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Commonwealth of Pennsylvania House of Representatives Appropriations Committee Budget Hearing Department of Community and Economic Development

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Commonwealth of Pennsylvania House of Representatives Appropriations Committee Budget Hearing Department of Community and Economic Development COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE BUDGET HEARING DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT MAIN CAPITOL BUILDING MAJORITY CAUCUS ROOM TUESDAY, FEBRUARY 28, 2006, 3:04 P.M. VOLUME V OF V BEFORE: HONORABLE BRETT FEESE, CHAIRMAN HONORABLE DWIGHT EVANS HONORABLE GIBSON C. ARMSTRONG HONORABLE MATTHEW E. BAKER HONORABLE STEPHEN E. BARRAR HONORABLE STEVEN W. CAPPELLI HONORABLE CRAIG A. DALLY HONORABLE GENE DiGIROLAMO HONORABLE TERESA E. FORCIER HONORABLE JOHN A. MAHER HONORABLE EUGENE F. McGILL HONORABLE STEVEN R. NICKOL HONORABLE SCOTT A. PETRI HONORABLE DOUGLAS G. REICHLEY HONORABLE SAMUEL E. ROHRER HONORABLE CURT SCHRODER HONORABLE JERRY A. STERN HONORABLE PETER J. ZUG HONORABLE KATIE TRUE HONORABLE PETER ZUG HONORABLE DAN FRANKEL 2 1 BEFORE (Cont'd.): HONORABLE HAROLD JAMES 2 HONORABLE KATHY M. MANDERINO HONORABLE ANTHONY J. MELIO 3 HONORABLE PHYLLIS MUNDY HONORABLE JOSH SHAPIRO 4 HONORABLE MIKE STURLA HONORABLE THOMAS A. TANGRETTI 5 HONORABLE DON WALKO HONORABLE GREG S. VITALI 6 HONORABLE JAKE WHEATLEY 7 8 ALSO PRESENT: MIRIAM FOX 9 ED NOLAN 10 11 HEATHER L. ARTZ, RMR, CRR REPORTER - NOTARY PUBLIC 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 I N D E X 2 3 TESTIFIER PAGE 4 Secretary Dennis Yablonsky 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 REPRESENTATIVE FLEAGLE: The House 2 Appropriations Committee will come to order. Before 3 us at this time is the Secretary of Department of 4 Community and Economic Development. Welcome, 5 Mr. Secretary. If you would, before you give your 6 testimony, if you would have the stenographer swear 7 you in. 8 9 DENNIS YABLONSKY, called as a witness, being 10 duly sworn, was examined and testified, as follows: 11 SECRETARY YABLONSKY: Thank you. Thank you, 12 Mr. Chairman. 13 REPRESENTATIVE FLEAGLE: Again, welcome. You 14 may proceed with your testimony. 15 SECRETARY YABLONSKY: Thank you, 16 Mr. Chairman. It's good to be with you all today, 17 particularly on Fat Tuesday. I believe you have a 18 copy of my written testimony. I'd like to start by 19 describing a summary of that, and then take your 20 questions. 21 Let me start by outlining what's been 22 accomplished on the economic and community development 23 front in the past year, and then I'd like to present 24 briefly our goals and priorities for the coming year 25 for the Department. 5 1 Over the past year there's been significant 2 progress in a number of areas that directly impacts 3 the economic competitiveness and revitalization of 4 Pennsylvania. 5 The state's employment is at an all-time 6 high, other macroindicators are on the rise, and 7 continued company expansion and attraction plans 8 indicate future growth. 9 The current economic indicators for the state 10 are continuing to show signs of recovery, particularly 11 in the area of job growth. Employments for residents 12 of the Commonwealth, as I mentioned, have reached an 13 all-time high of 5.73 million people, and there's over 14 120,000 net new jobs created in the past three years. 15 According to the Corporation for Enterprise 16 Development, our rankings relative to other states is 17 already improved -- has also improved. Employment 18 growth, for example, shows that we've gone from 41st 19 to 15th this past year. In the very same report we 20 were ranked as number 6 in the nation in the creation 21 of start-up businesses, up from 32nd. 22 Our investments in businesses and site prep 23 and infrastructure and community revitalization are 24 starting to have an impact. 25 Also of importance to highlight is the 6 1 progress that's been made in improving the environment 2 for Pennsylvania's businesses by reducing taxes and 3 workers' compensation costs. The Governor's budget 4 proposal would reduce business taxes by an additional 5 $221 million. When you add that to the business taxes 6 that have been enacted by you all in the last three 7 years, business tax cuts in the last three years would 8 total $987 million. 9 Also, the Governor recently announced that 10 Pennsylvania will decrease workers' comp cost, saving 11 the state's employers approximately a hundred million 12 dollars on their 2006 premiums. 13 We've been working hard on the stimulus 14 package. It's been launched. We've committed to over 15 1300 projects. We've allocated approximately $1.3 16 billion of the $2.3 billion in money that's available. 