COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES
APPROPRIATIONS COMMITTEE HEARING
STATE CAPITOL MAIN BUILDING ROOM 140 HARRISBURG, PENNSYLVANIA
WEDNESDAY , MARCH 11, 2015
PRESENTATION FROM DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT
BEFORE:
HONORABLE WILLIAM F. ADOLPH , JR., MAJORITY CHAIRMAN HONORABLE JOSEPH MARKOSEK , MINORITY CHAIRMAN HONORABLE KAREN BOBACK HONORABLE JIM CHRISTIANA HONORABLE GARY DAY HONORABLE GEORGE DUNBAR HONORABLE GARTH EVERETT HONORABLE KEITH GREINER HONORABLE GLEN GRELL HONORABLE SETH GROVE HONORABLE WARREN KAMPF HONORABLE FRED KELLER HONORABLE TOM KILLION HONORABLE JIM MARSHALL HONORABLE KURT MASSER HONORABLE DAVID R. MILLARD HONORABLE MARK T. MUSTIO HONORABLE MICHAEL PEIFER HONORABLE JEFFREY P. PYLE HONORABLE MARGUERITE QUINN HONORABLE CURTIS G. SONNEY HONORABLE MIKE VEREB
————————— JEAN DAVIS REPORTING 285 EAST MANSION ROAD • HERSHEY, PA 17033 Phone (717)503-6568 1 BEFORE (cont.'d):
2 HONORABLE MATTHEW D. BRADFORD HONORABLE TIM BRIGGS 3 HONORABLE MICHELLE F. BROWNLEE HONORABLE MIKE CARROLL 4 HONORABLE H. SCOTT CONKLIN HONORABLE MARY JO DALEY 5 HONORABLE MADELEINE DEAN HONORABLE MARIA DONATUCCI 6 HONORABLE EDWARD GAINEY HONORABLE JOHN GALLOWAY 7 HONORABLE STEPHEN KINSEY HONORABLE MICHAEL H. O'BRIEN 8 HONORABLE CHERELLE L. PARKER HONORABLE KEVIN SCHREIBER 9
10 ALSO IN ATTENDANCE :
11 DAVID DONLEY, REPUBLICAN EXECUTIVE DIRECTOR RITCHIE LaFAVER, REPUBLICAN EXECUTIVE DIRECTOR 12 CURT SCHRODER, REPUBLICAN CHIEF COUNSEL MIRIAM FOX, DEMOCRATIC EXECUTIVE DIRECTOR 13 ANNE BALOGA, DEMOCRATIC CHIEF COUNSEL HONORABLE VANESSA LOWERY BROWN 14 HONORABLE ELI EVANKOVICH HONORABLE ROBERT GODSHALL 15 HONORABLE BARRY JOZWIAK HONORABLE WILLIAM KORTZ 16 HONORABLE JOHN MAHER HONORABLE DAVID PARKER 17 HONORABLE THOMAS QUIGLEY HONORABLE MICHAEL SCHLOSSBERG 18 HONORABLE CRAIG STAATS HONORABLE GREG VITALI 19 HONORABLE JAKE WHEATLEY 20
21 JEAN M. DAVIS, REPORTER NOTARY PUBLIC 22 23
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2 1 I N D E X
2 TESTIFIERS 3 NAME PAGE 4 DENNIS DAVIN, ACTING SECRETARY, DEPARTMENT 8 5 OF COMMUNITY & ECONOMIC DEVELOPMENT
6 BRIAN HUDSON, EXECUTIVE DIRECTOR, 44 PENNSYLVANIA HOUSING FINANCE AGENCY 7 SCOTT DUNKELBERGER, ACTING DEPUTY SECRETARY 75 8 OF BUSINESS FINANCING
9 SHERI COLLINS, ACTING DEPUTY SECRETARY OF 99 TECHNOLOGY & INNOVATION 10
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3 1 P R O C E E D I N G S
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3 MAJORITY CHAIRMAN ADOLPH : Good morning ,
4 everyone.
5 Before we get into the testimony and the
6 questions, we have a full house here. We 'll just go
7 over some ground rules.
8 Please turn off your iPhones and your iPads. It
9 does interfere with the budget hearings. It is being
10 televised. I'd appreciate your cooperation.
11 We 're going to take just a few minutes to
12 introduce the committee members . We also invited some
13 standing Committee Chairmen related to the department.
14 They have not arrived yet . When they arrive, they will
15 have an opportunity to ask some questions as well.
16 First of all, my name is Bill Adolph . I
17 represent the 165th Legislative District in Delaware
18 County. And I'm the Republican Chair of the House
19 Appropriations Committee.
20 Chairman Markosek .
21 MINORITY CHAIRMAN MARKOSEK : Thank you , Chairman
22 Adolph .
23 I'm State Representative Joe Markosek , 25th
24 Legislative District, Allegheny County.
25 To my right is Sean Brandon, who is our staff
4 1 person from the Appropriations Committee today.
2 REPRESENTATIVE CARROLL: Good morning . I'm Mike
3 Carroll. I represent portions of Lackawanna and Luzerne
4 Counties.
5 REPRESENTATIVE GAINEY: Good morning . State
6 Representative Ed Gainey from the 24th Legislative
7 District, Allegheny County.
8 REPRESENTATIVE PARKER: Representative Cherelle
9 Parker, 200th District, Philadelphia County.
10 REPRESENTATIVE O'BRIEN: Good morning . Mike
11 O'Brien, Philadelphia.
12 REPRESENTATIVE BROWNLEE: Good morning .
13 Michelle Brownlee, 195, Philadelphia.
14 REPRESENTATIVE DALEY: Good morning . Mary Jo
15 Daley, Montgomery County or portions of Montgomery
16 County.
17 REPRESENTATIVE BRIGGS: Good morning . Tim
18 Briggs from Montgomery County.
19 REPRESENTATIVE SCHREIBER: Good morning . Kevin
20 Schreiber from York County.
21 REPRESENTATIVE DONATUCCI: Good morning . Maria
22 Donatucci, 185th District, Philadelphia and Delaware
23 Counties.
24 REPRESENTATIVE DEAN: Good morning . Madeleine
25 Dean from Montgomery County.
5 1 REPRESENTATIVE KINSEY: Good morning . Stephen
2 Kinsey, Philadelphia County.
3 REPRESENTATIVE BOBACK: Good morning . Karen
4 Boback, 117th District, Luzerne, Lackawanna, Wyoming
5 Counties.
6 REPRESENTATIVE MILNE : Duane Milne from Chester
7 County. Good morning .
8 MR . DONLEY: Dave Donley, Republican staff,
9 Executive Director for the committee.
10 MR . SCHRODER: Curt Schroder. Republican staff
11 chief counsel.
12 REPRESENTATIVE MUSTIO : Good morning . Mark
13 Must io, Allegheny County.
14 REPRESENTATIVE GREINER: Keith Greiner, 43rd
15 District, Lancaster County.
16 REPRESENTATIVE PEIFER: Good morning . Mike
17 Peifer, 139th District, Pike and Wayne Counties.
18 REPRESENTATIVE MILLARD : Good morning . David
19 Millard , Columbia County.
20 REPRESENTATIVE DUNBAR: Good morning . George
21 Dunbar, Westmoreland County.
22 REPRESENTATIVE KILLION: Good morning . Tom
23 Killion, Delaware County.
24 REPRESENTATIVE SONNEY: Good morning . Curt
25 Sonney, Erie County.
6 1 REPRESENTATIVE KELLER: Good morning . Fred
2 Keller, 85th District, Union and Snyder Counties.
3 REPRESENTATIVE MASSER : Hello. Kurt Masser ,
4 Northumberland , Montour , Columbia Counties.
5 REPRESENTATIVE KAMPF: Warren Kampf, Chester and
6 Montgomery Counties.
7 REPRESENTATIVE PYLE: Good morning . State
8 Representative Jeff Pyle, Armstrong , Butler, and Indiana
9 Counties. Thanks for being here.
10 REPRESENTATIVE MARSHALL : Good morning . Jim
11 Marshall , part s of Beaver County, part s of Butler
12 County.
13 REPRESENTATIVE CHRISTIANA: Good morning . Jim
14 Christiana, other part s of Beaver County and Washington
15 County.
16 MAJORITY CHAIRMAN ADOLPH : Okay. Thank you .
17 As you can see, the House Appropriations
18 Committee certainly is representative of the entire
19 Commonwealth of Pennsylvania. And I always kid. We are
20 almost the size of the Pennsylvania State Senate. Be
21 prepared for anything.
22 But we're here. And I always re mind the
23 member s, we are all here regarding the budget .
24 It's my pleasure to welcome Acting Secretary
25 Dennis Davin from the Department of Community & Economic
7 1 Development.
2 Mr . Secretary, welcome. If you would, introduce
3 your colleagues to the member s. And you can begin with
4 an opening comment and then we'll go right into some
5 questions.
6 Thank you .
7 ACTING SECRETARY DAVIN: Great. Thank you ,
8 Chairman Adolph .
9 To my left is Sheri Collins. She's the Deputy
10 Secretary of Technology and Investment.
11 And to my right, to your left, is Scott
12 Dunkelberger, who is the Deputy Secretary of Business
13 Financing.
14 MAJORITY CHAIRMAN ADOLPH : Thank you .
15 ACTING SECRETARY DAVIN: Chairman Adolph ,
16 Chairman Markosek , members of the committee, thank you
17 for the opportunity to provide today's testimony.
18 My name is Dennis Daven, Acting Secretary for
19 the Department of Community & Economic Development.
20 Prior to my appointment by Governor Tom Wolf , I served
21 for more than a decade as the Director of Allegheny
22 County's Department of Community and Economic
23 Development where I was able to see firsthand the
24 positive im pact s and advances that can be made through
25 strategic public and private partnership s in economic
8 1 development.
2 Governor Wolf 's proposed budget will have a
3 noticeable im pact on our ability to create jobs that pay
4 and get the Commonwealth back on track.
5 The truth is, Pennsylvania will not im prove
6 until we re build our middle class. Governor Wolf 's plan
7 reduces taxes to spur economic growth of jobs that
8 support families, invests in education to prepare our
9 kids for the economy of the future, and lessens the
10 total tax burden on middle -class homeowners.
11 We are near the bottom of the country in job
12 growth and we've lacked the vision and leadership to
13 move our economy forward. This budget makes
14 Pennsylvania a place where companies can come, invest,
15 and grow in an environment greatly im proved by cutting
16 the Corporate Net Income Tax by 40 percent in 2015-'16
17 and by 50 percent by 2018 and by finally getting rid of
18 the Capital Stock and Franchise Tax once and for all.
19 It will not be easy to get our economy back on
20 track and re build the middle class, but by taking bold
21 steps and trying new things, we'll grow our economy,
22 create new jobs, and make Pennsylvania a leader in the
23 21st Century.
24 With vision and leadership, we'll make targeted
25 investments in programs proven to work to spur private
9 1 business to create jobs.
2 Manufacturing has been at the heart and soul of
3 many communities. Governor Wolf 's budget build s on that
4 Pennsylvania tradition to create new, good-paying jobs
5 through establishing a Made -in-Pennsylvania Job Creation
6 Program to provide a total of $5 million in tax credits
7 to manufacturing companies that are creating
8 good-pay ing, middle -class jobs and providing $5 million
9 to leverage the talents of our research universities to
10 advance manufacturing technology and commercialization
11 in collaboration with the State's industrial resource
12 centers.
13 Over the past month and a half, I've had the
14 great pleasure to listen and learn from some of the most
15 hardworking individuals I have ever met while meeting
16 with the different program offices at the Department of
17 Community and Economic Development.
18 Unfortunately, over the past few years , this
19 department has seen some devastating budget cuts that
20 have left many of the programs without the critical
21 resources necessary to strengthen our communities and
22 encourage much -needed business development and job
23 creation.
24 At DCED, our mission is to foster opportunities
25 for businesse s to grow in the global economy, help
10 1 communities succeed and thrive, im prove the quality of
2 life for Pennsylvania citizens, and assure
3 accountability and transparency in the expenditure of
4 public funds.
5 Over the last four years , accomplishing that
6 mission was nearly im possible without sufficient funding
7 for our department's key programs and initiatives.
8 Governor Wolf 's proposed budget includes an
9 economic growth plan for jobs that pay which
10 recapitalizes DCED's proven programs , bring ing a fresh
11 start to spur investment and economic prosperity .
12 The 2015-2016 budget launches a $675 million
13 investment program , supported by the revenue from the
14 severance tax on drilling, to support economic
15 development initiatives that leverage private -sector
16 funds to create jobs.
17 This funding will support programs including
18 Pennsylvania Industrial Development Authority , PIDA, for
19 business development loans, Business in Our Sites
20 Program to allow us to compete for business expansions
21 and relocations, energy investment, and technology
22 investments to support entrepreneurs, established
23 companies, and manufacturing innovation.
24 We need bold ideas such as these and smart
25 investments to put our economy back on the fast track to
11 1 prosperity . And Governor Wolf 's budget is a
2 comprehensive plan that addresses the issues needed to
3 move Pennsylvania forward.
4 Governor Wolf is a businessperson . He knows how
5 tough it can be for businesses to start and grow. But
6 with his unique perspective and leadership, I'm fully
7 confident that Pennsylvania will be the place to do
8 business once again.
9 Governor Wolf has promised a Pennsylvania that
10 thrives by focusing on providing jobs that pay , schools
11 that teach, and government that works.
12 I look forward to hearing from you today on how
13 we can all work together to make this vision a reality.
14 Thank you .
15 MAJORITY CHAIRMAN ADOLPH : Thank you , Mr .
16 Secretary.
17 I do have some comments. But at this time I'm
18 going to defer to Chairman Markosek .
19 MINORITY CHAIRMAN MARKOSEK : Thank you ,
20 Chairman.
21 And welcome, Acting Secretary, you and your
22 staff. Just on a personal note, you know, I know the
23 Acting Secretary personally . We 've worked together. I
24 think the last time -- he's been in my district office.
25 And I think the last time I saw you was at a Pittsburgh
12 1 Pirates baseball game waiting in line at the concession
2 stand to help the economy there, as we know. So we've
3 got a little bit of history together. And it's just
4 been a wonderful relationship.
5 ACTING SECRETARY DAVIN: Yes.
6 MINORITY CHAIRMAN MARKOSEK : Acting Secretary
7 Davin has been great for Allegheny County's economic
8 development. Huge success there. He helped me
9 personally with some economic development issues in my
10 Legislative District.
11 And certainly the entire southwestern
12 Pennsylvania has benefit ed from the activities that you
13 carried out back there. I look forward to bring ing that
14 statewide now, that accountability and growth statewide.
15 And we know that creating jobs is so important for the
16 Commonwealth, so important.
17 ACTING SECRETARY DAVIN: Yes.
18 MINORITY CHAIRMAN MARKOSEK : I really can't
19 think of a better person to be in your position under
20 the Wolf Administration . I wish you well. We will do
21 everything we can to work with you .
22 ACTING SECRETARY DAVIN: Thank you .
23 MINORITY CHAIRMAN MARKOSEK : Mr . Chairman, I
24 don't have a question right now.
25 Representative Carroll, at the appropriate time,
13 1 will ask our first question from the Democrats.
2 MAJORITY CHAIRMAN ADOLPH : Thank you , Chairman.
3 Mr . Secretary, I'm an optimistic person . And
4 I'm going to stay optimistic.
5 ACTING SECRETARY DAVIN: Good.
6 MAJORITY CHAIRMAN ADOLPH : It was your
7 Department last year that helped bring back and open up
8 three refineries in Southeast Pennsylvania and probably
9 saved 5,000 jobs and hundreds of mill ions of dollars in
10 taxes to Pennsylvania.
11 I know there's an awful lot of employees that
12 are still there that worked on that. And I want to
13 thank those employees. That's No . 1.
14 ACTING SECRETARY DAVIN: Thank you .
15 MAJORITY CHAIRMAN ADOLPH : I think Pennsylvania
16 has a lot to offer people . And your department has a
17 lot to do with that. Okay.
18 And just recently -- I only live about five
19 miles outside the city of Philadelphia. And just
20 recently, the New York Times, believe it or not, the New
21 York Times listed Philadelphia as the No . 1 city in the
22 United States to travel to in the year 2015. That's
23 pretty amazing. I think Milan and Cuba internationally
24 ranked ahead of Philadelphia.
25 So let's not be so pessimistic to start this
14 1 hearing. We have a lot of things going for us. We have
2 the Democratic National Convention coming this year ,
3 which I'm sure your department is going to have a lot to
4 do with.
5 ACTING SECRETARY DAVIN: Yes.
6 MAJORITY CHAIRMAN ADOLPH : And we have the Pope
7 visiting. So I mean , it can't be all as bad as you said
8 in your opening statement. So things are happening here
9 in Pennsylvania. The sky did not fall here in
10 Pennsylvania just because we have a new Administration .
11 But there's one thing I want to get to right
12 away. And I've been a big supporter of tourism my
13 entire legislative career. And I'm a little puzzled
14 that in your budget , that increases your budget by
15 hundreds of million s of dollars. You saw or someone saw
16 fit to cut the two leading convention bureau s in
17 Philadelphia down to zero.
18 Can you explain why that line item was zeroed
19 out?
20 ACTING SECRETARY DAVIN: Yeah. My
21 understanding, Chairman, is that that line item was a
22 legislative line item last year .
