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Pennsylvania Puts Priority on Energy Development and Strong Infrastructure

A new business-friendly tax collection system means more opportunity for in-state development.

Oct/Nov 08
In exercising economic development strategies, Pennsylvania's balanced budget shows that the state is focused on maintaining "fiscal fitness," according to Dennis Yablonsky, secretary of the Pennsylvania Department of Economic and Community Development. "We just closed our fiscal year on June 30 with a $159 million surplus," he says. "It might not sound like much with our $20 billion budget, but if you consider other states' deficits, we're pretty pleased." He also notes that the $2.8 billion economic stimulus package that has been in place for the past four years continues to contribute significantly to the economy by driving investments in jobs and tax revenue.

 The state's new budget imposes no new taxes or expense cuts, but provides $3.1 billion for targeted sectors of the new economic strategy. To prepare for potential investments, a $2.35 billion portion - earmarked for improving and creating new infrastructure such as roads, bridges, dams, new research facilities, site preparations and downtown redevelopment - is "the best investment that we can make," says Yablonsky. "It creates construction and engineering jobs, boosts purchases of cement, asphalt, steel, and other supply chain materials, and creates long-term assets to improve the state's competitiveness."

A $650 million investment derived from the Energy Independence Strategy is directed towards the development of alternative and renewable energy technologies and helping individual customers and small businesses to reduce electricity consumption. Yablonsky says the fund promises "early-stage venture capital, significant grant and loan money for wind, solar, biomass, clean coal, and to some extent geothermal, as well as homeowner rebates to help improve energy efficiency in small homes and businesses."

Incentives bolster the state's drive to reach the Alternative Energy Portfolio standard passed in 2004, which requires 18 percent of electricity from renew sources by 2021. Currently the state produces about 4 percent of energy from renewables. "We are trying to become a net exporter of renewable energy products and fuels and a center for manufacturing of wind and solar systems," says Yablonsky. We want to be able to produce cellulosic ethanol and biofuels for ourselves, with enough excess for export, to make energy sector a growth engine for us."

To increase site possibilities, in July 2008, Governor Edward Rendell signed into law Senate Bill 1412, which extended and expanded the Keystone Opportunity Zone tax incentive program. Unused portions of the existing KOZs can be extended for seven years, and up to 15 new KOZs will be identified to receive benefits for 10 years.

The state also enacted a more efficient tax collection system that could yield more than $200 million for municipalities and school systems and improve Pennsylvania's business climate through the standardization, coordination, and accountability. "This is a business-friendly initiative in conjunction with the state and regional chambers and represents a process improvement for how we collect earned income tax," says Yablonsky.

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