Wolf needs to keep lid on spending, push pension reform

By Kevin Shivers

At his inauguration, Gov. Wolf said: "We need leaders today who are willing to listen to each other and learn from each other."

Since taking office, Wolf has been working behind the scenes and visiting with lawmakers on both sides of the aisle to establish working relationships. He's also met with many outside groups to hear their concerns.

On Tuesday, Wolf will have the opportunity to lay out his agenda and present his first budget proposal in a speech before the General Assembly. Last week, the governor outlined a few of those changes, several of which are promising - eliminating the capital stock tax and lowering the corporate net income tax. There are several other components that small-business owners will be listening for.

First, spending needs to be kept under control. While recent economic data indicate Pennsylvania's economy is continuing its slow recovery, now is not the time to go on a spending spree. The Independent Fiscal Office analysis, which predicts a $1.85 billion budget hole this year, includes an assumed spending increase of more than 6 percent above the $29 billion spent in 2014-15. This is unsustainable for the long-term fiscal health of the commonwealth and requires a serious review of the cost drivers.

Pennsylvania's public-pension deficit is the single greatest financial threat facing the commonwealth, school districts, and ultimately taxpayers. It's also an issue the majority in the private sector have faced and dealt with years ago by moving to 401(k)-style defined contribution plans. Meaningful pension reform is badly needed.

Next, the governor should look for innovative solutions that reduce costs for the commonwealth and for job creators. There are countless instances where employers, tax preparers, and payroll-service providers must make multiple filings of the same information. These inefficiencies raise administrative costs - especially for small businesses - and represent the costly inefficiencies of state government.

Wolf should also open the door to finally getting the state out of the business of selling alcohol. A proposal that enables small-business ownership, promotes lower prices, and provides for greater selection for consumers is a winning solution that also has the potential to provide a significant revenue source for the state - estimated at $1 billion.

This is also not the time to raise taxes on job creators. The governor has already proposed what would be one of the highest energy taxes in the nation on the natural gas industry - the growth of which has been a saving grace for many small businesses. He has also discussed raising the personal-income tax, which is the vehicle used by the majority of small-business owners when they file their earnings. Though the details of his plan remain unclear, we hope the idea ends up on the cutting-room floor as he prepares his budget address.

The governor should also resist the temptation to pick economic winners and losers through expensive and ineffective corporate-welfare schemes. Instead, he should work with job creators to improve the overall business climate in Pennsylvania.

Pennsylvania's tax code is stifling small businesses on many fronts. The tax code must be simplified and changed to encourage investment in activities that create jobs and business activity.

There are many more factors, beyond the tax code, that go into the cost of creating a job in Pennsylvania. Even with recent efforts, Pennsylvania continues to rank among the highest states in both unemployment tax rates and workers' compensation premium rates. Lawsuit abuse also remains a significant problem. Wolf should support reforms that help keep Pennsylvanians working, reduce costs, curtail fraud, and are consistent and competitive with other states.

Small-business owners will be listening intently Tuesday for a vision that moves Pennsylvania forward. The commonwealth's job creators and taxpayers will be well served if the governor and legislators choose a path that is fiscally sound.