23 And we fully anticipate having discussions with
24 the Legislature through the course of the budget
25 program , the budget process , to consider other
15 1 opportunities for funding.
2 MAJORITY CHAIRMAN ADOLPH : Okay. Chairman
3 Markosek has signaled to me if you could move your
4 microphone up a little bit .
5 ACTING SECRETARY DAVIN: Sure.
6 MAJORITY CHAIRMAN ADOLPH : All right.
7 Well , you know, we'll talk about what's a
8 legislative line item and what's an administrative line
9 item. But we're talking about the budget . And these
10 are budget line items that have proven successful.
11 And we send state tax money down to professional
12 people that have done an outstanding job over the
13 decades, no matter what Administration has been here.
14 So I'm looking forward to working with you there.
15 Sooner or later, whoever is Governor will
16 understand that you don't start off the conversation by
17 deleting items that the Legislature likes and so do the
18 people of Pennsylvania. That's throughout the budget .
19 The next question is going to be asked by
20 Representative Jim Christiana.
21 REPRESENTATIVE CHRISTIANA: Thank you , Mr .
22 Chairman.
23 Good morning .
24 ACTING SECRETARY DAVIN: Good morning .
25 REPRESENTATIVE CHRISTIANA: I have the privilege
16 1 of representing the 15th District, which incorporates
2 the proposed Royal Dutch Shell Petrochemical Plant. And
3 I must say that aside from former Governor Corbett
4 himself, Secretary Alan Walker probably had the second
5 most significant impact on us being chosen over our West
6 Virginia and our Ohio neighbors.
7 And first, before I ask you a specific question
8 about that project , will DCED, from your understanding,
9 have a continued presence working on the proposed
10 cracker plant going forward?
11 ACTING SECRETARY DAVIN: Yes. We will have a
12 continued presence in a very big way.
13 REPRESENTATIVE CHRISTIANA: And would you maybe
14 provide the committee, with an understanding from the
15 Secretary's standpoint, the Administration 's support of
16 that project going forward?
17 ACTING SECRETARY DAVIN: Sure. We 've had
18 tremendous amounts of discussion regarding the Shell
19 cracker plant in my short time, a month and a half that
20 I've been here. And I think that part of what we've
21 done is looked at opportunities to really significantly
22 work with them going forward.
23 If you remember or may recall, in 2014, November
24 of 2014, Shell exercised the land option with Horsehead
25 Company to purchase the property .
17 1 We don't know at this point in time -- and this
2 is after having some recent discussions with Shell. We
3 don't know when a final decision, investment decision,
4 will be made .
5 But right now, they are working on key permit s
6 with the Federal Government, with the State, and with
7 the local folks. And they've indicated to us that all
8 are working in a very coordinated fashion from our
9 Department of Environmental Protection, to the local
10 folks, to the Feds.
11 We feel very confident that there's a lot of
12 continued activity and progress . And we will be there
13 to help in any way we can.
14 REPRESENTATIVE CHRISTIANA: And with your
15 extensive experience in working with companies and
16 specifically in economic development and in western
17 Pennsylvania, when the company has not made a final
18 investment decision, in your experience, do things like
19 a Severance Tax and combined reporting being discussed
20 in the State Capitol, does that have an effect on that
21 final decision-making in your experience?
22 ACTING SECRETARY DAVIN: In my experience, I
23 don't think that the specific discussions in the
24 Legislature regarding taxes and things like that have
25 much of an effect on what they're doing, not only just
18 1 specific to Shell but other companies.
2 You know, what I found in my experience in
3 working with companies is that a lot of what they're
4 looking for is really based on the opportunities for the
5 areas that they're reviewing, that they're proposing to
6 put their facilities and also the workforce.
7 And workforce is probably the biggest indicator
8 of -- or not the biggest indicator, but the biggest
9 factor that companies look for when they're making their
10 location decision.
11 I think that from our perspective things are
12 moving forward in a very significant way. Again , we
13 don't have any indications from Shell right now on when
14 they would make their final investment decision. But
15 all indications are that things are moving in a positive
16 way.
17 REPRESENTATIVE CHRISTIANA: And , Mr . Secretary,
18 you had mentioned your experience of Allegheny County.
19 And Allegheny County has seen a significant influx of
20 county revenue because of their Chief Executive's
21 decision to lease on county land.
22 But the first act Governor Wolf did when he came
23 into office is he put a moratorium on drilling on state
24 land, which would have been equivalent to our
25 opportunity to do what you folks did in Allegheny
19 1 County, which is to bring in revenue for your taxpayers
2 by incentivizing -- not even incentivizing, by allowing
3 drilling on county land.
4 Can you talk about your experience with how that
5 has generated revenue for Allegheny County yet the
6 Governor seems to -- the first act as Governor was to
7 slap a moratorium on state land, prevent ing us from
8 doing the same thing that the Chief Executive had done?
9 ACTING SECRETARY DAVIN: Thank you .
10 Again , I don't know enough to be able to comment
11 on the moratorium on state game lands. My understanding
12 is that there has been significant amounts of drilling
13 around those areas up until now.
14 My experience in Allegheny County is that there
15 was very little drilling activity within Allegheny
16 County. And we -- I was a member of the Board of
17 Directors for the Airport Authority . We were fortunate
18 to have 9,000 contiguous acres around our air port and
19 opportunities to raise revenue through drilling on the
20 air port , which was significant in terms of upgrading the
21 airport.
22 As you may know, since this is close to your
23 district, the airport lost its hub status back in the
24 early 2000s with U.S. Airways leaving. So to be able to
25 raise significant revenue was good and was important for
20 1 us.
2 We also looked at raising revenue by taking one
3 of the remote park areas of Allegheny County and looked
4 at opportunities to do drilling activities outside of
5 the park area. So it wasn't a drilling activity that
6 took place in the park . It was outside of the park
7 areas. And it was drilling under the park s.
8 And then we looked at that opportunity and
9 entered into an agreement with a drilling contractor to
10 do that. It would provide significant revenue to the
11 park system as a whole in Allegheny County. But there
12 are no plans to do that any more going forward.
13 REPRESENTATIVE CHRISTIANA: I wasn't criticizing
14 what Allegheny County has done. I wish Beaver County
15 Commissioners would have done it a long time ago.
16 I would -- it would just be helpful I think to
17 tell the good story of what the Chief Executive has done
18 in Allegheny County. And if the state continues to say
19 that it needs additional revenue without raising taxes,
20 I think Allegheny County is a good exam ple of how we
21 could have done that.
22 Mr . Chairman, thank you for the opportunity to
23 ask the Secretary those few questions.
24 MAJORITY CHAIRMAN ADOLPH : Thank you ,
25 Representative.
21 1 Representative Mike Carroll.
2 REPRESENTATIVE CARROLL: Thank you , Mr .
3 Chairman.
4 Mr . Secretary, thank you so much for being here
5 today. I know that my colleagues will ask many , many
6 questions in the world of economic development.
7 So in anticipation of that, I'm going to change
8 gears a little bit right off the bat and shift to Act
9 164 of last year , which has come to my attention back in
10 Luzerne County as a tremendous problem for our local tax
11 collectors.
12 The act prescribe s continuing education and
13 certification requirements for tax collectors. And the
14 costs that are going to be associated with that
15 continuing education program in particular seem to be
16 quite onerous.
17 So, Mr . Secretary, I'm wondering since your
18 appointment if you 've had a chance to look at the
19 program , potential changes that might occur as a result
20 of your examination of what's on the horizon here with
21 the continuing education for tax collectors and what you
22 envision going forward for the implementation of this
23 act.
24 ACTING SECRETARY DAVIN: Thank you ,
25 Representative.
22 1 And I think that was one of the first issues
2 that was brought to my attention early on, in the first
3 couple of days actually.
4 We had taken a look at this. My Executive
5 Deputy Secretary, Neil Weaver , has worked very closely
6 with our community affairs folks on this and the amounts
7 that we were charging for getting certified and having
8 the appropriate opportunity to give the right type of
9 training to tax collectors.
10 It's our opinion right now that we're charging
11 too much simply. What we're going to come back with
12 probably in the next few weeks is significant reductions
13 to the amounts that we were charging previously for that
14 certification.
15 I can't really say right now because we're still
16 finalizing what that would be . But there will be
17 significant reductions in the amount that we charge.
18 REPRESENTATIVE CARROLL: And when you say
19 reductions, you 're talking about the cost per credit for
20 the continuing education requirement that's im posed on
21 the current tax collectors?
22 ACTING SECRETARY DAVIN: Yes, sir.
23 REPRESENTATIVE CARROLL: Well , I appreciate
24 that. And I really do think that it's important that
25 from the Department's standpoint that those sorts of
23 1 reductions occur. Because when you do the math on these
2 continue education credits, the amount of money that
3 will be expected to be provided by the tax collectors
4 really is significant.
5 So I'd ask you to really take and sharpen the
6 pencil with respect to the reductions and the per credit
7 cost. And I'd also ask you to take a look at the window
8 that is provided for the certification of newly elected
9 tax collectors.
10 It was brought to my attention that those tax
11 collectors who are elected in November 's election have a
12 very small window to be certified and that there's a
13 concern, at least in my part of the state, that that
14 window may not be enough time to allow for that newly
15 elected tax collector to reach the certification
16 requirements necessary to be able to be sworn into
17 office.
18 So I'd ask you as well to take a look at the
19 time frame necessary going forward with respect to the
20 original certification for newly elected tax collectors.
21 ACTING SECRETARY DAVIN: We 'll certainly do
22 that, Representative.
23 REPRESENTATIVE CARROLL: Thank you .
24 And finally, I'd offer that it seems likely, in
25 my view, that there's going to be a need to be a change
24 1 in the law with respect to the act that's on the book s
2 right now. So I applaud your willingness to go forward
3 with changes administratively. And I look forward to
4 input from the Department with respect to changes to the
5 law that may be necessary so that we can fairly provide
6 the continuing ed requirements that tax collectors
7 should have, but not do it in such a prescriptive way
8 that we just make it so burdensome for them that we
9 might actually drive people from the ranks of being tax
10 collectors.
11 And so I'd ask you to work with me and others in
12 the General Assembly as we contemplate changes to Act
13 164.
14 ACTING SECRETARY DAVIN: We 'll do that. Thank
15 you .
16 REPRESENTATIVE CARROLL: Thank you so much .
17 Thank you , Mr . Chairman.
18 MAJORITY CHAIRMAN ADOLPH : Thank you ,
19 Representative.
20 At this time I'd like to acknowledge the
21 presence of Representative Craig Staats of Bucks County.
22 And Chairman Jake Wheatley has arrived.
23 The next question will be asked by
24 Representative George Dunbar.
25 REPRESENTATIVE DUNBAR: Thank you , Mr . Chairman.
25 1 An d good morning , Secretary.
2 ACTING SECRETARY DAVIN: Good morning .
3 REPRESENTATIVE DUNBAR: My question is a
4 followup to our esteemed Chairman's comments.
5 The Governor in his budget raised taxes by $4.7
6 billion . DCED did very well in the budget with an
7 increase of (inaudible) million dollars, 38 percent .
8 I'm sure this is part of the jobs that pay initiative.
9 That's where we're trying to get at.
10 However, I'm really having trouble grasping the
11 whole big picture . Can you explain to me this increase
12 in funding in jobs that pay initiative with all this?
13 Why were there certain line items that were eliminated?
14 These line items that were eliminated were job creation
15 and training programs like Discovered in PA, Developed
16 in PA, the Supercomputing Center, Pennsylvania
17 Infrastructure Technology Alliance Program, and Rural
18 Leadership Training Program at Penn State.
19 Did you -- do you know why these were
20 eliminated? And did the Governor ask your opinion
21 before he issued the budget ?
22 ACTING SECRETARY DAVIN: Some of these program s,
23 for example, the Discovered and Developed in PA, we
24 really think that there are other opportunities within
25 the budget for other line items to capture the same type
26 1 of project s within that particular program .
2 Some of the other program s that you talked
3 about, the Superco mputing Center and other ones -- I'm
4 intimately familiar with the Supercomputing Center,
5 being from the Allegheny County region.
6 REPRESENTATIVE DUNBAR: Yes.
7 ACTING SECRETARY DAVIN: And we looked at
8 opportunities to try to fund that and other project s and
9 programs . And I think we're trying to be respectful of
10 the budget process as we're going through this right now
11 and understanding the pressure s on the budget to try to
12 capture the programs and the funding opportunities that
13 we have.
14 Unfortunately, we can't include everything
15 within the budget , again looking at the pressures that
16 are on the budget .
17 REPRESENTATIVE DUNBAR: And I understand that.
18 And with a budget of $280 million , a lot of the dollars
19 which we would consider discretionary -- I know you 're
20 new. But do you actually sit down and evaluate all the
21 existing programs with some type of outcome measurements
22 that we can see and understand what's working and what's
23 not?
24 ACTING SECRETARY DAVIN: That's a great
25 question. I'm in the process of doing that right now
27 1 with the executive team. We 're looking at essentially
2 all the program s that we have right now. We made some
3 decisions early on on programs like the D2PA, Discovered
4 and Developed in PA.
5 REPRESENTATIVE DUNBAR: Um-hmm.
6 ACTING SECRETARY DAVIN: But we're looking at
7 all the programs to really see the programs that give us
8 the best benefit to the communities and the businesses
9 in Pennsylvania to help continue to grow these
10 businesses in a very significant way.
11 REPRESENTATIVE DUNBAR: And I'd be appreciative
12 if you could share that information with us. That would
13 help us in our decision-making process as well.
14 Thank you , Mr . Secretary.
15 ACTING SECRETARY DAVIN: Thank you .
16 REPRESENTATIVE DUNBAR: Thank you , Mr . Chairman.
17 MAJORITY CHAIRMAN ADOLPH : Thank you ,
18 Representative.
19 At this time, Chairman Jake Wheatley .
20 REPRESENTATIVE WHEATLEY : Thank you , Mr .
21 Chairman.
22 Good morning , Mr . Secretary.
23 ACTING SECRETARY DAVIN: Good morning .
24 REPRESENTATIVE WHEATLEY : Congratulations on
25 your appointment. I'm looking forward to working with
28 1 you . I definitely have had a long working relationship
2 with you in the past and hopefully we'll continue while
3 we're in Harrisburg.
4 ACTING SECRETARY DAVIN: Yes.
5 REPRESENTATIVE WHEATLEY : I wanted to ask you a
6 question. First, the Governor is proposing this new
7 creation of a $5 million tax credit that's dedicated to
8 manufacturing companies that create good-paying jobs.
9 ACTING SECRETARY DAVIN: Yes.
10 REPRESENTATIVE WHEATLEY : Which of the tax
11 credits that we currently have are you looking at
12 eliminating for combining into this?
13 ACTING SECRETARY DAVIN: We 're actually looking
14 at a variety of tax credit programs to see, again, which
15 ones we think give us the best benefit for helping to
16 create jobs and stimulating the economy.
17 REPRESENTATIVE WHEATLEY : Okay.
18 ACTING SECRETARY DAVIN: I think with respect to
19 that particular program , Representative Wheatley , you
20 know, we think that there's a tremendous opportunity to
21 really help manufacturer s in Pennsylvania continue to
22 grow.
23 That particular tax credit would be a tax credit
24 based upon companies that increase the amount of their
25 payroll by a million dollars or more in any 12-month
29 1 period .
2 And I think from our standpoint providing a 5
3 percent tax credit to those companies would essentially
4 -- if you look at just plan ning it out, it essentially
5 would increase the amount of payroll by $100 million in
6 any given year just for manufacturer s.
7 And we think that manufactur ing jobs are a
8 critical component to helping to grow the economy. We
9 want to have manufacturer s that are here right now
10 expand. We want to have manufacturer s come to
11 Pennsylvania because we think we have a great story to
12 tell here in Pennsylvania.
13 And we think that that particular program will
14 really go a long way towards helping us increase the
15 manufacturing base in Pennsylvania.
16 REPRESENTATIVE WHEATLEY : So just so I'm clear,
17 you will be combining or eliminating current tax credit
18 programs in order to shift for this or will this be
19 something on top of our current tax credit programs ?
20 ACTING SECRETARY DAVIN: Most of the tax credit
21 program s that we currently have are still existing in
22 the amounts that they were available last year in the
23 2014-'15 budget .
24 REPRESENTATIVE WHEATLEY : And do you anticipate
25 in the bond issuance -- I'm shifting towards the bond
30 1 issuance, the $675 million bond . Are you anticipating
2 coming before us with a proposal that will require us to
3 -- let me ask you this way: How will that come before
4 us? How do you anticipate that coming before us?
5 ACTING SECRETARY DAVIN: We 're currently looking
6 at the components of that particular bond issue, the
7 $675 million , and trying to determine the best ways to
8 apply that.
9 I think part of it is there are great programs
10 in the Commonwealth Financing Authority , in the
11 Pennsylvania Industrial Development Authority , in the
12 Pennsylvania Economic Development Financing Authority .
13 And I think what we're doing with our staff is
14 determining where a lot of those programs should exist.
15 I think that there's going to be an opportunity
16 to have a bond issuance or maybe a few different bond
17 issuances within a couple of the various authorities to
18 capitalize, as the Governor mentioned , Pennsylvania
19 Industrial Development Authority , Business in Our Sites,
20 in a fairly significant way.
