Making Centre County better for business

bmilazzo@centredaily.comFebruary 10, 2013 

Local political and business leaders are working together to make Centre County a place that draws business.

But leaders say they face challenges across the commonwealth in striving to attract companies such as Oracle Inc. The California-based computer technology company, which specializes in developing and marketing computer hardware systems and software products, recently considered opening a plant in the Centre Region but said last week it would expand at its West Coast location instead of here or at sites it considered in Virginia and Texas. Oracle would have brought about 300 jobs to the area.

Officials said they are hopeful the area offers more to attract businesses than relying on Penn State to fuel the fire.

While Oracle wouldn’t comment to the CDT about its expansion plans, a lack of housing and transportation infrastructure are two challenges leaders said they are tackling.

Other challenges may fall to state lawmakers, as well as Gov. Tom Corbett’s budget plan, to give Pennsylvania a chance.

Sen. Jake Corman, R-Benner Township, state Rep. Kerry Benninghoff, R-Bellefonte, and members of the Chamber of Business and Industry of Centre County said they are working to improve the economy by filling in the transportation and housing void to bring people to Centre County and keep them here. But it’s not going to happen overnight.

Corbett tackled some business tax burdens in his latest budget plan that local leaders said will help businesses. But they said more must be done to make the area attractive to outside businesses.

Corman said while incentives are put in place for businesses willing to open locally and some business taxes will be phased out in the next few years, he is not in favor of buying them out.

“I like to try to go in a different direction. You don’t want to buy them to come here,” Corman said. “It’s much more beneficial to a company when they know all their options. Eventually, incentives go away.”

One of those incentives that was passed earlier this year was the Promoting Employment across Pennsylvania bill, otherwise known as PEP. Initiated by Benninghoff, PEP would allow employers who hire at least 250 workers to keep 95 percent of their state income taxes. The other 5 percent would go to the commonwealth.

Some proposals Corbett mentioned in his budget included closing the so-called Delaware loophole, phasing out of the capital stock and franchise tax by 2014, repealing the inheritance tax and adding $1.8 billion to the transportation budget, which local leaders said may be the most important initiative locally right now.

Transportation funding

Under Corbett’s plan, the commonwealth would phase in an increase on the wholesale tax that gas stations pay on gasoline and the Oil Company Franchise Tax over five years by uncapping the average price used to calculate the tax. That increase, which would help finance a five-year, $5.3 billion transportation initiative, would be partially offset by a phased-in reduction in the liquid fuels tax from 12 cents a gallon to 10 cents a gallon in two years.

Patton Township Manager Doug Erickson said the municipality is working with the chamber and Corman in funding the Waddle Road bridge project near the Interstate 99 interchange that would replace the current bridge with a six-lane bridge and pedestrian and bicycle paths. The project would also have double left-turning lanes on the westbound off-ramp to allow a smoother flow of traffic.

Erickson, Corman and chamber President Vern Squier said that stretch of road is a mess for traffic and puts safety at risk.

Erickson would not say how much the project is expected to cost, but said he, hand-in-hand with Corman and the chamber, requested a large chunk of the transportation funding from the state to improve the area for safety and transportation measures.

“Improving transportation is vital to our economy,” Squier said. “We need to maintain our infrastructure to keep it efficient to avoid more costs.”

He said that once the area is fixed, improvements would not be necessary in the future and would allow people to move in and out of the area more efficiently.

Once the project is completed, Erickson said, it would allow opening up more land for development, specifically in Toftrees.

“In the last decade, we’ve seen a lot of development,” Erickson said.

However since 2008, Erickson added that growth declined to about 1 percent from 3 percent in the Patton Township taxing area.

Erickson said he is waiting on more details about the transportation bill from the governor.

Corman said the bill should be done by this spring — or latest, by the summer.

Corman said the transportation plan would help jobs because the amount of money in infrastructure would help the private sector. This includes local businesses like HRI, Glenn O. Hawbaker Inc. and others, and brings businesses in and out of Centre County more smoothly.

“It will invest in local job growth … it certainly helps safety wise,” Corman said. “Money would be put into it to allow more traffic flow and wider loads, but we can’t get this done until we are able to get funding.”

Better business environment

The next biggest concern is how government takes steps to phase out the capital stock and franchise tax, Corman said.

Corman said the tax is not based on profits. He said if a business loses money from years previous, it would still have to pay the tax until 2014, when it would be gone indefinitely. He said the rate would drop from 1.89 mills to 0.89 mills this year and the tax would be eliminated altogether next year.

The next target, lawmakers say, is the Delaware loophole. Closing that tax gap would stop multistate corporations from avoiding Pennsylvania tax liability by transferring ownership of assets to a subsidiary in a different state.

Corporations use the loophole to avoid having to pay taxes to the commonwealth, but legislation would close that loophole and decrease the state’s corporate net income tax from 9.99 percent to 6.99 percent over a six-year period.

It also would have applied a single sales factor in calculating taxes and phase out the cap on the tax credit for net operating losses within nine years.

“We’re looking for ways to close the loophole, but not close Pennsylvania for business,” Corman said.

The government also plans to reduce the corporate net income tax, which is similar to the Delaware loophole but reduced over a longer period of time, by removing the cap on net operating loss deductions.

The plan is to phase in a reduction in the corporate net income tax rate from the current 9.99 percent to 6.99 percent by 2025. This would also increases the maximum net operating loss deduction from $3 million to $4 million in 2014, and to $5 million in 2015, but has yet to be approved, Corman said.

And while local leaders said this is all good for business, they are attempting to find other ways to attract commerce.

“Its not that we want to get X and Y business,” Squier said. “Going forward, we want to operate and create an economic development program that will promote the economic well-being of Centre County at large.”

This includes coming up with a balanced attack between keeping business already in Centre County and recruiting new businesses to the community.

And the chamber is working with local municipalities and political leaders in doing so.

“We try to make sure the climate is good,” Corman said. “At the local end, sometimes our hands are tied behind our back when we’re up against the government. But we do what we can to put forth better proposals, including the tax structure, education, job training.”

Britney Milazzo can be reached at 231-4648. Follow her on Twitter @brmilazzo.

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