Governor’s budget plan continues long-term effort
to right-size state government and improve competitiveness, PMA says
February 7, 2012 – (HARRISBURG) Governor Tom Corbett’s FY 2012-2013 budget continues the difficult but necessary work of imposing fiscal discipline on state government and positioning the commonwealth for economic recovery, said Frederick W. Anton III, President and CEO of the Pennsylvania Manufacturers’ Association.
"Tom Corbett is a man of his word," Anton said. "When he pledged to make state government live within its means, just like Pennsylvania households and businesses do, he meant it. The governor’s budget plan holds the line on spending, protects Pennsylvania’s overburdened taxpayers, and makes additional improvements to our economic competitiveness. After too many years of borrow-and-spend profligacy, Tom Corbett’s pro-growth agenda of fiscal responsibility is directing Pennsylvania toward a more prosperous future for the entire commonwealth."
Governor Corbett’s FY 2012-2013 General Fund budget proposes to limit spending to the 2011-2012 level of roughly $27.15 Billion. Although slow economic growth has yielded approximately $500 Million less in state tax collections than expected, Corbett is holding fast to his pledge to oppose tax increases and instead will bring the budget into balance with additional spending reductions.
"Fiscal discipline is the first and most important step toward returning Pennsylvania to stronger economic growth and a better competitive position relative to other states," said PMA Executive Director David N. Taylor. "For too long, Pennsylvania has missed out on new jobs, capital investment, and economic growth due to chronic overspending in Harrisburg, high business taxes, lawsuit abuse, and regulatory overkill. Governor Corbett recognizes these challenges and is tackling them head-on, which is the hallmark of a true leader. On behalf of Pennsylvania’s manufacturing sector, we thank Governor Corbett for being true to his principles and doing the difficult work of right-sizing state government."
The FY 2012-2013 General Fund budget also continues state government’s commitment to phase out the Capital Stock and Franchise Tax, a business assets tax that employers pay regardless of their profitability. Combined with the highest-in-the-nation 9.99 percent Corporate Net Income Tax, Pennsylvania is one of the only states in America to impose both a business income tax AND a business assets tax. Under the original phase-out plan put forward by Governor Tom Ridge, state government would have stopped collecting the Capital Stock and Franchise Tax on January 1, 2009. Under the current phase-out plan, the CSFT rate fell to 1.89 mills on January 1, 2012 and will further drop to 0.89 mills on January 1, 2013, with the CSFT reaching zero on January 1, 2014.
"Ever since the crippling 1991 tax hike, Pennsylvania’s employers have struggled under some of the highest business taxes in the nation. Ending the uncompetitive Capital Stock and Franchise Tax after five years of delay will at long last send a signal to employers and investors that Pennsylvania is serious about becoming job-friendly," Taylor said.
Founded in 1909 by Bucks County industrialist Joseph Grundy, the Pennsylvania Manufacturers’ Association is a Harrisburg-based statewide trade organization representing the manufacturing sector in Pennsylvania’s public policy process. Manufacturing is the largest sector of Pennsylvania’s economy, adding $75 Billion of value annually, generating 13 percent of Gross Domestic Product, directly employing 575,000 Pennsylvanians, and sustaining millions of additional Pennsylvania jobs through far-reaching supply chains and distribution networks. To learn more about the association and its work, visit www.pamanufacturers.org