21 So we anticipate that there will be
22 opportunities that we're going to be able to provide to
23 the Legislature in terms of where those funds would
24 actually be housed. We don't know that just yet .
25 REPRESENTATIVE WHEATLEY : And just finally,
31 1 what's your role with the state's tax equalization
2 board ? I know it's housed in DCED. Do you have any
3 administrative role or any authority with the Board?
4 ACTING SECRETARY DAVIN: Yeah. We actually have
5 a number of folks that work on that within the
6 department. I'm actually just getting up to speed on
7 that right now because there's some issues that are
8 coming to me regarding that.
9 REPRESENTATIVE WHEATLEY : Okay.
10 ACTING SECRETARY DAVIN: So we do have some
11 authority over that Board.
12 REPRESENTATIVE WHEATLEY : All right.
13 Thank you , Mr . Chairman.
14 Thank you , Mr . Secretary.
15 ACTING SECRETARY DAVIN: Sure. Thank you .
16 MAJORITY CHAIRMAN ADOLPH : Thank you ,
17 Representative.
18 Representative Mark Mustio .
19 REPRESENTATIVE MUSTIO : Thank you .
20 Secretary, welcome. And congratulations. I'm
21 over here.
22 ACTING SECRETARY DAVIN: Sorry.
23 REPRESENTATIVE MUSTIO : If I inadvertently call
24 you Dennis, I apologize in advance. We 've known each
25 other a long time.
32 1 ACTING SECRETARY DAVIN: Thank you .
2 REPRESENTATIVE MUSTIO : I want to agree with
3 Chairman Markosek in that, like him, you and I have
4 worked together on a lot of project s, particularly in
5 the airport area.
6 ACTING SECRETARY DAVIN: Yes.
7 REPRESENTATIVE MUSTIO : I also want to agree
8 with Chairman Adolph in that at least the Pittsburgh
9 region has done exceptionally well. I guess I can tell
10 you the best economic indicator to that is when I first
11 got elected and probably for the first five or six
12 years , my office I'm sure is not unlike many of the
13 other member s here, where at times you almost feel like
14 you 're an employment agency, where people are calling
15 and asking for help or helping to network. Do you know
16 this person at this company? that type of thing.
17 And I can tell you in the last couple of years
18 that that has dropped off to nothing. And if you look
19 at the area that you 've been very instrumental in
20 Allegheny County in helping to develop, particularly
21 around the airport, we're doing really well.
22 And I used to say that if we sold stock in the
23 area, that I'd buy it. And people should buy it. But
24 now that I think about it, we already are buy ing stock
25 in that area with our individual tax dollars and our
33 1 corporate tax dollars by investing in infrastructure and
2 many of the program s that you 're advocating for budget
3 increases today.
4 So with that being said, there are a couple
5 items that I'd like to talk to you about.
6 ACTING SECRETARY DAVIN: Okay.
7 REPRESENTATIVE MUSTIO : One, which
8 Representative Dunbar touched on briefly , was the line
9 item for the Pittsburgh Computing Center. You indicated
10 in your comments to him that you were familiar with it.
11 I'd like to ask you if you could possibly talk
12 in a little bit more detail about whether you are
13 familiar with it in enough detail that you can advocate
14 for getting that line item back into the budget .
15 I think some of the buzz words that could be
16 used in describing that organization is magnet ,
17 highly-skilled technical talent. And Google has relied
18 on them a lot for the significant growth in their
19 employment in the Pittsburgh region.
20 So if you could talk about the Pittsburgh
21 Computing Center a little bit , I'd appreciate that.
22 ACTING SECRETARY DAVIN: Sure. I think in my 11
23 years as Director of Economic Development in Allegheny
24 County, I probably toured the Supercomputing Center
25 three or four times. And I think they do provide a very
34 1 good resource.
2 You know, we've talked with some of the staff.
3 I've talked with some of the staff here regarding the
4 Supercomputing Center. And I think the staff believe s
5 that it is a very good resource.
6 REPRESENTATIVE MUSTIO : Yes.
7 ACTING SECRETARY DAVIN: That probably needs to
8 work a little bit more diligently, I guess, on market ing
9 their program , what they can do, the things that they
10 can do.
11 And I think to that end, one of the things that
12 we're looking at is if you look at the Governor's budget
13 package , it includes money , and fairly significant
14 resources, for training dollars.
15 And one of the things that we've seen is that we
16 really want to promote training for the right types of
17 jobs. And I think the Supercomputing Center probably
18 can be part of that. To really promote opportunities
19 for training, promote opportunities within our market ing
20 line items to attract businesses , promote opportunities
21 for businesses to utilize the resources that we have
22 here already.
23 So in that case, potentially the Supercomputing
24 Center could even raise additional revenues through that
25 way if we apply some of the opportunities to really
35 1 market what they can do. I agree with you . I mean ,
2 they do a great job, I think.
3 From our standpoint, again, you know, what I can
4 tell you is that we're trying to be respectful of the
5 budget process and understanding the pressure s on the
6 budget .
7 REPRESENTATIVE MUSTIO : Thank you .
8 And I have attended some of their advisory board
9 meetings . And I will tell you that they are very smart
10 people . But there probably is a little bit of a
11 challenge in the market ing ability there.
12 So if there's something that your department can
13 do to help with that, I'm sure they would very much
14 appreciate it.
15 They do use the dollars that we provide , state
16 tax dollars that we provide , to leverage significant
17 Federal funds as well.
18 ACTING SECRETARY DAVIN: Right.
19 REPRESENTATIVE MUSTIO : The second item relates
20 to the base relocation and the funding. I saw a
21 significant increase in that. And I know that the
22 volunteer Military Affair s Council in my district that
23 tries to save all the base s in my area will be very
24 appreciative of that.
25 I just wanted to get you to go on record, if you
36 1 could, and talk a little bit about the support and how
2 important this is to all of our districts in the state.
3 ACTING SECRETARY DAVIN: Thank you ,
4 Representative Mustio .
5 It's critically important from my standpoint.
6 I've been involved with the previous BRAC around 9/11
7 around Allegheny County International Airport ,
8 Pittsburgh International Airport .
9 And I think, you know, it's very important for
10 us as a state to really provide the resources to these
11 local military groups so they can put together the right
12 plan s if, in fact, there is a potential for either base
13 closure or reductions.
14 Speaking specifically for Greater Pittsburgh
15 International Airport and some of the military
16 installations around there that you know of, you know,
17 it was critical back at that time to be able to show the
18 military why these bases are so important.
19 REPRESENTATIVE MUSTIO : Um-hmm.
20 ACTING SECRETARY DAVIN: You know, the economic
21 benefit s, the number of people that are working there,
22 the tax revenue that's generated from these people , and
23 the dollars that they're spending in the local
24 government.
25 As you recall also, the commissary and exchange
37 1 in your district, you know, we worked very hard. And I
2 want to thank you personally for getting, you know,
3 directly involved in that.
4 REPRESENTATIVE MUSTIO : Thank you .
5 ACTING SECRETARY DAVIN: We were able to put
6 together a program that kept the commissary and exchange
7 in the Pittsburgh region, which provided assistance to a
8 number of military families in the tri-state area
9 actually. This is very important.
10 And my understanding, again, getting up to speed
11 with respect to central and eastern Pennsylvania, you
12 know, the military installations here are very important
13 to the economy of Pennsylvania. You know, we have a
14 couple of folks within our department right now that
15 specialize in working with those military installations.
16 And I think the Governor felt that it was
17 important to provide the resources to really have the
18 necessary strategy and reports done to prepare these
19 local military groups for any eventual reductions in
20 their base s or elimination of their base s.
21 We need to get everybody prepared if there is a
22 BRAC round in 2017.
23 REPRESENTATIVE MUSTIO : Thank you .
24 ACTING SECRETARY DAVIN: Thank you .
25 REPRESENTATIVE MUSTIO : Thank you , Mr . Chairman.
38 1 MAJORITY CHAIRMAN ADOLPH : Thank you .
2 I'd like to acknowledge the presence of
3 Appropriation member s Galloway, Grell, and Briggs, as
4 well as Representative Bill Kortz, who have joined us.
5 The next question will be asked by
6 Representative Cherelle Parker.
7 REPRESENTATIVE PARKER: Thank you , Mr . Chairman.
8 And welcome, Mr . Secretary.
9 ACTING SECRETARY DAVIN: Thank you .
10 REPRESENTATIVE PARKER: Let me just state for
11 the record, as Chair of the Philadelphia Delegation, we
12 have to get you to Philadelphia. I have to say it loud
13 so I can get a confirmation from the people back home
14 that I did invite the Secretary to come down.
15 I also needed to just commend him for the
16 record. And I would be re miss if I didn't do this, Mr .
17 Secretary. We 're talking about some pretty significant
18 investments in the Pennsylvania economy that the
19 Governor is proposing in his budget .
20 And with you coming along with your experience,
21 along with the institutional knowledge of this team that
22 you have along your side, it is incredible. I want to
23 commend you for the team along with the Governor.
24 And , in particular , I need to state for Scott
25 Dunkelberger, along with Barry, they have done an
39 1 awesome job. I don't care whether it's been under D
2 and/or R, they know their stuff. And in this bill ,
3 that's extremely important.
4 With that being said, I needed to echo the
5 sentiments that you heard earlier regarding
6 Philadelphia, the Greater Philadelphia region and the
7 hospitality and tourism industry.
8 You know, whenever we get anything right in
9 Philadelphia, Mr . Secretary, I am just extremely excited
10 about it. And we know we've done extremely well in this
11 area in particular because His Holiness is coming to
12 visit us.
13 In addition to that, in 2016, we will be hosting
14 the DNC. So I'm confident that, as you noted in your
15 remarks, the comments about this issue earlier, that
16 throughout the budget process , we'll get an opportunity
17 to talk and work together to address those issues.
18 But I just wanted to get that on the record.
19 ACTING SECRETARY DAVIN: Thank you .
20 REPRESENTATIVE PARKER: The next issue that I
21 wanted to mention that I wanted you to respond to was
22 the two issues that have been extremely important. One
23 is the Keystone Communities. And this other is this
24 PHFA program .
25 There is nothing more frustrating for my
40 1 constituency than when they are watching these hearings
2 on television and they're hearing about all of these,
3 you know, 25,000 mile -high issues and you 're talking
4 about investing in economic development. And they say,
5 what about my neighborhood?
6 So first, thanks to the Governor for actually
7 getting it from the playing level and talking about the
8 proposed increase regarding the Keystone Communities
9 Programs along with the one that I'm really, really
10 interested in. And that is the PHFA increase to
11 implement the Mixed -Use Development Program aimed at
12 increasing affordable housing and commercial corridors
13 development.
14 Because when people look up, they just don't
15 want to see again a long-range plan but how is the
16 Commonwealth investing dollars to stabilize neighborhood
17 commercial corridors in their region and the community
18 in which they live?
19 ACTING SECRETARY DAVIN: Thank you very much ,
20 Representative.
21 If I can take Keystone Communities first. That
22 is very near and dear to my heart. We 've utilized the
23 programs within the Keystone Communities line item in
24 Allegheny County to a great degree, so have a number of
25 the communities around Southwestern Pennsylvania.
41 1 And I think from that perspective I understand
2 how important it is from the Main Street, the Elm
3 Street, the other programs that we have.
4 REPRESENTATIVE PARKER: Yes.
5 ACTING SECRETARY DAVIN: We need to -- and I was
6 a big advocate of this with respect to the budget
7 discussions. And the Governor really saw the need to do
8 that for a couple of reasons.
9 Number 1, we think that we did have insufficient
10 funding within that particular line item the last few
11 years . And we needed to really beef that up to again
12 re build some of these communities that are hard hit
13 throughout Pennsylvania in a big way.
14 We are looking at opportunities with respect to
15 those programs . And I mentioned to one of the
16 Representatives previously that we're looking at all the
17 programs . We 're taking a very intensive look at the
18 Keystone Community Programs first. That was actually
19 one of the first programs that we really wanted to
20 attack because of how important it is.
21 The other thing is that, you know, my background
22 is in economic development for the past 11 years .
23 Previous to that, I was with the Urban Redevelopment
24 Authority in the city of Pittsburgh as Director of
25 Housing working very closely with a number of the
42 1 communities in the Pittsburgh region, understanding how
2 important these programs are but also understanding that
3 there's a need to have economic development and
4 community development work together. You know, there
5 are opportunities in the Pittsburgh region that we
6 looked at, for example, where there are Brownfield
7 sites.
8 And around those Brownfield sites that we're
9 trying to develop for businesses to grow on, there are
10 communities that may be struggling. So there needs to
11 be support for the Brownfield sites and the communities.
12 And I think that is something that we're going
13 to look very closely at, making sure that economic
14 development and community development work hand in hand.
15 With respect to the PHFA program , Mr . Chairman,
16 if I could respectfully ask, Brian Hudson is here, the
17 Executive Director of the Pennsylvania Housing Finance
18 Agency . And he can speak more eloquently to this
19 program .
20 MAJORITY CHAIRMAN ADOLPH : No problem . If he
21 would like to come on up and pull a seat up. Just
22 identify yourself . We 're looking forward to your
23 testimony.
24 EXECUTIVE DIRECTOR HUDSON: Good morning , Mr .
25 Chairman. Thank you . Members of the committee, my name
43 1 is Brian Hudson. I'm the Executive Director of the
2 Pennsylvania Housing Finance Agency .
3 Representative Parker, thank you for your
4 question.
5 REPRESENTATIVE PARKER: Sure.
6 EXECUTIVE DIRECTOR HUDSON: The Mixed -Use
7 Development Program is actually a restart of an
8 initiative that PHFA had operated from 2005-'06 through
9 2009. And it particularly deals with blighted
10 communities.
11 REPRESENTATIVE PARKER: Yes.
12 EXECUTIVE DIRECTOR HUDSON: As you know, PHFA
13 operates the Housing Tax Credit Program. We also
14 operate new market tax credits which are designed to
15 re build distressed areas. So the Mix ed-Use Development
16 Program would be a Complementary 2, if you will, to go
17 into those communities to provide commercial on the
18 first floor and rental on the top floor in those
19 communities as needed.
20 It's a great Blight 2. As the crisis came, we
21 ran out of money and couldn't continue to fund the
22 program . I'm glad to see it's back in the budget . We
23 also do expect to leverage that with private and capital
24 coming to the table. So in many cases, the developments
25 that we will be financing, there will be a partner to
44 1 the table providing funding.
2 We 've already held discussions with some of the
3 foundations in Pennsylvania that have already indicated
4 they are willing to step up and provide additional
5 funding and partner with PHFA on these communities to
6 bring it back .
7 In some cases, we may be the catalyst. And in
8 other cases, we may be the finishing piece to stabilize
9 those communities. But a very successful program that
10 was actually studied by the Heinz Foundation and found
11 to be very successful across the Commonwealth.
12 So we're glad to bring that back and help deal
13 with the blight ed issues in those communities that need
14 it.
15 Thank you .
16 REPRESENTATIVE PARKER: Thank you , Mr . Hudson.
17 And again, I just want to say kudos to Governor
18 Wolf for having the vision to know that this was
19 something we should invest in so that people again and
20 neighborhoods can see dollars being invested in their
21 communities to bring life into neighborhoods. So that's
22 extremely important.
23 Finally, Mr . Secretary, I want to ask a question
24 about the PA Minority Business and Development Fund.
25 ACTING SECRETARY DAVIN: Sure .
45 1 REPRESENTATIVE PARKER: As I look through this
2 area, I notice that in the previous year , no project s
3 had appeared to be approved. Now , if the data that I'm
4 looking at was incorrect, please correct me for the
5 record. But if that is the case, please let me know.
6 And also let me know, what efforts are we
7 undertaking to raise awareness about the program ? And I
8 want to state for the record that when I saw that there
9 were actually no programs approved, I said to myself ,
10 there is no way that anyone can tell me that in the
11 Commonwealth of Pennsylvania with our 12.5 million
12 population that there were no minority businesses in the
13 Commonwealth of Pennsylvania who had an interest in
14 participating in this program .
15 So if you could give us an update, that would be
16 great.
17 ACTING SECRETARY DAVIN: Thank you ,
18 Representative.
19 I share your frustration with respect to that.
20 One of the issues that we have looking at that
21 particular authority and that particular program is the
22 interest rate is simply too high.
23 My understanding is that the interest rate was
24 dedicated in part of the legislation. And in an
25 interest rate environment that we're having right now,
46 1 it doesn't make any sense for businesses to even utilize
2 the program .
3 That is one of the program s that we need to fix.
4 You know, we need to do a good job of fixing it to
5 provide the right capital. And not only from a lending
6 standpoint, but maybe , you know, there are opportunities
7 to provide guarantees, there may be opportunities to
8 provide other tax credits and things like that that can
9 be utilized through that authority that haven't been
10 utilized previously .
11 I'm taking that as a challenge. And I
12 appreciate, you know, your comments on it. It's a big
13 part of what I believe in that we need to do. We need
14 to serve a variety of different businesses , including
15 minority women business enterprises. And we're going to
16 do that.
17 REPRESENTATIVE PARKER: Thank you , Mr .
18 Secretary.
19 Thank you , Mr . Chairman.
20 MAJORITY CHAIRMAN ADOLPH : Thank you .
21 Representative Jeff Pyle.
22 REPRESENTATIVE PYLE: Thank you , Mr . Chairman.
23 Mr . Secretary, thanks for being here. I
24 appreciate it. Allegheny County, yes ?
