A State On The Move!

Monday, June 23, 2014 - 10:28

The Editor interviews Governor Tom Corbett regarding the business climate in Pennsylvania.

Editor: Governor Corbett, please discuss the economic priorities of your current administration.

Corbett: When I took office, Pennsylvania was still struggling with the aftermath of the economic recession, facing a staggering $4 billion budget deficit and near double-digit unemployment. To get Pennsylvania back on the right track, I launched JOBS1st PA as a comprehensive roadmap to economic recovery that harnessed the state’s resources and talents to prioritize private-sector job creation and retention.

Today, our policies are working: during my time in office, Pennsylvania’s private sector has added more than 150,000 new jobs, our unemployment rate has dropped significantly to a five-year low and the number of people working is at its highest since the recession. We have made record investments in education and transportation. We’ve lowered taxes. We’ve reined in spending and practiced responsible budgeting. By harnessing our commonwealth’s immense natural gas resources, we have built a world-class energy industry that ranks second in the nation in terms of energy production and sustains more than 200,000 Pennsylvania jobs.

Our approach to governing is why Pennsylvania is roaring back from the Great Recession while other states are still struggling.

Editor: Pennsylvania’s unemployment rate is below the national average. To what factors do you attribute this favorable condition?

Corbett: We have successfully nurtured job creation through meaningful tax, legal and regulatory reform. Increased confidence in our economy from workers and businesses has stimulated growth.

This translates, more simply, to people finding jobs. Retirement-age Pennsylvanians can now retire, and students graduating from post-secondary education can confidently enter the labor force and find a job.

Editor: What impact has the development of the hydrocarbon and chemicals industries had on the state’s economy?

Corbett: Pennsylvania is the tenth-largest chemical-producing state in the U.S., generating $3.7 billion in payroll annually and providing more than 120,000 direct and indirect jobs.

The recent surge in the availability of natural gas liquids (NGLs) is drastically lowering the cost of plastics production by providing ethylene as an inexpensive feedstock alternative to propylene.

These domestically produced NGLs, specifically ethane, have catapulted Pennsylvania to the forefront of competing with the Gulf Coast, a long-established energy hub, for major energy capital projects.

The proposed Shell petrochemicals facility in southwest Pennsylvania is projected to result in 10,000 construction jobs, at least 400 direct jobs and more than 10,000 jobs created in chemical and supply chain industries.

New manufacturers who use byproducts of ethane are expected to cluster around the new facility, and established Pennsylvania manufacturers who use byproducts of ethane as a feedstock will benefit from a significantly shorter and more cost-effective supply chain (currently sourced from the Gulf Coast and Canada).

The American Chemistry Council projects that the addition of a world-scale ethane cracker in Pennsylvania could bring the state’s industry revenues to more than $29 billion, making it the seventh-largest chemical producing state in the U.S.

Editor: What impact has the Marcellus Shale gas industry had on the state’s economy?

Corbett: Pennsylvania’s world-class energy industry ranks second in the nation in terms of energy production. By harnessing this immense resource responsibly, we are putting more than 200,000 Pennsylvanians back to work.

Additionally, a diverse energy portfolio equals affordable and less volatile energy prices. According to the EPA, natural gas prices are down 50 percent, electricity prices are down 40 percent, and carbon emissions continue to be on the decline as well.

Finally, this industry is a critical revenue source. The impact fee has generated a total of $630 million in new revenue for Pennsylvania since its enactment in February 2012. Nearly $2 billion in corporate and personal income tax revenue has been paid out by oil and gas companies since the onset of Marcellus Shale activity seven years ago.

Editor: What is the administration doing to encourage job growth?

Corbett: I believe government should be an advocate, not an adversary to job creation. We created JOBS1stPA to support the continued resurgence of Pennsylvania’s manufacturing, life sciences and technology sectors, as well as empowering our small business community to unleash a new wave of innovation and progress.

Tax reforms like the $5,000 startup business tax deduction, increasing the net operating loss cap, and eliminating the inheritance tax for small business enables our job creators to invest profits where they should be investing – back into the business.

Life sciences companies are redefining our economy; startups have grown into profitable businesses; and investors are selecting Pennsylvania as a high-potential location.

Increasing the research & development tax credit to $55 million annually is encouraging our researchers to discover the next breakthrough in technology or health. Our Discovered in PA – Developed in PA initiative fills a much-needed niche to support business incubating, tech transfer and commercialization to ensure that ideas that are dreamed up in PA are manufactured in PA. The program also strives to engage Pennsylvania’s esteemed colleges and universities in regional and local economic development to inject our talent and our technology into the business world.

Editor: What incentives are available to lure new business into the state?

Corbett: We are proud to create an economic environment of lower taxes, streamlined permitting and strong investments in education, our workers, and our infrastructure to encourage innovation and growth. Simply put, Pennsylvania is open for business.

