By Melissa Daniels | PA Independent
HARRISBURG — Pennsylvania needs to get innovative about fixing its unemployment — and that means letting business owners keep their employees’ tax withholdings.
“Let’s not be afraid of trying something new,” Senate Appropriations Chairman Sen. Jake Corman, R-Centre, said. “Traditional programs are great, but sometimes you gotta be willing to get out and try something new.”
Corman was speaking Wednesday on the Senate floor in support of House Bill 2626, after several Democrats voiced opposition to the new proposal.
The measure would allow businesses to keep 95 percent of their employees’ personal income tax withholdings if they qualified for the Promoting Employment Across Pennsylvania program.
In this program, businesses would be required to pay workers the county median income and stay in the state for at least five years to receive the full benefit.
Supporters have said this bill would create jobs by giving companies capital to reinvest. As pointed out by Corman, personal income tax revenue may end up supporting economic development projects once they go to the state anyway.
But opponents say it goes too far.
State Sen. John Blake, D-Lackawanna, said the bill amounts to “paying their boss for the privilege of having a job.”
Blake said he could not support the bill, while the Legislature is continually “cutting economic growth for means of a balanced budget.”
“I still have a problem wrapping my head around this bill and this model,” he said.
Some policy experts share Blake’s concerns.
Sharon Ward, executive director of the progressive policy analysis think tank Pennsylvania Budget and Policy Center, said the commonwealth doesn’t have a strong track record on past policies.
While speaking on the bill at a conference call earlier this week, she said the state does not appropriately check for compliance in other areas.
“Pennsylvania has not done a particularly good job of looking at or enforcing the commitments that are made by these companies,” she said.
Ward said the bill passed relatively quickly. Changes to economic development and tax collection are more often introduced during the budget season rather than at the end of a legislative session.
“Many people in Harrisburg were caught unaware when this bill began to move,” Ward said.
The bill passed 33-16 in the Senate. It now needs to go back to the state House before heading to the governor’s desk. House members will need to approve the bill with an amendment from the Senate that gives the program a sunset provision in 2018, and caps it at $5 million in benefits.
UPDATE 8:40 p.m.: The state House passed the final version of HB2626 with a vote of 111 to 80 just before 8:30 p.m. Wednesday.
The approved bill puts stricter limitations on how many jobs the business must create to be eligible. It must create 250 within a five-year period, of which 100 must be created in the first two years.