25 ACTING SECRETARY DAVIN: Yes.
47 1 REPRESENTATIVE PYLE: I'm right next to you in
2 Armstrong so we have some common interests.
3 ACTING SECRETARY DAVIN: Yes. Right.
4 REPRESENTATIVE PYLE: I noticed that your
5 funding has been increased a gross amount of $78 million
6 over the previous year . That's about a 38 percent
7 increase. Am I pretty close?
8 ACTING SECRETARY DAVIN: Yes. That's right on.
9 REPRESENTATIVE PYLE: I noticed within those
10 lines, you had identified energy development. I'm real
11 curious as to what you 're calling energy development.
12 ACTING SECRETARY DAVIN: I think one of the
13 issues that we've looked at, one of the things that
14 we've looked at, is an economic growth fund to fund
15 program s that would help with energy development in a
16 variety of different ways.
17 REPRESENTATIVE PYLE: I don't think you 're going
18 to bring back the coal-fired plant s. What kind of
19 energy development are we talking about here?
20 ACTING SECRETARY DAVIN: So what we're looking
21 at, Representative, are cogeneration plant s, wind power ,
22 green agriculture, Pennsylvania Energy Development Fund,
23 which would help advance clean, advance energy
24 technology services and funds, last mile natural gas
25 distribution lines to be able to provide opportunities
48 1 to bring natural gas to business communities and to
2 industrial park s and areas like that.
3 The potential for solar investment, helping to
4 recapitalize the Pennsylvania Sunshine Program and
5 energy efficiency for small businesses and local
6 governments, which is something that we utilized in
7 Allegheny County, to be able to help small businesses
8 and governments do a much better job of reducing their
9 energy costs and saving tax dollars.
10 REPRESENTATIVE PYLE: I'm familiar with some of
11 those green rooftops. It's a very popular and
12 successful program . So is geothermal heating.
13 Here's my question: I've been on the Energy
14 Committee -- I don't know if anybody else here is. I
15 think there probably are -- for ten years . And I was
16 here the first time we ran windmills and solar.
17 I don't know that that's the wisest investment
18 given our past track history here. I believe Gamesa,
19 who is our big windmill build er, has left Johnstown.
20 The solar panel maker s of the northeast are still
21 around, not nearly as vibrant as they were.
22 But being an Allegheny County boy , I'm sure
23 you 've heard KDKA and DV and all the local radio
24 stations. We actually get two days less every year of
25 sunshine than Seattle does. Not so sure solar is the
49 1 best way to go.
2 Now , where I'm going with this, our friend and
3 colleague from Forest County, Representative Kathy Rapp,
4 last year successfully ran language to do an efficiency
5 study on what our cost benefit analysis would be for
6 what we invested in windmills and what we invested in
7 solar versus what we're getting back from it.
8 I would urge, you before we dive in head first,
9 to wait for that study to come out. More knowledge is
10 more power .
11 And I promise d the Chairman I'd go short today.
12 Let me make sure I'm understanding this. Pipelining to
13 get our reservoirs to market is within your budget ,
14 correct?
15 ACTING SECRETARY DAVIN: That's part of it,
16 right.
17 REPRESENTATIVE PYLE: Our reservoirs are full.
18 I live in the gas patch . We have Marcellus , Utica, the
19 Upper Devonians, the whole thing. They're going to be
20 drilling us for a couple hundred years .
21 Given that, it's sort of well accepted, having
22 moved in and out of that industry talking to them quite
23 often because most of them do drill in Armstrong County,
24 that this Severance Tax is going to drive them to Ohio.
25 And , in fact, they've already starting moving their
50 1 drilling rigs. There's only four left in the state.
2 And I would have to check with the gentleman from Muncy .
3 I believe we topped out in the 20s. They're now in
4 Ohio. They are anticipating the Severance Tax.
5 Are you telling me we're going to move away from
6 something that generated over $2 billion in personal
7 income taxes -- because that's a fallacy. People think
8 we didn't get the industry. We actually taxed the
9 royalties people collected on the back end and generated
10 about $2 billion . That number is expected to fall.
11 So I'm kind of stuck in the mud here. This
12 isn't making sense to me . We 're going to tax an
13 industry that is driving pipe building for our steel
14 workers and nearly every other heavy industry in Western
15 Pennsylvania.
16 Am I getting this the way it's intended?
17 ACTING SECRETARY DAVIN: I think part of that --
18 and that's going to be a great discussion going forward,
19 I understand. Part of this I think is the Governor is
20 proposing a comprehensive package of tax cuts and also
21 some tax increases.
22 And I think the one thing that we're looking at
23 is trying to level the playing field with some of the
24 proposal s that are out there right now and also trying
25 to provide for opportunities for other things that we
51 1 need to grow the middle class and also increase business
2 activity.
3 When you look at the Corporate Net Income Tax,
4 for example, and the reductions that are propo sed there,
5 you know, I've been involved in discussions directly
6 with companies and site selection consultants that look
7 at that. And that is something where Pennsylvania
8 doesn't even make the short list for corporate
9 relocations. Pennsylvania sometimes doesn't even make
10 the short list for opportunities for businesses in
11 Pennsylvania to grow because of the 9.99 percent
12 Corporate Net Income Tax. That has to come down.
13 Same thing with the Capital Stock and Franchise
14 Tax, which I think the Governor is proposing to do that.
15 And when you look at some of the other
16 opportunities and the other things, we're looking at
17 advancement of all manufacturing throughout Pennsylvania
18 including the natural gas industry.
19 REPRESENTATIVE PYLE: Okay.
20 ACTING SECRETARY DAVIN: And we think by some of
21 the other things we're looking at providing a program
22 for, like I had mentioned , last mile natural gas
23 pipeline s to bring that natural gas to users of that
24 natural gas and look at other pipeline construction, we
25 think that when you look at those opportunities as a
52 1 whole, as a whole Pennsylvania will do much better .
2 REPRESENTATIVE PYLE: Thank you .
3 Just one question, if you could give me the
4 information later.
5 ACTING SECRETARY DAVIN: Sure.
6 REPRESENTATIVE PYLE: By line item, could you
7 please identify how much you 're identifying for
8 alternative energy versus how much you 're identifying
9 for pipeline s?
10 ACTING SECRETARY DAVIN: Sure. We 'll get you
11 that.
12 REPRESENTATIVE PYLE: Thank you very much .
13 ACTING SECRETARY DAVIN: Sure.
14 REPRESENTATIVE PYLE: Thank you , Mr . Chairman.
15 MAJORITY CHAIRMAN ADOLPH : Thank you ,
16 Representative.
17 Representative Kinsey.
18 REPRESENTATIVE KINSEY: Thank you , Mr . Chairman.
19 Good morning , Mr . Secretary.
20 ACTING SECRETARY DAVIN: Good morning .
21 REPRESENTATIVE KINSEY: Under the Governor's PA
22 First Program, it consolidated three previously existing
23 programs . They are to customize the Job Training
24 Program, the Opportunity Grant Program, and the
25 Infrastructure Development Program.
53 1 In this budget there's a request for $25 million
2 more over last year 's budget . Out of the $25 million
3 that's being requested, how much of it do you expect to
4 go towards job training and out of that, like, what's
5 the project ed economic im pact with that?
6 ACTING SECRETARY DAVIN: That's a great
7 question. And I think looking at that particular
8 program and combining it, WEDnet , which is the job
9 training part of that particular program , Pennsylvania
10 First, we're anticipating that roughly $8 million would
11 be identified in that particular line item based upon
12 need.
13 The Governor is also proposing additional
14 funding for job training within the Labor & Industry
15 Department to help match job needs of our businesses in
16 Pennsylvania to job seekers.
17 So we think there is a tremendous amount of
18 training dollars within that, not only that program but
19 other programs that are going to be available.
20 And the Pennsylvania First Program, from our
21 standpoint, is critical. It was critical for us to
22 request an additional amount within that program so that
23 we can compete for business expansions, business
24 relocations, with other states. And we think that this
25 amount will provide , you know, the needed amount where
54 1 we'll be able to, in a very aggressive fashion, go after
2 the companies we need to, not providing more funding
3 than we need to for each individual company but go after
4 more companies as a whole.
5 We don't have the numbers right now in terms of
6 the actual job creations because they will be vastly
7 different for a number of different areas. But what we
8 can do is we can put together some numbers for you and
9 some projections for that.
10 REPRESENTATIVE KINSEY: Great. I'd appreciate
11 that.
12 Also , Representative Parker sort of stole my
13 thunder as it related to the Keystone Communities. But
14 let me just switch for one quick second.
15 ACTING SECRETARY DAVIN: Sure.
16 REPRESENTATIVE KINSEY: She touched on -- and
17 you touched on -- the PHFA budget .
18 ACTING SECRETARY DAVIN: Yes.
19 REPRESENTATIVE KINSEY: If you can, does that
20 flow in with the Infrastructure Facilities Improvement
21 Grants Program? I mean , are they tied in? Are they
22 linked in together?
23 ACTING SECRETARY DAVIN: No . Those are
24 different programs .
25 REPRESENTATIVE KINSEY: Separate program s?
55 1 ACTING SECRETARY DAVIN: Yes.
2 REPRESENTATIVE KINSEY: Okay. So then with the
3 Infrastructure and Facilities Improvement Grants, just
4 looking at some data that was present ed, I understand
5 there's also a request for $8 million for that
6 particular program ?
7 ACTING SECRETARY DAVIN: Yes.
8 REPRESENTATIVE KINSEY: And also along with that
9 question, just looking at previous data that was
10 presented , it appears as though 52 project s were
11 approved since that program was initially started. I
12 guess my question as it relates to that particular
13 program -- actually, I'm sorry.
14 It was 52 project s ap proved and also was an
15 anticipated creation of over 28,000 jobs. So I guess my
16 question is, with this 11 million that's being requested
17 for the Infrastructure and Facilities Improvement Grants
18 Program, how many project s are you anticipating? And
19 how many jobs would that parlay to throughout the
20 duration?
21 ACTING SECRETARY DAVIN: The Infrastructure and
22 Facilities Improvement Program is a unique program .
23 It's a state tax TIF-like program . And these are annual
24 grants that pay debt service on capital development
25 project s, similar to tax increment financing at the
56 1 local level.
2 REPRESENTATIVE KINSEY: Okay.
3 ACTING SECRETARY DAVIN: The beauty of the
4 program is that it is a revenue-neutral program ; that
5 is, the annual grant amounts cannot exceed the amount of
6 additional state taxes that the project generates every
7 year . All right.
8 So the really great news about all this is since
9 the inception of the program , you know, we monitor
10 obviously every year the amount of increment that's
11 created and the amount of grants that we pay out each
12 year .
13 It's more than three to one in terms of the
14 amount of increment that's been created versus the
15 amount of the annual grant. So it's been a hugely
16 successful program . We think at least 20 more , 20
17 additional project s, can be funded under the program
18 with that additional 11 million .
19 REPRESENTATIVE KINSEY: Great. Thank you , Mr .
20 Secretary.
21 Thank you , Mr . Chairman.
22 MAJORITY CHAIRMAN ADOLPH : Thank you .
23 Representative Karen Boback.
24 REPRESENTATIVE BOBACK: Thank you , Mr . Chairman.
25 Mr . Secretary, the Governor's proposed budget
57 1 includes a $2 million increase for a statewide tourism
2 initiative. Can you tell us what this funding will be
3 used for?
4 ACTING SECRETARY DAVIN: Sure. I think from our
5 standpoint, tourism is such a big industry. And I've
6 come to realize that in the short time that I've been
7 here.
8 And I think what we're trying to do is, without
9 sounding pessimistic , we're trying to really increase
10 the amount of opportunities to tell our story, tell
11 Pennsylvania's story, to the country and to the world in
12 a much bigger way.
13 We think that there are great opportunities to
14 do that. And what we've done is we've actually carved
15 out a Deputy Secretary position for market ing, tourism,
16 and film to really enhance and identify that as a very
17 big part of what we need to do going forward to
18 appropriately market what Pennsylvania's assets are.
19 REPRESENTATIVE BOBACK: Thank you .
20 And for our listening audience, tourism, in
21 fact, is the second to largest industry in the state.
22 What a money driver into our budget .
23 With that being said, if I can follow up,
24 please . Can you provide the committee with an update
25 then on the Pennsylvania tourism partnership , because
58 1 that was a big initiative that we promoted , and what
2 impact it will have on tourism and the Pennsylvania
3 economy?
4 ACTING SECRETARY DAVIN: Again , I'm getting up
5 to speed on this. And I think that, you know, what I
6 understand about the Pennsylvania tourism partnership is
7 that it's very well organized and well thought of
8 through Team PA, who's done a great job of working on
9 this. And it will provide us the opportunity to
10 generate some significant monies to really upgrade even
11 in a bigger way the amount of tourism dollars that we
12 have and we're able to utilize.
13 And I think, you know, if it's successful, it
14 will put us on par with some of the other states that
15 are doing some very significant tourism, you know,
16 advertising that maybe we haven't been able to do in the
17 past .
18 REPRESENTATIVE BOBACK: And as a comment,
19 Representative Parker spoke so eloquently about
20 Philadelphia and what's come. We really hit the ground
21 running on this. And just for clarification then, you
22 took away a secretary position and you 're making it a
23 market ing tourism position ?
24 ACTING SECRETARY DAVIN: No . I'm sorry.
25 We had one deputy secretary position that we've
59 1 actually moved into three separate areas because it was
2 really unwieldy the way that it was set up, we felt.
3 So we have a Deputy Secretary of Business
4 Financing, which is Scott Dunkelberger. We have now a
5 Deputy Secretary of Technology and Innovation, which is
6 Sheri Collins. And starting next week is Carrie Lepore,
7 who is going to be our Deputy Secretary of Marketing ,
8 Tourism, and Film.
9 REPRESENTATIVE BOBACK: Thank you , Mr .
10 Secretary.
11 Thank you , Mr . Chairman.
12 MAJORITY CHAIRMAN ADOLPH : Thank you .
13 Just a comment. You know, anybody who watches
14 television, you always see the out-of-state advertising,
15 you know, I love New York.
16 ACTING SECRETARY DAVIN: Yes.
17 MAJORITY CHAIRMAN ADOLPH : That's been around
18 for decades. Virginia is for Lovers, you know. It
19 would be nice if one day one Administration will agree
20 with another that we should have a logo that stays once
21 in a while, you know, instead of constantly changing it.
22 Just a comment.
23 ACTING SECRETARY DAVIN: Thank you .
24 MAJORITY CHAIRMAN ADOLPH : Representative
25 Brownlee.
60 1 REPRESENTATIVE BROWNLEE: Thank you , Mr .
2 Chairman.
3 Good morning , Mr . Secretary and Team DCED.
4 ACTING SECRETARY DAVIN: Good morning .
5 REPRESENTATIVE BROWNLEE: A statement first. I
6 appreciate how the Governor has hit the ground running
7 to upgrade middle class and communities. And I have to
8 give a shout-out to Mr . Hudson and PHFA because
9 everywhere I go in my district where there's a
10 development, PHFA has been involved. So I thank you for
11 that.
12 EXECUTIVE DIRECTOR HUDSON: Thank you .
13 REPRESENTATIVE BROWNLEE: My district I think is
14 unique because it has several tourist attractions. And
15 I do have to follow up on Chairman Adolph and
16 Representative Boback's line of questioning regarding
17 tourism.
18 ACTING SECRETARY DAVIN: Sure.
19 REPRESENTATIVE BROWNLEE: I have Eastern State
20 Penitentiary Museum in my district. And if anybody is
21 familiar with that, during the Halloween season, it's
22 Terror Behind the Walls , which is a Commonwealth
23 attraction. I have the Philadelphia Art Museum in my
24 district. And they have world-class exhibitions.
25 My question is regarding the line item that has
61 1 been currently zeroed out, and that's the tourism
2 regarding the accredited zoos because the nation's first
3 zoo, the Philadelphia Zoo, is also in my district.
4 And I do understand that this is what commonly
5 happens. Some items do get zeroed out and later put
6 back . The Philadelphia Zoo and these other place s that
7 I've mentioned are economic drivers in my district.
8 I'm just wondering, is there any intention on
9 putting this line item back for the zoo and, if so, I do
10 look forward to working with you and the Administration
11 to facilitate that.
12 ACTING SECRETARY DAVIN: Okay. Thank you very
13 much .
14 I think, again, we're trying to be sensitive to
15 budget pressure s as we're going through this process ,
16 but we're understanding and hearing it loud and clear
17 from a number of folks that that's very important to
18 your district. And we certainly understand that. So we
19 can certainly have that conversation going forward.
20 REPRESENTATIVE BROWNLEE: Thank you .
21 Thank you , Mr . Chairman.
22 MAJORITY CHAIRMAN ADOLPH : Thank you .
23 Representative Keith Greiner.
24 REPRESENTATIVE GREINER: Thank you , Mr .
25 Chairman.
62 1 And thank you , Mr . Secretary, for being here
2 today.
3 ACTING SECRETARY DAVIN: Thank you .
4 REPRESENTATIVE GREINER: I had the opportunity
5 yesterday to ask the Auditor General a question
6 concerning financially distressed municipalities , Act
7 47.
8 ACTING SECRETARY DAVIN: Yes.
9 REPRESENTATIVE GREINER: And in particular I
10 brought up the city of Scranton and it's pension
11 problem s. And he actually mentioned that he was
12 concerned about the potential bankruptcy down the road.
