services. Right now, about 60 cents of every new dollar Pennsylvania brings in goes to funding our pension system. That’s simply unsustainable; and unless we do something, the number will only grow. The state’s pension payments are the fastest growing line item in the budget, crowding out funding for education, transportation, human services, public safety and other key budget items.

That’s why I’ve called for a combination of real reforms that would ultimately steer new state employees from the traditional “defined benefit” plan to a “defined contribution” plan, similar to the 401(k) programs used in private business. I also want to make it clear that our proposal does not affect benefits for retirees or change benefits that current state employees have already earned. These reforms not only help solve our long term budget issues, but will strengthen the entire system for the next generation of workers.

Editor: Talk a little bit about your current priorities.

Corbett: Along with pension reform, we’re also working on getting Pennsylvania out of the wine and spirits business, and we’re working on a transportation funding package. First, Pennsylvania and Utah are the only two states in the nation where the state completely controls both the wholesale and retail operations of wine and spirits. We need to get government out of the business of selling alcohol. We are working hard to end the 75-year-old state monopoly. Our proposal calls for the reinvestment of the proceeds from the sale of the state system into Pennsylvania’s future – our children. This could generate up to $1 billion. The proposal is part of my commitment to changing Harrisburg, streamlining government and moving Pennsylvania forward. Our plan gives consumers what they want by increasing choice and convenience, and helps to secure our future by adding funding toward the education of our children, without raising any taxes.

Second, Pennsylvania’s transportation concerns are not new. This problem has been building for three decades. If we don’t do anything about it, the solution will become more expensive and our infrastructure will continue to deteriorate more quickly than we can afford to maintain it. The average bridge in Pennsylvania is 52 years old, and our system of roads and bridges need a consistent source of funding. This is both a safety issue and a matter of economics – we move a half-trillion dollars worth of goods and services across our roads every year. Our economy, quality of life and safety relies on keeping Pennsylvania’s transportation system well maintained. We are working with the legislature on our goal to generate funding in a fair and balanced way for taxpayers.

Editor: What is your administration doing to grow jobs and our economy?

Corbett: I ran on the slogan, “More Jobs. Less Taxes.” Over the past two years, I’ve worked to fulfill that promise, and the results speak for themselves. Since I took office, we’ve worked to usher in an economic climate where the private sector could grow and create more than 125,000 jobs; and the Governor’s Action Team, a group of economic development professionals who work directly with businesses considering locating or expanding in Pennsylvania, has been directly responsible for the creation of over 20,000 jobs. We are working hard every single day to create more lasting, good paying jobs.

In addition, we’re working hard to prepare our workforce for the jobs of today and tomorrow. Through the Keystone Works program, we’re training workers and providing employers with incentives to hire. We funded the program at $5 million last year and proposed another $5 million this year.

We’re also creating a business environment where companies want to hire and expand. We reformed the unemployment compensation system, ensuring employers will no longer face increased costs when hiring. Our reforms are resulting in $150 million in expected savings for employers and $385 million annually to the unemployment compensation trust fund.

In 2012, all three Philadelphia refineries announced that they were closing due to various economic conditions. We worked to keep all three refineries in the Philadelphia area open, guaranteeing hundreds of direct jobs and tens of thousands of jobs in related industries will stay in Pennsylvania.

We are also working to bring a multi-billion dollar petrochemical plant to Beaver County, the first such facility to be built in the northeastern United States, which could create up to 17,000 jobs.

We also expanded Keystone Opportunity Zones that will spur job growth by providing job creators with tax cuts, credits and exemptions, as well as led a bipartisan effort to secure more than $60 million to continue the dredging of the Delaware River, making the Port of Philadelphia more competitive with ports around the country.

All of these efforts are part of deliberate strategy to make our commonwealth a national model in the next decade for innovation and job creation.

Editor: You often mention the energy sector as growing a lot of jobs, why is it such a benefit to the state?

Corbett: Energy equals jobs. And nowhere is that more evident than Pennsylvania in 2013. The energy sector is helping put Pennsylvania at the forefront of a second, national industrial revolution that is going to transform how the United States powers its vehicles, heats it homes, and, most importantly, creates jobs for working families. The energy field is helping to re-energize industries and companies all over Pennsylvania, resulting in 72,000 new job hires and, since 2007, generating more than $1 billion in related revenue.

We’re helping to nurture this growth with energy reforms passed in 2012, known as Act 13. The impact fee, which was part of Act 13, has generated more than $400 million for Pennsylvania communities. By creating a regulatory framework that is consistent and predictable, we are providing the incentive job creators need to relocate and invest in Pennsylvania.

As we grow the energy sector in Pennsylvania, we will have access to abundant energy through natural gas. This resource will lessen our dependence on foreign oil. Five years ago, Pennsylvania imported 75 percent of the gas we used. Now, for the first time in 100 years we are a net exporter.

We’ve also enacted the strongest environmental standards in the nation when it comes to unconventional drilling, also known as fracturing, including: increased fines and penalties; significantly greater setback distances between drilling and homes, streams, and water wells; increased well bonding amounts paid by drillers; required disclosure of hydraulic fracturing chemicals; a required water management plan, with a focus on water reuse and recycling; and significantly expanded legal protections of water supplies. Pennsylvania has also adopted well construction and water discharge standards that are the strictest in the nation, and more than doubled its enforcement staff.

Pennsylvanians are realizing these environmental protections – while also supporting the more than 240,000 fellow citizens who work in the oil and gas industry, and saving thousands of dollars from natural gas and electricity prices that are more than 40 percent lower than just five years ago. Because of Act 13, our water is cleaner, our air is cleaner, and our communities are safer than ever before. That’s a story worth telling.