State Rep. Kerry Benninghoff, R-Bellefonte, spoke about tax reform, regulations and recent legislation related to small businesses Tuesday at Mountain View Country Club, telling county business leaders that “bold initiatives” are needed to deal with an about $75 billion pension debt, in addition to other factors weighing on the state’s economy.
As voters were heading to their polling locations for Tuesday’s primary election, Benninghoff urged the crowd at the Chamber of Business and Industry of Centre County breakfast to exercise their right as citizens and hold lawmakers accountable.
“You need to be demanding that we get a final pension package through and across the table,” he said. “There is no greater cost driver to local school budgets and our state budgets, and it’s gobbling up state dollars faster than you can imagine.”
Benninghoff noted the state’s changing demographics, citing a Penn State Data Center brief highlighting a graying population. According to the brief, Pennsylvania’s age 65-and-older population grew by 10 percent from 2011 to 2015, while the general population grew by 0.5 percent. The Census Bureau, meanwhile, reported that the commonwealth was one of six states to shed overall population from 2015 to 2016, losing about 7,700 people during that time.
When coupled with the sixth-oldest population in the country — and growing — the state is feeling the pressure in paying for benefits.
“It’s not necessarily the easiest thing to do from an economic perspective, but it’s respectable that people love Pennsylvania, and they want to be here and a lot of them go to work … in other states and then they want to return here,” Benninghoff said. “There’s other reasons they want to do that, because Pennsylvania does not tax retirement. I’m not advocating it, but it puts us in a predicament economically. In addition, Pennsylvania is pretty generous in its senior services.
“You have less people paying into the system and more who may need services.”
To improve the state’s economic situation, Benninghoff said regulatory policies could be streamlined. In Pennsylvania, he said, businesses can wait months to procure certain permits, where in other states it takes days or weeks.
Regarding tax reform, he pointed to recent bills focused on like-kind exchanges, net operating loss and expense deductions.
“Pennsylvania sales tax is so complicated the average business person doesn’t have the time to look at all the regulations and understand what is taxed and what is not taxed,” he said. “These may be small, but they’re incremental changes that hopefully are getting us in the right direction.”
Pennsylvania’s corporate income tax rate of 9.99 percent is the second-highest in the country, behind Iowa’s 12 percent, according to the Tax Foundation, a nonprofit that specializes in tax policy.
Benninghoff, the House majority policy chairman, is asking the Tax Foundation to draft a report analyzing Pennsylvania’s tax code, a move that has been done in other states to some success.
“We cannot continue to do things as we’ve been doing them,” he said. “We are not as attractive as other states.”
In the question-and-answer session following Benninghoff’s seech, Dottie Yukish, a former board member with the Central Pennsylvania Convention and Visitors Bureau, suggested another solution. To attract startups and retain young talent, she said, more entrepreneurs could focus on services for one of the state’s largest customer bases: senior citizens.
“It’s a possibility for everyone to benefit,” she said.
CBICC President and CEO Vern Squier agreed with Benninghoff’s approach.
“It’s ultimately to change the culture and the history of regulatory actions and the environment that that represents,” Squier said. “We have to incrementally start to challenge, ‘Can we do it differently?’ So I think that’s part of what he’s doing.”