13 And I guess what I'm trying to get my hands
14 around is the city has been in Act 47 status now since
15 1992. Can you comment on the city's financial health
16 and what other distressed options may exist for
17 Scranton?
18 ACTING SECRETARY DAVIN: You know, I can't
19 comment specifically on Scranton. Again , I'm starting
20 to understand some of the serious issues that our cities
21 and some of the communities are facing right now. And
22 Scranton is right up there.
23 REPRESENTATIVE GREINER: Yes.
24 ACTING SECRETARY DAVIN: I know that the
25 Governor and Chief of Staff had met with the Mayor of
63 1 Scranton not too long ago to discuss some of the issues.
2 And I think from our standpoint, the Act 47
3 Program has been , you know, we think great in terms of
4 helping those communities to continue to exist.
5 As you may know, Pittsburgh is in --
6 REPRESENTATIVE GREINER: Well , I was going to
7 segue into that, if you don't mind . I was going to say
8 Pittsburgh, too, has been in the same situation, our
9 second largest city. And I didn't know whether you know
10 what the -- you know, is Pittsburgh going to have a
11 chance to -- by the way, I've been to Pittsburgh. Great
12 city. Beautiful.
13 But I was wondering, are they going to get a
14 chance to come out of Act 47? What are your thoughts?
15 You're certainly very familiar with Pittsburgh. Where
16 are we heading with that?
17 ACTING SECRETARY DAVIN: I think so. I think
18 right now we have 19 communities in Act 47. And the
19 good news is nine have come out. So there is some light
20 at the end of the tunnel I think for a lot of these
21 communities.
22 As you may have seen in the Governor's budget
23 also, we are proposing an additional million dollars for
24 communities that are distressed right now to try to help
25 them before they get into Act 47 to put together the
64 1 right programs and opportunities to get them in a
2 situation where they're not going into Act 47.
3 REPRESENTATIVE GREINER: Okay.
4 ACTING SECRETARY DAVIN: My understanding -- and
5 again, Pittsburgh is one of them. We have other
6 communities in Allegheny County that have been in Act 47
7 for years .
8 REPRESENTATIVE GREINER: That's right.
9 ACTING SECRETARY DAVIN: And we're trying to get
10 them out. You know, again, I'm trying to understand the
11 situation, trying to figure out what we can do as a
12 state to help these communities.
13 One thing that we've looked at is, you know,
14 some of the infrastructure that some of these
15 communities have, is there a way to use that
16 infrastructure to generate revenue that can help them
17 with some of their costs.
18 And we're looking at things like that right now.
19 REPRESENTATIVE GREINER: I did see that line
20 item in the budget . I also did want to follow up. I
21 mean , I'm a little bit selfish, I guess, in that I'm
22 working on a piece of legislation and you -- and some of
23 the prior DCED secretaries are actually assisting in
24 that legislation. And it's bipartisan . It's both part s
25 .
65 1 ACTING SECRETARY DAVIN: Um-hmm.
2 REPRESENTATIVE GREINER: What I was wondering
3 is, would you be willing to have some of your key staff
4 sit down if I had a meeting with them and some key
5 municipal officials? I actually have part of Lancaster
6 City School District myself in my district. Mayor Gray
7 in my area has been outspoken.
8 Although Lancaster, you know, is fairly
9 financially sound, he sees down the road where there
10 could be some issues. Would you be willing to meet with
11 us in a meeting if I would schedule something here in
12 the next few weeks just to sit down and go over this?
13 Like I said, you sound like you 're trying to get
14 your hands around it. Because it is a big problem
15 statewide.
16 ACTING SECRETARY DAVIN: Representative, I would
17 be happy to meet . And I would bring along Fred Redding,
18 who runs our Act 47 Program who's done, I think, just a
19 tremendous job around the state. So we would be
20 absolutely happy to sit down and meet and talk about
21 that.
22 REPRESENTATIVE GREINER: Thank you very much ,
23 sir.
24 Thanks, Mr . Chairman.
25 MAJORITY CHAIRMAN ADOLPH : Representative Dean.
66 1 REPRESENTATIVE DEAN: Thank you , Mr . Chairman.
2 Welcome .
3 ACTING SECRETARY DAVIN: Thank you .
4 REPRESENTATIVE DEAN: My name is Madeleine Dean.
5 I'm from Montgomery County. And I was thinking as our
6 different member s talked to you that part of the
7 challenge, as well as the charm of Pennsylvania, is our
8 diversity of neighborhoods.
9 So I want to follow up on what my colleague and
10 friend, Cherelle Parker, talked about, which is the
11 Keystone Communities line items and what that really
12 means tangibly.
13 ACTING SECRETARY DAVIN: Okay.
14 REPRESENTATIVE DEAN: I'm im pressed with your
15 experience.
16 ACTING SECRETARY DAVIN: Thank you .
17 REPRESENTATIVE DEAN: And so I think for me and
18 for those who are listening, if you could make a little
19 more tangible what that kind of investment would bring
20 to an older-ring suburban community like mine of
21 Abington and Upper Dublin Townships in Montgomery County
22 if we're taking a look at strictly the dollars.
23 This is a program , a combination of programs ,
24 that went from about $27 million four years ago down to
25 $6 million as of last year . And Governor Wolf seeks to
67 1 invest about another $15 million in that program .
2 What I'd like to know is, physically , tangibly,
3 what does that mean to Main Streets, to surrounding
4 neighborhoods, in terms of investment, development,
5 re building of towns and economic centers?
6 And on the flip side of that, I'd like to talk
7 about housing and homelessness, because I think that is
8 within the same set of programs . And in my district, we
9 are struggling with homelessness and, in particular ,
10 homeless vets, which is just one of the more crushing
11 and heartbreaking things that happens.
12 So if you could talk to those kinds of
13 developments.
14 ACTING SECRETARY DAVIN: Sure. I think, as I
15 mentioned before , we're looking at all the programs that
16 we have in our jurisdiction. And Keystone Communities
17 is very near and dear to my heart because I've had such
18 a great opportunity to utilize the program and other
19 programs like that in Allegheny County.
20 Main Street and Elm Streets, you know, those
21 programs when they were developed were developed and
22 utilized very effectively throughout Pennsylvania.
23 And we need to re build those programs to make
24 sure that they're effectively going to the communities
25 that need them.
68 1 REPRESENTATIVE DEAN: Can you explain a little
2 bit so people understand? What does it mean the Main
3 Street development and the Elm Street development?
4 ACTING SECRETARY DAVIN: Right. So there are
5 business districts within cities and towns that are
6 falling apart , that are crumbling, that may be tired
7 business districts that need some support.
8 They need help in terms of helping to organize
9 the business districts, helping to provide street face
10 improvements to help, you know, build up the building s
11 and make them look better , infrastructure improvements
12 within those communities also to help dress them up so
13 they are places that people want to come to.
14 The Elm Streets are the areas surrounding some
15 of those communities. So they are housing opportunities
16 surrounding those communities, the same thing, street
17 face, street scape improvements so there are sidewalks
18 and the appropriate lighting and things like that that
19 are developed as part of these.
20 As I mentioned before , I think that, you know,
21 our goal here is to develop very sustainable quality
22 program s that really do what they're meant to do, what
23 they need to do, but not just stop there, so there are
24 opportunities for economic development-type project s
25 around there too. That needs to be a part of the
69 1 equation.
2 So we need to really take a holistic look for
3 these communities and provide the necessary funding to
4 help these Main Street communities, the communities
5 around them with significant investment opportunities.
6 And the other thing is that I think, in my
7 experience, what I've seen that works is not -- and
8 Representative Wheatley -- I don't know if he's still
9 here. But he's seen that. Representative Gainey has
10 seen this, too.
11 You need sustained investment in these
12 communities. If it's a once and done and we provide
13 funding for, you know, one year 's worth of improvements
14 to a certain community, that doesn't do anything. But
15 it needs to be sustained investment over the course of a
16 number of years in order for these communities to come
17 back .
18 REPRESENTATIVE DEAN: And if you could speak a
19 little bit to how homelessness, homelessness prevention
20 -- I think DCED works with HUD on programs to try to
21 prevent homelessness, to get temporary relief to folks
22 who are falling into homelessness.
23 Can you speak to where that falls within your
24 department?
25 ACTING SECRETARY DAVIN: And that is one that I
70 1 am not -- I don't have enough information regarding
2 that.
3 I do know that our relationship with the
4 Pennsylvania Housing Finance Agency and Brian Hudson,
5 who was just here, there are a number of program s that
6 we will work in conjunction with PHFA to provide housing
7 opportunities for lower-income people . Veteran s housing
8 is a big part of that, too.
9 And when you said that, you know, in the
10 Pittsburgh region, we have looked at veterans' housing
11 in a number of different instances. And that's a big
12 part of what needs to be done overall when you 're
13 looking at homelessness and prevent ing homelessness.
14 REPRESENTATIVE DEAN: And something I'll just
15 leave on is this. The Neighborhood Assistance Program
16 that I'm seeking to try to get a couple million dollars
17 more in for veterans housing relief and investment, if
18 I'm not mistaken , it's connected to corporations that
19 pay corporate net income tax. So I'm fearful of what
20 happens when we do phase that out to the Neighborhood
21 Assistance Program. How do we still continue that
22 investment?
23 I'll just leave you with that concern.
24 ACTING SECRETARY DAVIN: Sure. That's a good
25 point . I mean , that's one of the things that might be
71 1 affected somehow. But I don't think it's going to be as
2 big of an effect as you might think.
3 The corporations we're seeing in Southwestern
4 Pennsylvania, the corporations in Southwestern
5 Pennsylvania, are really doing a great job of supporting
6 these Neighbor hood Assistance Program opportunities in
7 communities all throughout Southwestern Pennsylvania.
8 I see opportunities like that throughout
9 Pennsylvania that we need to maybe do -- again with some
10 of the market ing dollars that we have, we may need to do
11 a better job market ing this.
12 I know that there was a contingent that may have
13 spoke to some of you from Southwestern Pennsylvania
14 which was headed by the Allegheny Conference, Dennis
15 Yablonsky, who he was another DCED secretary named
16 Dennis, that, you know, came specifically talking about
17 the Neighborhood Assistance Program credit and how
18 important it was. And he brought some of the business
19 leaders with him.
20 They see the need, you know, that this is a way
21 for businesses to kind of give back to the community.
22 And I think what this does is there's still going to be
23 opportunities, tremendous opportunities, to utilize the
24 program .
25 And I think what we can do on our part is to
72 1 help to market that program in a much bigger way.
2 REPRESENTATIVE DEAN: I thank you .
3 Thank you , Mr . Chairman.
4 MAJORITY CHAIRMAN ADOLPH : Thank you ,
5 Representative.
6 Representative Duane Milne .
7 REPRESENTATIVE MILNE : Thank you , Mr . Chairman.
8 And good morning , Mr . Secretary.
9 ACTING SECRETARY DAVIN: Good morning .
10 REPRESENTATIVE MILNE : As a member of the
11 Commerce Committee, I certainly welcome you to
12 Harrisburg. I know the entire Commerce Committee looks
13 forward to working with you .
14 ACTING SECRETARY DAVIN: Thank you .
15 REPRESENTATIVE MILNE : And I'd also like to take
16 a moment on behalf of the Majority Chairman,
17 Representative Adam Harris, to extend his greetings and
18 his regrets. He was not able to join us this morning .
19 ACTING SECRETARY DAVIN: Thank you .
20 REPRESENTATIVE MILNE : I know he very much looks
21 forward to build ing a relationship with you as well.
22 ACTING SECRETARY DAVIN: Thank you .
23 REPRESENTATIVE MILNE : I have a question in
24 relation to a bond ing issue. As we know, the Governor
25 is proposing a $675 million economic development bond
73 1 supported, at least in part , by a propos ed natural gas
2 tax. And that would be used for economic development
3 initiatives in the state with some of the proceed s
4 specifically going to the Pennsylvania Industrial
5 Development Authority , Business in Our Sites Program,
6 and also energy investment and technology investments.
7 With respect to the energy and technology
8 investments, which would be a new initiative, at least
9 in part , what entity or entities in the state will have
10 oversight and jurisdiction over that part of your
11 portfolio ?
12 ACTING SECRETARY DAVIN: Thank you ,
13 Representative.
14 We still are determining the appropriate area
15 under which those would be housed, whether it's the
16 Commonwealth Financing Authority or PIDA or PEDFA.
17 We 're looking at those opportunities right now. We 're
18 working with Deputy Secretary Dunkelberger and others to
19 try to figure out the best opportunities for those
20 programs .
21 PIDA certainly is a big one for us. Those
22 programs will be in PIDA definitely and will provide the
23 necessary funding to help recapitalize Machine ry and
24 Equipment Loan Fund in Pennsylvania and Small Business
25 First.
74 1 But we don't know exactly which authorities
2 right now the overall funds would be housed.
3 REPRESENTATIVE MILNE : Sure. I can appreciate
4 that. And I'm sure you will certainly keep us updated
5 to those conversations.
6 Just a related question then again related to a
7 bond issue.
8 ACTING SECRETARY DAVIN: Um-hmm.
9 REPRESENTATIVE MILNE : Do you anticipate that
10 the Commonwealth will issue 20-year revenue bond s as
11 part of the program for supporting the 675 million
12 overall economic development bond initiative?
13 ACTING DEPUTY SECRETARY DUNKELBERGER: The bond
14 issues, Representative, will happen over time. So they
15 would be just in time to actually pay the cost from the
16 programs that have been initiated so the bond issues
17 would be over several years .
18 They would be revenue bond s likely done -- not
19 general obligation bond s from the Commonwealth. But one
20 of the authorities of the state would be a likely place
21 to do those bond s and then transferred to the final
22 entities that actually deploy the money .
23 REPRESENTATIVE MILNE : Certainly. And it's been
24 great to work with you , Mr . Dunkelberger, over time.
25 You certainly are a tremendous asset to the Department.
75 1 Just a related question then. And I realize
2 with a longitudal issuing of the bond s, some of this
3 will change. But do you have any preliminary
4 projection s of the kind of anticipated debt service of
5 these bond s?
6 ACTING DEPUTY SECRETARY DUNKELBERGER: The one
7 thing that we do know is that when all of the bond s are
8 issued and start to amortize the proposal is that it
9 will not exceed $55 million in any year . So obviously
10 that goes to, you know, interest rates in the market at
11 the time that we go to it.
12 But that's the one thing that we do know, that
13 down the road when these bonds are fully sold, it will
14 not exceed that. And that's similar to what the
15 Legislature did in 2008 with the Alternative Energy
16 Investment Act, which has a similar cap.
17 REPRESENTATIVE MILNE : Certainly. And just so
18 we're all clear, the figure being put forward of 55
19 million that would be in any one given fiscal year , that
20 would be the cap?
21 ACTING DEPUTY SECRETARY DUNKELBERGER: Would not
22 exceed. It could be much less than that depending on
23 the rates at the time.
24 REPRESENTATIVE MILNE : So it's a ceiling then?
25 REPRESENTATIVE DUNBAR: Right.
76 1 REPRESENTATIVE MILNE : Great. Thank you very
2 much .
3 ACTING DEPUTY SECRETARY DUNKELBERGER: Thank
4 you .
5 Thank you , Mr . Chairman.
6 MAJORITY CHAIRMAN ADOLPH : Thank you .
7 Representative Gainey.
8 REPRESENTATIVE GAINEY: Thank you , Mr . Chairman.
9 Good morning , Secretary. How are you ?
10 ACTING SECRETARY DAVIN: Good.
11 REPRESENTATIVE GAINEY: Good to see you .
12 As Chairman Markosek said, I know we've done
13 project s together. I want to congratulate you on your
14 rise from the City of Pittsburgh Urban Redevelopment
15 Authority to the county to the state. I've watched you
16 work over the years . I've watched you grow. So before
17 anything else, I want to congratulate you and say thank
18 you .
19 ACTING SECRETARY DAVIN: Thank you very much .
20 REPRESENTATIVE GAINEY: I also want to
21 congratulate Brian Hudson, who has done a lot of work in
22 my district, a lot of housing project s. So I know the
23 benefit of having you there.
24 ACTING SECRETARY DAVIN: Thank you .
25 REPRESENTATIVE GAINEY: Mr . Secretary, yesterday
77 1 we had a conversation with the Auditor General. And he
2 was saying on some of the tax credit deals, sometimes a
3 lot of the companies that were going for these tax
4 credit deals were not meeting the number of jobs they
5 said they would create in the Commonwealth.
6 And I want to know going forward, particularly
7 with this great manufacturing tax credit that we're
8 talking about, how we're going to make sure that they're
9 meeting their jobs? Will there be any report given to
10 us saying who did it, what the job number was, how they
11 got to it, and those that didn't, and what we did to
12 make sure that they got there? That's No . 1. I'd like
13 to hear that answer there.
14 And the No . 2 is, I know how important the
15 Keystone Communities are. I know about the Main Street
16 Program. I know how effective it's been in Allegheny
17 County and the city of Pittsburgh. I'd like for you to
18 just give a brief exam ple of how you 've seen it help
19 transform communities.
20 And then thirdly, so I can get them all out at
21 once, with the NBE , Chairwoman Cherelle talked about it.