17 These projects are committed to bringing approximately 18 125,000 jobs eventually to the Commonwealth. And we 19 work with the private sector who committed an 20 additional $2 billion in private sector match on those 21 projects. 22 Our budget for this year is proposed at $426 23 million. We propose an increased investments in a 24 number of programs, including the infrastructures and 25 facilities improvement program. The Governor's also 7 1 highlighted two major -- two new major initiatives, 2 the first is the Jonas Salk Legacy Fund. DCED is 3 partnering with the Department of Health to implement 4 a new bioscience initiative called the Jonas Salk 5 Legacy Fund. It's intended to provide $500 million in 6 accelerated capital over the next two years for 7 investments in bioscience research in this state. 8 This money will be used to help attract world class 9 faculty and to provide financing for facility and lab 10 infrastructure. 11 Funding for this program would come from the 12 securitization of a portion of Pennsylvania's tobacco 13 settlement funds. This approach will allow us to 14 dramatically accelerate these new investments in 15 bioscience infrastructure without adversely affecting 16 the Commonwealth's general fund. 17 Specifically, no taxpayer dollars will be 18 used and there will be no risk to the Commonwealth in 19 connection with this initiative. This fund will also 20 require a dollar-for-dollar match, which means that a 21 total of $1 billion in new accelerated capital would 22 be available. 23 The second new initiative the Governor 24 proposed is called World Trade PA. This is designed 25 to help Pennsylvania businesses successfully compete 8 1 in the global economy. 2 We're proposing $15 million of additional 3 support be available to advance these initiatives. 4 And this money would be available for direct support 5 to businesses, to our international partners, and for 6 the outreach and operational expenses of running the 7 program. 8 In closing, we feel that the budget proposal, 9 coupled with the progress that's already been made, 10 will help us to continue to build a strong foundation 11 for growth with Pennsylvania's businesses and 12 communities and put the Commonwealth in a position to 13 be more competitive in the future. 14 I'm looking forward to continuing to working 15 with all the members of the General Assembly and to 16 continue to improve our job population and community 17 revitalization performance in the coming years. Thank 18 your for the opportunity. I'd be happy to take your 19 questions that this time. 20 REPRESENTATIVE FLEAGLE: Thank you, 21 Mr. Secretary. I have an initial question here. And 22 this comes from several constituents that I have that 23 are very entrepreneurial. And my area, although it's 24 a rural area, was widely known as an area where farm 25 boys became mechanics and built industries. And we're 9 1 really innovative in business. And it's getting to be 2 known now for an innovation in, believe it or not, 3 international trade, and particularly younger people 4 who are not afraid to take those chances and who grow 5 up in that atmosphere of we have to compete 6 internationally. 7 I did get a rather alarming report from one 8 of them. And I wouldn't go into detail about the 9 specific office of the -- or which trade office it 10 was, because I don't think that's fair to the person 11 that's in that office. We can discuss that certainly, 12 but are you -- when you're looking at the World Trade 13 in Pennsylvania initiative, how are things going to 14 change from the way they are now? 15 SECRETARY YABLONSKY: Well, the World Trade 16 initiative is designed to do a couple of things. 17 First of all, there has been a strong emphasis on 18 trade, and by that I mean helping Pennsylvania 19 companies find markets to export their products to 20 overseas. We have representation now in 17 countries, 21 I believe. We've made some changes in that 22 representation over the last couple of years. We will 23 probably make some additional changes as a result of 24 this initiative, assuming it's proposed. 25 The second part where we haven't emphasized 10 1 as strongly until Governor Rendell came on board was 2 the reverse side, which is the so-called Foreign 3 Direct Investment, where we find overseas companies 4 that want to invest in Pennsylvania. We're putting a 5 much greater emphasis on that, not at the expense of 6 trade. We're trying to build both of them up to an 7 equal level. So this initiative would involve some 8 changes. It would involve some new programs.
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