Through the Governor’s Action Team and the Department of Community and Economic Development (DCED), we offer a single point of contact for business expansion, retention and attraction, providing technical assistance and putting together financial incentive packages which may include grants, loans and/or tax credits. DCED has also consolidated more than 70 economic programs under the Office of Innovation and Investment to streamline delivery of services.

These programs include supporting technology and innovation through seed funding to organizations like the Ben Franklin Technology Partners and Life Sciences Greenhouses, as well as tax credits for R&D and innovation.

In addition, we offer grants and loan programs for machinery and equipment; job training; infrastructure; land and building improvements; environmental assessment/remediation; acquisition of land, buildings, right of ways; working capital; and site preparation.

DCED also offers private financing assistance to help businesses access cost-effective financing, including taxable and tax-exempt bond financing and loan guarantees.

Editor: You have placed a heavy emphasis on funding of education. Have you been able to shift financing from other avenues to financing to provide additional financial resources for educational purposes?

Corbett: Budgets are about priorities and as such, one of my top priorities is to ensure that every child in Pennsylvania, regardless of his ZIP code or background, has access to a high-quality education and high-quality, effective teachers and school leaders.

Since taking office, I have invested an additional $1.2 billion – a total of nearly $10 billion – into Pennsylvania’s pre-kindergarten to grade 12 public education system. This will provide our students with the resources that are needed to be prepared for the workforce, postsecondary education and the military.

Working with Pennsylvania educators, my administration has put into place college- and career-ready academic standards and rigorous assessments to ensure students are graduating from a Pennsylvania high school with the knowledge and skills to be successful as well as a school report card to provide parents, taxpayers and communities with comprehensive, detailed information on how each of our public schools is performing.

A high-quality education not only benefits students, it secures the long-term economic growth of Pennsylvania – something in which we all have a vested interest

I remain committed to ensuring that Pennsylvania’s students are not just locally and nationally competitive, but globally competitive in the 21st century economy.

Editor: Pension reform has been one of your priorities since 2013. Why do you think pension reform is so important? 

Corbett: Pension reform is critical for the long-term sustainability of Pennsylvania’s general fund.

The debt in our pension system has risen to approximately $50 billion. That equates to a share of approximately $13,000 per Pennsylvania taxpayer.

We cannot continue to look at solving the state’s general fund budget problems solely on the backs of taxpayers or new revenue generation; we must also look at the cost drivers. Pension costs from our public school and state employee retirement systems consume approximately 60 cents of every new dollar of general fund revenues.

We must accomplish meaningful pension reform, including moving from an unsustainable system to a more progressive defined contributions plan. If we do not do this, pension obligations will balloon. Dollars intended for education, human services and public safety will instead go toward paying legacy costs for services long ago rendered.

Editor: Pennsylvania is noteworthy for its fine healthcare institutions. Do you see these institutions being a magnet for professionals to come into the state?

Corbett: There’s no question that Pennsylvania is home to a world-class system of healthcare institutions that draws the best and the brightest from across the globe.

An area where I see the need for further development is keeping the talented people we have in our network from Pennsylvania right here in our state. This is especially critical in our rural communities that may be lacking resources for quality care, such as consistent access to a primary care physician.

Two million people live in areas that are federally designated as medically underserved, and given the richness of the medical capacity in Pennsylvania, that’s two million too many.

That’s why I support loan repayment assurance to healthcare practitioners who commit to working in primary care in rural and underserved areas. Increasing the number of residency slots for Pennsylvania-trained physicians will result in an increase in the number of primary care providers practicing in these areas and improved care options in these communities.

Editor: What do you see as the engines for future growth in the state?

Corbett: Pennsylvanians are synonymous with independence, creativity and a fiercely competitive can-do spirit. The future of business is already here. Pennsylvania is fortunate to have tremendous assets including:

  •     Location within a day’s drive of 60 percent of the U.S. and Canadian populations;
  •     Highly skilled workforce of more than 6.4 million;
  •     Low-cost, less volatile energy costs; and
  •     World-class colleges and universities.

One sector that has and will continue to see strong growth is energy. Energy, including natural gas, wind, solar, nuclear and coal - is a game-changer in Pennsylvania. Pennsylvania is home to the second-largest energy field in the world. We are also second in the nation for electricity generation, for natural gas production and for nuclear generation.

Pennsylvania’s shale gas production is projected to meet 25 percent of all U.S. requirements by 2020, and the overall shale play is projected to be a 100-year play.

Low-cost, domestic energy and the continued development of intrastate pipelines will result in even lower energy costs for business and individual consumers.

Increased activity will continue to increase demand for a growing supply chain, which will mean more manufacturing growth.


Please email Governor Corbett’s office at Governor@pa.gov with any questions regarding this interview.