22 I would like to know what we can do to im prove that,
23 particularly if there's a commission or something that's
24 put together to talk about how we go forward to make
25 sure that we're improving that segment of business to
78 1 make sure that we're moving together from a diversity
2 standpoint in the Commonwealth of Pennsylvania.
3 ACTING SECRETARY DAVIN: Thank you ,
4 Representative Gainey.
5 Talking first about the Auditor General
6 findings. I had a chance to review the report. And I
7 had a chance to actually talk to the Auditor General and
8 obviously the staff. And I think, you know, the staff
9 has done a really good job at determining and working
10 with companies that may not make their job creation
11 requirements.
12 You know, right now the numbers is about 90 --
13 almost 97 percent of the project ions, you know, through
14 the last recession have been made , you know, in terms of
15 the jobs. Individual companies may have not made those
16 job creation numbers. But that's a pretty good number
17 overall we think.
18 And then the performance and monitoring
19 division, which is under Secretary Dunkelberger's shop,
20 has received and clawed back more than $40 million from
21 companies that did not meet their obligations or
22 project ions.
23 So I think what we do is we work very closely
24 and diligently to try to work with companies when there
25 are issues that will affect whether those jobs are
79 1 created or not.
2 But again, with respect to the Auditor General's
3 report, we're going to continue to strengthen our
4 efforts to support job growth but also to ensure that
5 there's transparency and accountability for the
6 companies that we're providing assistance to.
7 And that goes through all the tax credit
8 programs that we're talking about. 9
10 ACTING DEPUTY SECRETARY DUNKELBERGER: Related
11 to Keystone Communities, again my experience in
12 Pittsburgh, we've seen it in places like East Liberty,
13 in place s like Wilkensburg , in places that are just
14 coming back like Braddock, outside of the city of
15 Pittsburgh.
16 These are communities that are really seeing
17 some, you know, tremendous opportunities because of
18 sustained support from the State and from the Feds. And
19 I think our Keystone Communities Program is a big , big
20 part of that.
21 There are some communities that don't get as
22 much support maybe on the local level only because
23 there's not that much support within the communities
24 because they are really having a tough time often in
25 terms of their resources.
80 1 But I think from our standpoint the additional
2 support that we're requesting in this particular budget
3 that the Governor is proposing will go a long way
4 towards helping many more communities like that with the
5 funding that they need to help them continue to grow,
6 increase their tax base , and provide good opportunities
7 for the citizens that live in those communities.
8 In terms of the Minority Women Business
9 Enterprise, again, the one authority that I've reviewed
10 I just don't think does the job in terms of providing
11 the resources that we need.
12 You know, we need to look at, I think, other
13 opportunities for Minority Women Business Enterprise
14 statewide. For example, in Allegheny County, one of the
15 things that we did is we provided for a program that
16 provided working capital for organizations, minority
17 women, veteran-owned businesses that provided working
18 capital based upon government contracts that they had,
19 whether they had it at the city, the state, or the
20 Federal level, if they had a particular public contract
21 that we could use as security providing a certain
22 portion of that for working capital.
23 That's something that was critical in the
24 Pittsburgh region. And I think it could be a model to
25 be used statewide.
81 1 I'm sure that there are other opportunities for
2 the folks in Philadelphia, in Lehigh Valley , in Erie,
3 and a variety of other places that have ideas on things
4 that we need to do to promote opportunities for these
5 good small businesses . And we need to do as much as we
6 can to promote that.
7 REPRESENTATIVE GAINEY: Mr . Secretary, as you go
8 forward, I'd like to be a part of it. I also think we
9 probably need to get a small working group of
10 legislators as well to talk about it. So as you begin
11 to develop it, we're actually walking with you .
12 ACTING SECRETARY DAVIN: Absolutely .
13 REPRESENTATIVE GAINEY: Thank you .
14 ACTING SECRETARY DAVIN: Thank you .
15 REPRESENTATIVE GAINEY: Thank you , Mr . Chairman.
16 MAJORITY CHAIRMAN ADOLPH : Thank you ,
17 Representative.
18 Representative Marguerite Quinn.
19 REPRESENTATIVE QUINN: Thank you , Mr . Chairman.
20 Thank you very much for being here.
21 ACTING SECRETARY DAVIN: Thank you .
22 REPRESENTATIVE QUINN: I look forward to getting
23 to know you and working with you .
24 ACTING SECRETARY DAVIN: Thank you .
25 REPRESENTATIVE QUINN: Mr . Acting Secretary, I
82 1 am delighted to see the increase in the budget for DCED.
2 And I'm delighted to hear the emphasis on manufactur ing.
3 It's been something I've been talking about for a couple
4 of year s. And I'd love to work with you on looking to
5 see how we can marry manufacturer s in the southeast to
6 the growing shale industry, not taking manufacturing
7 jobs from other part s of Pennsylvania.
8 But I have no problem with taking those jobs
9 from other part s of the nation, Oklahoma, Texas,
10 Louisiana, etc. So maybe we could look at that a little
11 bit later.
12 ACTING SECRETARY DAVIN: Sure.
13 REPRESENTATIVE QUINN: With the indulgence of
14 the Chairman, I have a question I prepared . But there's
15 a couple of things that you said that I need some
16 clarification. It's my first time on this committee.
17 ACTING SECRETARY DAVIN: Mine too.
18 REPRESENTATIVE QUINN: Okay. So we might cancel
19 each other out with the questions.
20 ACTING SECRETARY DAVIN: That's right.
21 REPRESENTATIVE QUINN: You talked about in your
22 opening remarks about re build the middle class. Has
23 your department put parameters on what that income is
24 for a middle -class family?
25 ACTING SECRETARY DAVIN: No . We haven't put
83 1 parameters on that. And I think what we're looking at
2 are opportunities for people that, you know -- and
3 again, we probably use middle class generically. So we
4 don't have specific numbers related to what those
5 incomes are.
6 But essentially a large portion of the
7 population of Pennsylvania is who we're trying to put
8 program s in place for to help those folks.
9 REPRESENTATIVE QUINN: We just hear recurring,
10 you know, it will be property tax or tax relief for the
11 middle class. Last year I had a bill . And it was the
12 Middle -Income Student Debt Reduction Act . And middle
13 class was defined in that as a gross household income of
14 eighty to one hundred ten thousand dollars.
15 And as we talk about tax reduction for the
16 middle class, I'm just trying to put that in context so
17 I can deliver back home an accurate message as to what
18 we're actually looking at.
19 ACTING SECRETARY DAVIN: Right.
20 REPRESENTATIVE QUINN: Okay. So my next thing
21 is you mentioned when it came to tourism that it's a
22 legislative line item. And just being the first time on
23 this committee, I'm confused because then I heard you
24 speak about the department talking, you know, you 're
25 bring ing on a new deputy secretary just for tourism.
84 1 I'm confused about tourism being reduced in the budget .
2 Many aspects of tourism are now being taxed.
3 And , you know, I don't understand the
4 legislative line item versus an administrative line item
5 on that.
6 ACTING SECRETARY DAVIN: That's a great
7 question. Coming into this, you know, I had thought
8 that, you know, the Governor make s a budget address and
9 that's it. You know, we get that amount of money and
10 these particular programs . But that's not the way it
11 works. I understand that there's a lot of discussion
12 back and forth.
13 And my understanding is that there are a lot of
14 special project s and special tourism line items that
15 have been looked at from the Legislature going forward
16 based upon the needs of some of the tourism project s
17 that I've seen in the current '14-'15 budget .
18 And I think, you know, we're respectful of that
19 and understand that. We 're also respectful of, again,
20 the pressure s on the budget and understanding where the
21 budget is. Looking at tourism overall, I think we are
22 doing a better job or as best a job as we can of
23 market ing tourism, market ing Pennsylvania in a very big
24 way. And I think some of the special project s that were
25 legislative line items last year , you know, are
85 1 extremely important.
2 REPRESENTATIVE QUINN: All right.
3 ACTING SECRETARY DAVIN: You know, judging from
4 some of the questions that have come to me , I think it's
5 something that we'll take a very close look at.
6 REPRESENTATIVE QUINN: Thank you .
7 Another thing that I think that's along the line
8 of tourism and it does not come under your department
9 but it very well should and I'm going to be extending an
10 invitation right now for you to come down to the
11 biotechnology center in my district.
12 ACTING SECRETARY DAVIN: Um-hmm.
13 REPRESENTATIVE QUINN: Eight years ago there was
14 a ribbon-cutting ceremony. Now there's 38 companies in
15 there, well-pay ing, you know, great jobs. They're
16 producing jobs. They're producing cures. And that is
17 zeroed out, not just reduced in the budget .
18 So, you know, in terms of economic and community
19 development, that's it. And , you know, I'd welcome you
20 down. Those jobs aren't just -- this is not just a look
21 at my neighborhood. This is the whole southeast. This
22 is displaced farmer jobs. You know, we're becoming a
23 world center for this.
24 I'd like to ask when we look at the increase in
25 PIT -- and recently it was brought to my attention that
86 1 79 percent of Pennsylvania's businesses pay PIT. We
2 look at that. We look at the increase of sales tax, the
3 expansion of sales tax. Has your office been able to in
4 a short time frame do a study to see what that's going
5 to do to negatively im pact business ?
6 ACTING SECRETARY DAVIN: We have not done a
7 study to look at any negative or positive im pact s just
8 yet .
9 Again , looking at the Governor's overall package
10 and the overall budget , one of the things that we're
11 very sensitive to are small businesses , entrepreneurs,
12 and providing the necessary assistance for those folks.
13 I think one of the things that we see the need
14 to do is provide for education and also for training so
15 we have a better -prepared workforce for these small
16 businesses that would be able to assist them.
17 The property tax reduction is also a big part .
18 A lot of small business es own properties and own their
19 businesses . And those opportunities to have mean ingful,
20 significant cuts in those property taxes are also a part
21 of what we have.
22 And then properly funding programs that really
23 help to support small business owners like through the
24 PIDA, Small Business First, and the Machine ry and
25 Equipment Loan Fund. Those things taken collectively we
87 1 think are going to make Pennsylvania a much better --
2 you know, have a much better overall climate for
3 encouraging businesses to start and encouraging
4 businesses to grow.
5 REPRESENTATIVE QUINN: Thank you .
6 And you mentioned property tax reduction. I'm
7 curious. By levying a sales tax on the admission of
8 amusements, is that going to negate our ability or the
9 ability from our municipalities and our school districts
10 who already have that tax, are they going to be able to
11 continue with that tax?
12 ACTING SECRETARY DAVIN: I'm sorry. I'm not
13 familiar with that specific one. But we can find the
14 answer to that.
15 REPRESENTATIVE QUINN: Thank you very much .
16 ACTING SECRETARY DAVIN: Sure.
17 REPRESENTATIVE QUINN: Thank you , Mr . Secretary.
18 Thank you , Mr . Chairman.
19 MAJORITY CHAIRMAN ADOLPH : Thank you ,
20 Representative.
21 Representative Schreiber.
22 REPRESENTATIVE SCHREIBER: Thank you , Mr .
23 Chairman.
24 Congratulations, Mr . Secretary. Thank you for
25 being here today.
88 1 ACTING SECRETARY DAVIN: Thank you .
2 REPRESENTATIVE SCHREIBER: And foremost, I
3 wanted to say thank you for the incredible work that
4 your entire team does at DCED and PHFA.
5 ACTING SECRETARY DAVIN: Thank you .
6 REPRESENTATIVE SCHREIBER: All of the employees
7 and staff do an incredible job and have been great
8 friends to a lot of our small communities throughout
9 Pennsylvania and are all overworked, understaffed,
10 underresourced, and unfortunately too often
11 underappreciated in the work they do behind the scenes.
12 So thank you all very much .
13 I spent several years working for the great city
14 of York as our Economic and Community Development
15 Director under Tim (inaudible). An d so I came in very
16 firsthand contact with the work that DCED does.
17 And obviously Keystone Communities has been
18 talked about throughout this budget hearing. And the
19 work that Keystone Communities does is very much a
20 lifeline to a lot of your older communities.
21 And economic development is an incredibly
22 difficult phrase to define. It's almost as subjective
23 as art. It's a little bit of everything. And the
24 breadth and depth of economic and community development
25 touches every aspect of government, everything that we
89 1 do.
2 I often try to oversimplify it and say our job
3 was really just to enhance and im prove investor
4 confidence, whatever that may be , whether it's in the
5 manufacturing sector, industrial, residential, small
6 business , large business , whatever.
7 And everything that we have traditionally done
8 in our smaller, older communities, cities like York, a
9 lot of our third-class cities, and even older boroughs
10 and townships is trying to manage and balance out
11 disequilibrium that is currently occurring in the
12 market .
13 So whether it's offering direct subsidy for
14 redevelopment project s or tax credits to incentivize
15 business or retention, it's all managing the
16 disequilibrium. And I do think, for a personal
17 statement, that the Governor's budget proposal does take
18 a very direct shot at trying to comprehensively adjust
19 the disequilibrium that occurs. And that's through
20 obviously education funding and property tax reduction.
21 Those are two of the greatest impediments
22 specifically for our smaller communities. Everything
23 that we try to do to stabilize and im prove our small
24 towns, cities, and boroughs is directly linked to our
25 school districts and our tax rates.
90 1 So I do think, you know, as a comprehensive
2 budget proposal what Governor Wolf has put forward does
3 help try to tackle that issue. But until we can really
4 manage full-on municipal reform, which goes into a whole
5 lot of other issues, there still will be some element of
6 disequilibrium.
7 So specifically I wanted to at least thank you
8 for putting forth proposal s for increased funding in the
9 IRCs, which do incredible work throughout our
10 Commonwealth and also work very directly with our
11 manufacturing community. And obviously the Made in PA
12 tax credit I think will have a very positive return on
13 its investment specifically in areas like Central
14 Pennsylvania where we have a great manufacturing base
15 and have been able to retain that talent.
16 The mixed -use line item to PHFA obviously has
17 been mentioned . Brian Hudson and the work PHFA does is
18 incredible. And specifically in York we had a
19 mixed -income project that was a little bit tricky to
20 accomplish. It was an affordable housing project at the
21 entry point to our central business district. And due
22 to the Federal regulations and stipulations on
23 low-income tax credits, we weren't able to do a mix ed
24 income, which obviously we wanted in a central business
25 district. Through creativity of DCED and PHFA, we were
91 1 able to accomplish that. I do think that line item will
2 be beneficial .
3 And obviously the economic development growth
4 bond put s forth a pretty bold and aggressive vision for
5 DCED and the philosophy behind the use of DCED to manage
6 the investor confidence throughout our Commonwealth.
7 So specifically I wanted to ask a couple very
8 quick questions that you can then answer to and I'll be
9 quiet.
10 One is with respect to Pennsylvania historic tax
11 credits, just how that program has been going, how it is
12 overseen, and how the distribution of resources has been
13 going throughout the state. I understand, you know,
14 it's a rather small line item that we've allocated to
15 that. And that can be consumed pretty quickly
16 throughout a lot of our older communities to include
17 Philadelphia and Pittsburgh. So that's the first
18 question.
19 And then the second question, which is a little
20 bit more length y, is with respect to the City
21 Revitalization Im prove ment Zone, the CRIZ Program, which
22 is obviously near and dear to cities like York and how
23 it's been going in Bethlehem and Lancaster and the
24 vision of the department moving forward with CRIZ.
25 Thank you very much .
92 1 ACTING DEPUTY SECRETARY DUNKELBERGER: Sure.
2 I'll speak briefly about the historic preservation tax
3 credits.
4 REPRESENTATIVE SCHREIBER: Okay.
5 ACTING DEPUTY SECRETARY DUNKELBERGER: Last year
6 we deployed the $3 million . As typically happens,
7 project s come in and everybody wants the maximum amount
8 of tax credits available per project . So we look very
9 hard at all of those project s, what state of development
10 they were in.
11 And the good news is we were able to spread
12 those tax credits by giving some folks less than what
13 they asked for and successfully deployed the $3 million
14 to a number of businesses .
15 In year two, we're in the process of that right
16 now. We 're just getting our feedback from the Historic
17 Museum Commission. And we'll be ready to make approvals
18 on the next $3 million here in the next month .
19 REPRESENTATIVE SCHREIBER: Thank you .
20 In terms of the CRIZ Program, I've come to
21 really appreciate some of the components and some of
22 those programs . And those two I think are really
23 interesting in terms of -- I'm sorry. The CRIZ Program
24 and also some of the other programs like the NIZ and
25 other ones. But the CRIZ Program I think especially is
93 1 very interesting. We 're going to have another round I
2 believe in 2016 for that particular program .
3 But I think it acts -- it can act as a catalyst
4 for other development in a very, very big way,
5 especially as you mentioned , Representative Schreiber,
6 about, you know, some of those communities that have
7 seen disinvestment that are tired, that have needs for
8 upgrades and things like that. And that can be
9 accomplished in a big way through that particular
10 program .
11 The good thing is I think that will give us some
12 time through the course of the next year to look at the
13 two communities that are in the CRIZ right now to gauge
14 what's happened with respect to, you know, some of the
15 good things that have happened as a result of it and if
16 there are any negative things, any other issues that we
17 need to take a look at and to be able to have that
18 discussion with the Legislature about any need to change
19 items within the CRIZ.
20 But I think they are very good programs and will
21 be very well utilized throughout Pennsylvania.
22 REPRESENTATIVE SCHREIBER: Thank you very much ,
23 Mr . Secretary.
24 And then finally, you know, we live in a time
25 right now where national data does show that people want
94 1 older urban communities, they want the urban amenities
2 and walkability, baby boom generation moving back into
3 cities and the millennial generation all growing up
4 wanting to move into cities.
5 So we have this great asset throughout our
6 Commonwealth of all of these older communities, whether
7 they're third-class cities or boroughs , to include our
8 great metropolitan areas in Philly and Pittsburgh.
9 So I will be the first former Economic
10 Development Director to say if these cities can cut
11 their tax rates in half, that the private market would
12 evolve and would evolve incredibly by offering a product
13 that the next generation wants.
14 So I would just hope that as we go forward,
15 there's a lot of talk of distressed communities, Act 47,
16 if we can try to take an overarching view of how to best
17 capitalize on the product that we have, which is older
18 urban cities that a next generation of our population
19 want to live in, and how we can do the best job to
20 incentivize that by stabilizing these neighborhoods.
21 So thank you very much .
22 And thank you , Mr . Chairman, for the time.
23 MAJORITY CHAIRM AN ADOLPH : Yes.
24 Thank you , Representative.
25 I'd like to acknowledge the presence of
95 1 Representative Barry Jozwiak.
2 And I just want to let the member s know that we
3 have about eight more Representatives that would like to
4 ask questions. We 're already running 20 minutes late.
5 If you could get to your questions without the
6 editorials, it would be nice.
7 And if the Secretary and his staff would keep
8 their answers a little shorter, we might only run about
9 45 minutes late.
10 ACTING SECRETARY DAVIN: Okay.
11 MAJORITY CHAIRMAN ADOLPH : Thank you .
12 Representative Tom Killion.
13 REPRESENTATIVE KILLION: Thank you , Mr .
14 Chairman. With that, I will be very brief .
15 One editorial comment. I also want to weigh in
16 on the tourism funding. I sat on the Board of GPTMC,
17 not the Visit Philly Board. And I also was a chairman
18 for a number of years of the Brandywine Convention and
19 Visitors Bureau. And that money is crucial.
20 So I'm looking forward to working with you as we
21 move forward with a budget and restore some of the
22 funding that was cut in the Governor's proposed budge t.
23 Just a quick followup -- and I know Brian Hudson
24 had already been to the microphone -- on the $15 million
25 new budget . I'm a big fan of PHFA. I think they do a
96 1 great job across the Commonwealth.
2 (Continuation of the remarks presented by
3 Representative Killion.)
4 REPRESENTATIVE KILLION: Thank you , Mr .
5 Chairman.
6 MAJORITY CHAIRMAN ADOLPH : Thank you ,
7 Representative.
8 Representative O'Brien.
9 REPRESENTATIVE O'BRIEN: Good morning , Mr .
10 Secretary. I'll see if I can beat Representative
11 Killion's time.
12 I want you to know that this is a shameless
13 advocacy wrapped and veiled in a question. I'm a big
14 supporter and fan of Royal Trade PA. And I'm very
15 pleased to see that this year there's a 17 percent
16 increase. Where that sounds like a lot, it's only a
17 million dollars, only a million dollars.
18 And one of the things that truly concerns me is
19 the number of contractors that are employed by the
20 Commonwealth, not employees of the Commonwealth, but
21 contractors.
22 Now , the People's Republic of China, who are the
23 second largest trading partner of the Commonwealth, is
24 interested in doing far more business with us. But
25 they're not visited by employees, not visited by
97 1 Pennsylvanians, but visited by private contractors who
2 have perhaps never been to Pennsylvania.
3 Now , here's the question: Is the Administration
4 looking forward to devising a strategic plan for opening
5 the world market to Pennsylvania?
6 ACTING SECRETARY DAVIN: Yes.
7 Can I expand upon that? Thank you . I'll be
8 quick. Thank you .
9 MAJORITY CHAIRMAN ADOLPH : Sure.
10 REPRESENTATIVE O'BRIEN: Yes. I made my point .
11 ACTING SECRETARY DAVIN: Okay. All right.
12 Good. No , we are. We are looking at expanding market
13 coverages in a number of different countries that we
14 need to.
15 Unfortunately, staff can't be in every one of
16 those countries and rely on contractors to do a lot of
17 the work within those countries. But then when there
18 are opportunities, the staff then follows up on those
19 opportunities.
20 REPRESENTATIVE O'BRIEN: Thank you .
21 Thank you , Mr . Chairman.
22 MAJORITY CHAIRMAN ADOLPH : Thank you .
23 Representative Warren Kampf.
24 REPRESENTATIVE KAMPF: Mr . Acting Secretary,
25 good morning .
98 1 ACTING SECRETARY DAVIN: Thank you .
2 REPRESENTATIVE KAMPF: So Bio 2015 is coming to
3 Philadelphia in June. Any money in this DCED budget for
4 the Bio 2015?
5 ACTING SECRETARY DAVIN: That was actually one
6 of the first meetings that I had with the gentleman. I
7 can't remember his name.
8 ACTING DEPUTY SECRETORY COLLINS: Chris
9 Molineaux from PA Bio.
10 ACTING SECRETARY DAVIN: Right.
11 My staff met with him. I had a follow-up
12 meeting with him. And he made -- he advocated for
13 necessary funding for Bio 2015. And we will provide the
14 resources that are necessary for Bio 2015.
15 REPRESENTATIVE KAMPF: Excellent.
16 So it's not an editorial comment, Mr . Chairman.
17 Bio 2015, for those who don't know, is the annual
18 international BioPharma Life Sciences Conference.
19 It is going to be in Philadelphia this year ,
20 which is an incredible thing. There will be 1,800
21 international CEOs there. There will be 30,000 people ,
22 including heads of state, major economic development
23 player s in the international marketplace for
24 pharmaceutical s and life sciences.
25 And I think that the amount of money that Mr .
99 1 Molineaux asked for compared to the $80 million increase
2 that is in this proposed budget is infinitesimal. So
3 I'm thrilled to hear that you are interested in that.
4 Thank you .
5 Innovate PA is something that I was involved in
6 when it actually came to pass . This is where insurance
7 companies pay money in up front and then they get tax
8 credits over the next few years slowly to sort of match
9 that.
10 I think we are close to de ploy ing that money or
11 getting that money in from the insurance company.
12 Deputy Collins, you look like you might have a
13 comment.
14 MS . COLLINS: I always have something to say,
15 Representative. I've been chomping at the bit all
16 morning .
17 Yes, we are aggressively moving forward with the
18 sale of the tax credits right now. We are utilizing our
19 third-party consultant, Atex Petros, who has locked down
20 three anchor investors at this time. We 've been working
21 through documentation with them. And they're helping to
22 set the price .
23 It looks as though they will subscribe for about
24 730 million of the hundred million with the other 30
25 million being subscribed to other investors.
100 1 We 're very close to that process starting and
2 being concluded in the sense that during the period of
3 time of May 1st through June 30th, we will have a close,
4 at which time those purchaser s of the insurance premium
5 tax credits will have a payment made , the first payment
6 made , to the Commonwealth through the BFTDA, the Ben
7 Franklin Tech Development Authority .
8 They will make additional payment s over the next
9 three fiscal years , so a total of six payment s over
10 three fiscal years . And we will deploy those funds
11 through the BFTDA to the legislative prescribed
12 programs .
13 REPRESENTATIVE KAMPF: That's great that goes
14 out to the Tech and Life Sciences companies. Wonderful
15 thing. I won't ask a question on it.
16 But I like the fact that in the budget proposal
17 for the first time in several years , you 're trying to
18 get some public television money back in the budget .
19 Neat thing. Good luck.
20 ACTING DEPUTY SECRETARY COLLINS: Thank you .
21 ACTING SECRETARY DAVIN: Thank you .
22 MAJORITY CHAIRMAN ADOLPH : Thank you ,
23 Representative.
24 Representative Briggs.
25 REPRESENTATIVE BRIGGS: Thank you , Mr . Chairman.
101 1 And thank you , Secretary, for being here today.
2 ACTING SECRETARY DAVIN: Thank you .
3 REPRESENTATIVE BRIGGS: Representative Kampf
4 stole my thunder. Because I was in the meeting with
5 Chris Molineaux and the Secretary. And I wanted to
6 thank you for your support and commitment to the Life
7 Science and specifically the Bio 2015.
8 ACTING SECRETARY DAVIN: Thank you .
9 REPRESENTATIVE BRIGGS: If you 're creating a
10 new, I guess, position , the Technology and Innovation
11 Deputy Secretary, could you just expand a little bit how
12 that office and Sheri would work with the life science
13 industry?
14 ACTING DEPUTY SECRETARY COLLINS: Sure. I'd be
15 happy to.
16 So over the last couple of years -- and I'll try
17 to make this brief , Chairman.
18 MAJORITY CHAIRMAN ADOLPH : Thank you .
19 ACTING DEPUTY SECRETARY COLLINS: Over the last
20 several years , the Department had a deputy secretary
21 that ran what was known as the Office of Innovation and
22 Investment. And I can't recall the number of program s
23 that they had under that particular deputy, but it was
24 pretty unwieldy.
25 What we have done is gone back to the days of
102 1 yester year where we had several deputy secretaries that
2 focused specifically on certain industry sectors.
3 My particular team, the Technology Investment
4 Office, has worked very closely with the life science
5 industry sector over the last several years through the
6 Keystone Innovation Zone Program, through the BFTDA
7 specifically, our Ben Franklin Technology partner s, our
8 Life Science Greenhouses.
9 This will be a continuation of the partnership s
10 that we've had for a variety of years , for a number of
11 years with a variety of different partner s, including
12 our friends at PA Bio. So this will be an enhancement
13 to the relationship that has been there.
14 REPRESENTATIVE BRIGGS: Terrific. Thank you .
15 And I'm going to be short. I know a lot of conversation
16 has been around tourism.
17 I am the Vice Chair of Montgomery County's
18 Tourism Promotion Board. And it's definitely something
19 that is of interest to me . I'm also very active with
20 the arts and culture community.
21 One of my predecessor s, it's a priority to her
22 so it's a priority of mine . I'm looking forward to
23 working with your new deputy secretary on that to see
24 how we can bring all those sectors together.
25 So thank you very much .
103 1 ACTING SECRETARY DAVIN: Thank you .
2 REPRESENTATIVE BRIGGS: Thank you , Mr . Chairman.
3 MAJORITY CHAIRMAN ADOLPH : Thank you .
4 Representative Mike Peifer.
5 REPRESENTATIVE PEIFER: Thank you , Mr . Chairman.
6 Thank you , Act ing Secretary, for being here
7 today. Thank you all for being here today.
8 ACTING SECRETARY DAVIN: Thank you .
9 REPRESENTATIVE PEIFER: Last year , Mr . Chairman,
10 I happened to be at a vacation bureau banquet . And the
11 next day I had to come in front of DCED. And at that
12 banquet they kind of put my feet to the fire and said,
13 look, what are we doing in Harrisburg to promote our
14 great Commonwealth?
15 ACTING SECRETARY DAVIN: Right.
16 REPRESENTATIVE PEIFER: When we turn on the TV
17 in the northeast, all we do is see commercials from
18 states to our east who are hammering us with these great
19 commercials that are tastefully done welcoming business ,
20 welcoming tourists, welcoming the use of product .
21 I said, you know, you 're watching somebody weld
22 and you just want to go to that Commonwealth or that
23 state and start to weld. And I said it would be great
24 if we could, you know, help you and give you some
25 resources to maybe start a new slogan again.
104 1 I think we've always had a friend in
2 Pennsylvania. I don't know how many friends we've got
3 in Harrisburg. But we've always had friends in
4 Pennsylvania. I like that. And it would be great if we
5 could work on that.
6 I know obviously you 're new to this position .
7 But really from a tourism standpoint, I am from the
8 northeast. And we really need to promote our great
9 Commonwealth. And to be honest with you , at the end of
10 that hearing last year , I had a number of people from
11 across the aisle say, look, Mike , if we can help you in
12 any way, we'd be willing to do that.
13 And when you look at the budget and it's a $78
14 million increase in spending in your line items and, I
15 guess, the net increase is $2 million , I mean , it's not
16 -- you know, we're not too excited about that.
17 Do you have any comment on that?
18 ACTING SECRETARY DAVIN: Yeah. I think a number
19 of the -- again, a number of the items that we had in
20 here were legislative line items in the market to
21 attract tourists in that particular line item.
22 But I think that overall that tourism budget for
23 what we're trying to do with respect to what you had
24 just said is trying to get the message out. We 're
25 trying to put more dollars directly towards that.
105 1 I've heard that directly from the Governor
2 himself. He's sick and tired of hearing those ads all
3 the time when the television goes on.
4 So short of block ing those ads from coming into
5 Pennsylvania, what we need to do is, we think, a much
6 better job of getting the message out, exactly what you
7 had just said, that Pennsylvania is the place to start a
8 business , Pennsylvania is a place to have a business
9 grow, and also Pennsylvania is a place that has these
10 wonderful assets from a tourism standpoint, that we
11 really need to do a great job of getting that message
12 out in a big way.
13 REPRESENTATIVE PEIFER: You know, I represent
14 the area of Lake Wallenpaupack . And if we could just
15 get someone on the dock having fun jumping off that dock
16 or someone waterskiing across that lake. You sit there
17 all week working your tail off and all you do is plan
18 for that vacation on a Saturday and Sunday.
19 So those are just some ideas that we had
20 discussed last year . Again , I don't mean to put your
21 feet to the fire either. But I think it's something
22 that we would all like. We would like to support you in
23 that endeavor.
24 But on a macro level, when we look at your
25 budget , it looks like the Governor and some of his
106 1 initiatives really have focused on increased
2 manufacturing in this Commonwealth. I think he ran on
3 that.
4 I'm not sure that his business manufactured
5 anything in this Commonwealth. But it made it very
6 clear in this budget that there are programs , new
7 programs , new initiatives to bring manufacturing to this
8 Commonwealth. And I think we all would embrace that,
9 because we all would like to bring those manufacturing
10 jobs.
11 But when you look at some of these programs --
12 and again, you 've got a great binder here. It's very
13 informative. You've given us some examples of companies
14 who have received grants and what you 're trying to do.
15 So thank you for that.
16 But when you look at some programs and, you
17 know, the Made in Pennsylvania Job Creation Program,
18 there is a credit up to 5 percent of the new taxable
19 payroll . But it's only if the manufacturing company
20 brings in a million dollars over a four-quarter period .
21 So my question specifically is -- and there's a
22 number of these. There's a number of these caveats
23 where I'm concerned that small business -- and yet
24 earlier this week we heard how Mom and Pop corporations
25 really need help in the Commonwealth, es pecially from
107 1 the other side of the aisle. I mean , is there anything
2 being done for small businesses ?
3 Because when we watch the TV show Shark Tank,
4 which is a great show, we look at people and how they
5 start their business in a garage, in a basement , behind
6 a computer of a neighbor's.
7 Is there anything, you know, that's not going to
8 work for some of these small, small startups? My
9 concern when looking at your overall budget is, is there
10 anything there that we can help that small innovator to
11 help establish a business in Pennsylvania?
12 ACTING SECRETARY DAVIN: Yeah, absolutely. I
13 think part of it is the Made in PA manufactur ing tax
14 credit that we're looking at right now is for the larger
15 companies. And it's not actually just for companies to
16 come to Pennsylvania. But it's for Pennsylvania
17 companies to look at opportunities to expand. We have
18 some tremendous manufacturing conditions right here in
19 Pennsylvania that have opportunities to expand and have
20 opportunities to put their expansion anywhere in the
21 country, in some cases in the world.
22 We want them to do it here. And we think that
23 that provide s the necessary capital for them to do that
24 here.
25 We also have as part of the budget , as part of
108 1 the economic growth fund program s, that we're looking at
2 again to recapitalize PIDA and some of the necessary
3 funding that these small businesses need in order to
4 help them grow, in addition to looking at other
5 technology investments through the Ben Franklin
6 Technology Development partnership s to help some of
7 those entrepreneurs that are looking at technology
8 startups and things like that, helping our IRCs, helping
9 the Ben Franklin Technology Programs around the state
10 with the necessary resources to give them to help them
11 help these companies.
12 So I think, again, comprehensively there are a
13 lot of areas where there's going to be help for small
14 businesses throughout this budget and throughout, you
15 know, our area, throughout the Department of Community
16 and Economic Development.
17 REPRESENTATIVE PEIFER: Thank you for that.
18 When you 're looking at those small businesses ,
19 look at those parameters . I mean , I'm trying to help
20 some of the business es in my community. And , you know,
21 good things are happening in the Northeast . And I've
22 got a number of businesses that have talked to me about
23 some crazy ideas or good ideas or expansion ideas that
24 we're excited about. But when I look at some of these
25 programs , I have a tough time, you know, fitting within
109 1 the parameters established in this budget .
2 So when you do establish these programs , just
3 think of that little entrepreneur that will grow someday
4 to hopefully something big . And maybe some of these
5 caveats that you have, maybe , you know, can reduce the
6 scope of those.
7 Thank you , Mr . Chairman.
8 Thank you for being here.
9 ACTING SECRETARY DAVIN: Thank you .
10 MAJORITY CHAIRMAN ADOLPH : Thank you .
11 Representative Fred Keller.
12 REPRESENTATIVE KELLER: Thank you , Mr . Chairman.
13 Thank you , Mr . Secretary and staff, for coming.
14 ACTING SECRETARY DAVIN: Thank you .
15 REPRESENTATIVE KELLER: I have to say my
16 background is manufacturing kitchen cabinets, a company
17 that started in a garage in Lancaster County. Now they
18 have over 1,100 employees, most of them in the
19 Commonwealth.
20 A couple of things I wanted to ask about. And
21 it has to do with the investment that we make in DCED.
22 And we're looking at increasing that investment by 38
23 percent . How are we going to measure the performance ?
24 What are the matrix to say we're successful with this
25 investment in Pennsylvania?
110 1 ACTING SECRETARY DAVIN: That's a great
2 question. That is actually something that the Governor
3 has asked each of the departments to weigh in on, to
4 come up with three or four very mean ingful matrix es of
5 how the budget and how we are looking at ourselves and
6 judging ourselves going forward.
7 You know, for example, it may be jobs created.
8 It may be things like investment, a private investment
9 that's been leveraged with the funds that we're looking
10 at. I don't have the answer to that right now. We 're
11 coming up with that over the course of the next month or
12 two. We want them to be very mean ingful matrix es. We
13 want them to be very mean ingful indicators of how well
14 we're doing within this particular budget .
15 REPRESENTATIVE KELLER: So employment numbers
16 might be one of those things?
17 ACTING SECRETARY DAVIN: Absolutely .
18 REPRESENTATIVE KELLER: Unemployment rate, those
19 kinds of things?
20 ACTING SECRETARY DAVIN: Unemployment rate, the
21 amount of employed individuals in the state of
22 Pennsylvania, new companies coming to Pennsylvania,
23 companies that are already existing in Pennsylvania that
24 have chosen to grow in Pennsylvania. So a variety of
25 things like that.
111 1 But really three, four, five mean ingful
2 indicators that would really help us determine, you
3 know, whether we're doing what we need to do and going
4 into the next budget cycle, you know, whether we need to
5 ask and request other programs to be funded or if these
6 programs are doing a great job, continue these programs
7 as they are.
8 REPRESENTATIVE KELLER: Yeah. Because it's
9 difficult because , you know, when you 're looking at
10 percentage s, you know, are looking at jobs created, if
11 you already have a higher number, you know, it might be
12 tougher to get more people . It might look like you 're
13 not performing as well as another state because you 're
14 starting from a different base .
15 ACTING SECRETARY DAVIN: Absolutely . I was just
16 going to say, I think invest ment is a big -- we've
17 always used that as an indicator where I was. The
18 amount of, not just so much the public investment, but
19 the private investment that's been leveraged. And what
20 I've seen with some of the programs under Deputy
21 Secretary Dunkelberger's shop and Deputy Secretary
22 Collins, you know, the return on investment for some of
23 these programs already has been very high. And we think
24 by recapitalizing some of them to a much greater level
25 that we'll even get a better return on investment.
112 1 REPRESENTATIVE KELLER: The reason I bring that
2 up, my concern is we always talk about how we're behind
3 other states in job growth. You know, we're always down
4 at the bottom in job growth. Yet our unemployment
5 numbers, you know, show a lower unemployment rate than
6 the national average.
7 So I think we should be very careful when we
8 make statements like we're down at the bottom . You sort
9 of have to look at where the basis was and what you 're
10 comparing. And I'm very concerned that, you know, when
11 we make these comparisons, a lot of times it's a sound
12 bite rather than what our good policy would indicate
13 happened in the state.
14 Would that be a fair assessment?
15 ACTING SECRETARY DAVIN: It may be . There's a
16 lot of things that go into those numbers. We 're
17 reviewing numbers that we have that we've looked at on a
18 national level where we are in terms of job creation.
19 And in terms of actually creating jobs here bring ing new
20 people into Pennsylvania for jobs, we're close to the
21 bottom .
22 REPRESENTATIVE KELLER: As far as new jobs. But
23 again, I'd like to see that comparison after we make an
24 investment.
25 One other question if I may , Mr . Chairman.
113 1 You know, the tax policy , we're looking at
2 investing money here. But then on the back end, we're
3 going to increase taxes on, as it was said earlier, 79
4 percent of the businesses in the Commonwealth in the
5 form of a PIT increase.
6 Having said that, I know your testimony earlier
7 to the gentleman from Beaver County, you indicated that
8 that's not really a significant determining factor for
9 business to come to the Commonwealth. They are more
10 worried about the workforce.
11 Yet when the gentleman from Armstrong County
12 talked about it, the Governor says, well, we've got to
13 lower the Corporate Net Income Tax to bring more
14 business in here. So I'm a little bit confused.
15 And for the people watching, you know, how
16 important are tax rates for all businesses in creating
17 jobs and what impact will increasing the taxes just in
18 general have on our businesses ?
19 ACTING SECRETARY DAVIN: It's a big indication.
20 And it's a big factor in companies.
21 What I was specifically talking about was
22 companies that are looking to locate in certain areas.
23 Workforce is usually their biggest issue, their biggest
24 issue, when they make the decision. They want to make
25 sure that the workforce is there and we have a properly
114 1 trained workforce.
2 Taxes are a big problem . With the 9.9 percent
3 corporate net income tax, I've seen personally companies
4 that we've worked with that didn't even give
5 Pennsylvania -- that we wanted to work with that didn't
6 even give Pennsylvania a shot because of the corporate
7 next income tax rate.
8 And I think the Governor has recognized that.
9 The Governor has recognized that. And that needs to be
10 reduced. So I think the Governor's proposal is to
11 really level the playing field in terms of reducing
12 corporate net income tax, phasing out the capital stock
13 and franchise tax, reducing property taxes and then some
14 necessary tax increases in personal income tax and
15 things like that, but offset with significant property
16 tax reductions. That's what we're looking at.
17 And I think that with looking at the budget
18 comprehensively, this is going to be a great place for
19 companies to grow, a great place for companies to want
20 to be , and a great place for companies to start up and a
21 great place for small businesses to flourish.
22 REPRESENTATIVE KELLER: Again , I agree with the
23 fact that the corporate net income tax is way too high.
24 I just have a problem on the other side, on our small
25 businesses , raising their taxes because we're still
115 1 unsure how the property tax is going to come across and
2 be driven back out to the businesses . So I guess I'll
3 end my comments with that.
4 I appreciate your time. Thank you very much .
5 ACTING SECRETARY DAVIN: Thank you very much .
6 MAJORITY CHAIRMAN ADOLPH : Thank you ,
7 Representative.
8 Representative Kurt Masser .
9 REPRESENTATIVE MASSER : I wanted to talk about a
10 different subject. But I just want to stay on this
11 subject because most small businesses -- I mean , 80
12 percent of our businesses are considered small
13 businesses that aren't pay ing the Corporate Net Income
14 Tax, aren't pay ing the Corporate Stock and Franchise
15 Tax. What they're pay ing is Personal Income Tax.
16 So their taxes are going to go up. Their
17 property tax on the business is not going to go down; am
18 I correct? I mean , it's being driven out on the
19 Homestead formula unless I'm mistaken . And if I am, I'd
20 love to be corrected on that. Is that correct?
21 I mean , the property tax relief is being driven
22 out through the Homestead?
23 ACTING SECRETARY DAVIN: Well , I think the
24 property tax relief is part of the overall comprehensive
25 plan that we're looking at. And I think with respect to
116 1 eduction and job training that we're looking at other
2 factors that go into the support that we're providing to
3 small businesses .
4 And then you look at capitalizing programs like
5 the Pennsylvania Industrial Development Authority , PIDA,
6 which provide s capital to small businesses .
7 When you look at all those items taken together,
8 we think that this will be a tremendous environment for
9 small businesses to grow. Overall, we believe that
10 there's a 13 percent reduction in taxes throughout. And
11 a lot of that will go towards small businesse s, helping
12 small businesses .
13 REPRESENTATIVE MASSER : And I would tend to
14 disagree. I disagree. The ones that are going to get
15 hit the hardest are the Mom and Pop businesses . The
16 larger ones who can take advantage of some of these
17 training programs and the different programs that are
18 going to be offered through this tax increase are not
19 the Mom and Pops. The Mom and Pops just need money in
20 their pocket to reinvest in their business and to hire
21 new employees.
22 And this certainly will not do that for them
23 because they will not see the Homestead exclusion on
24 their business . And they will see significant increases
25 in their personal income tax on their businesses .
117 1 That's my opinion. I'm leaving it at that.
2 ACTING SECRETARY DAVIN: Okay.
3 REPRESENTATIVE MASSER : I'll end on a high note.
4 And we've talked a lot about Keystone
5 Communities. We 've talked about it a lot for a reason,
6 because it's a great program . And it's a great program
7 because you have a fantastic team at DCED. You have a
8 top-notch team that's delivering these programs .
9 Otherwise, you can have the greatest program in the
10 world. If you have a terrible team delivering these
11 programs , it's not going to work.
12 However, I think we can do more . I think we're
13 strung by what the Federal regulations are in some of
14 these programs . So if we're going to be investing what
15 will be now $21 million in new money -- and trust me . I
16 could use the $21 million in my district alone to fight
17 blight and I still wouldn't get it all. That's a fact.
18 We did some great things in my district through
19 the program , through the Neighborhood Assistance
20 Program, through other programs . But we need to develop
21 a working group I think to talk about the Federal
22 hamstrings that we have within these programs .
23 Are we getting -- for that new $21 million , if
24 that stays -- and quite frankly, I'm hoping it does
25 because of the need that's out there -- what can we do
118 1 to make that $21 million go as far as it possibly can?
2 And do we need to talk to the Feds to make that happen?
3 And I'd love to talk to you about it in more
4 detail when you have time.
5 ACTING SECRETARY DAVIN: Sure.
6 REPRESENTATIVE MASSER : Maybe start a working
7 group with some of your team and some legislators to
8 come up a plan to make those dollars stretch.
9 ACTING SECRETARY DAVIN: We 'd be happy to do
10 that.
11 REPRESENTATIVE MASSER : Thank you , sir.
12 Thank you , Mr . Chairman.
13 MAJORITY CHAIRMAN ADOLPH : Thank you .
14 I'm happy to announce that this is our last
15 Representative.
16 ACTING SECRETARY DAVIN: Okay.
17 MAJORITY CHAIRMAN ADOLPH : Representative Seth
18 Grove batting No . 26.
19 REPRESENTATIVE GROVE: Thank you , Mr . Chairman.
20 Gentlemen, Madam , thank you so much for coming
21 in today and discussing such an important element, job
22 creation and what you do.
23 ACTING SECRETARY DAVIN: Thank you .
24 REPRESENTATIVE GROVE: I thank you for that.
25 ACTING SECRETARY DAVIN: Thank you .
119 1 REPRESENTATIVE GROVE: Two of my colleagues kind
2 of already hit on the PIT increase. You know, you 're
3 looking at a 21 percent increase in PIT; 79 percent of
4 businesses pay for it. That allocation, out of $6
5 billion in taxes collected over two years , only 3
6 billion is going out the door. It's being driven out
7 through Homestead. Maybe some school districts will hit
8 millage rates; very few will.
9 We 're looking at a 40 percent increase in sales
10 tax between a hike and an expansion, which hit small
11 businesses . You're talking about taxation of
12 professional services, which are small businesses . And
13 on top of that, you 're asking for a 10.10 minimum wage
14 for no reason at all but besides we're the government
15 and we can tell you what to do.
16 With all that compounded and piled on top of
17 each other, how do you expect small businesses to
18 actually survive and want to stay here in Pennsylvania?
19 Because when I go out there, they're not looking forward
20 to any of this stuff.
21 ACTING SECRETARY DAVIN: Okay. Well , this is a
22 good one to end on I guess, right?
23 REPRESENTATIVE GROVE: Yes.
24 ACTING SECRETARY DAVIN: I appreciate the
25 question. That is a good question. And I think part of
120 1 it, again, I go back to the comprehensive nature of the
2 Governor's proposal and the Governor's budget .
3 You know, we're looking at opportunities to help
4 small businesses , large businesses , and med ium-sized
5 businesses and communities with the things that we do.
6 Part of what we're trying to do is we are really
7 trying to make sure that we have a properly trained
8 workforce. And a big part of the Governor's budget
9 looks at education before people enter into the
10 workforce and also training program s that we have in a
11 very big way through WEDnet and also through the
12 Department of Labor and Industry that we need to make
13 sure gets to the right people . And some of those people
14 are small businesses . It's not just the larger
15 businesses that can take this, that can utilize this
16 assistance.
17 We also need to look at properly funding, again,
18 the program s that we have that can help these small
19 businesses grow. So when there's a need for small
20 businesses to get machine ry and equipment to do certain
21 activities, when there's a need for working capital and
22 other items for small businesses , we need to be able to
23 be in a position where we can help them and support
24 them.
25 REPRESENTATIVE GROVE: I understand the
121 1 argument. But over two years we're pull ing $12.7
2 billion out of our economy. We 're giving $3 billion
3 back to homeowners. And the answer to help small
4 businesses , we're using your huge tax increase to give
5 you government programs to help you .
6 I'm not sure I buy that answer. And I'm not
7 sure the general public does, too.
8 Let me move on to the business taxes. It's my
9 understanding that combined reporting affects different
10 companies differently. Has the Administration sat down
11 and done any kind of cost benefit analysis to see who it
12 benefit s, who it doesn't benefit , and what that will do
13 to jobs in the Commonwealth?
14 Obviously, the last thing we want to do -- and
15 I'm with the Governor. I love reducing the Capital
16 Stock Franchise Tax. I stood up and clapped for him. I
17 love reducing the CNI. Combined reporting, I'm a little
18 iffy on just because of what the repercussions may be .
19 ACTING SECRETARY DAVIN: Right.
20 REPRESENTATIVE GROVE: So can you try to get to
21 that?
22 ACTING SECRETARY DAVIN: I think in your
23 question was, are there studies or are we looking at
24 that?
25 REPRESENTATIVE GROVE: Yes.
122 1 ACTING SECRETARY DAVIN: I think we're doing
2 that. We actually are looking at those, some of the
3 studies right now, and actually talking to a number of
4 people and businesses , business owners, and also larger
5 businesses to see what the effect of that really would
6 be on them.
7 I think from the Governor's perspective , it's
8 really trying to level the playing field in terms of the
9 whole tax structure. And this is a big change from what
10 we've seen previously .
11 And I think, you know, again, it's hard to look
12 at certain part s without looking at other part s. It
13 really needs to be looked at comprehensively.
14 REPRESENTATIVE GROVE: Um-hmm.
15 ACTING SECRETARY DAVIN: And , you know, our
16 assumption I guess is that this is going to be -- this
17 is going to make for a much better tax climate for
18 Pennsylvania throughout, through homeowners, through
19 small businesses , who also are homeowners that are going
20 to see a significant decrease in their taxes, their
21 property taxes, and other things and programs that we're
22 capitalizing to help them.
23 So that's kind of where we are right now with
24 res pect to it.
25 REPRESENTATIVE GROVE: I appreciate you are
123 1 looking at that. That's a positive step.
2 Last question. Obviously, the Governor is a
3 very astute businessman . He's very good. I would not
4 want to be on the other side of the table doing a
5 business deal with that guy.
6 He knows business through-in and through-out.
7 He does business . When he was a businessman , he did
8 businesses in other states. Particularly one was
9 Indiana, which has recently become a right-to-work
10 state. After they became a right-to-work state, wages
11 increased, economic activity increased. And that's
12 something else.
13 You know, when people talk about business
14 climate in Pennsylvania (inaudible). And they also talk
15 about right to work.
16 Is that something the Administration is having
17 discussions, with moving towards more of a free market
18 economy state right to work?
19 ACTING SECRETARY DAVIN: I have not had any
20 discussions related to that at all.
21 REPRESENTATIVE GROVE: Okay. Thank you .
22 ACTING SECRETARY DAVIN: Sure.
23 REPRESENTATIVE GROVE: Thank you , Mr . Chairman.
24 MAJORITY CHAIRMAN ADOLPH : Thank you ,
25 Representative.
124 1 Mr . Secretary, Deputy Secretaries, thank you so
2 much for being here with us today. Certainly a lot of
3 changes. I'm getting used to changes, you know, being
4 an Eagles fan. I'm getting used to changes.
5 I'll tell you what, Chip Kelly could not go
6 through this type of hearing. His move s would
7 definitely be questioned, as Governor Wolf 's changes
8 are.
9 But I'm looking forward to working with you .
10 ACTING SECRETARY DAVIN: Thank you .
11 MAJORITY CHAIRMAN ADOLPH : Good luck in your new
12 job. You have a tremendous staff to work with.
13 ACTING SECRETARY DAVIN: Thank you .
14 MAJORITY CHAIRMAN ADOLPH : There's a great
15 interest in community and economic development here on
16 both sides of the aisle. We just have to find out how
17 much we can afford.
18 Thank you . Good luck to you .
19 ACTING SECRETARY DAVIN: Thank you , Mr .
20 Chairman.
21 MAJORITY CHAIRMAN ADOLPH : For the member s'
22 information, we will reconvene in ten minutes .
23 Thank you .
24 (Whereupon , the hearing concluded.) 25
125 1 I hereby certify that the proceedings and
2 evidence are contained fully and accurately in the notes
3 taken by me on the within proceedings and that this is a
4 correct transcript of the same. 5
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8 Jean M. Davis 9 Notary Public 10
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