Pennsylvania’s House of Representatives passed a proposal that would institute a two year hiatus on a variety of tax incentive programs that are funding economic development. The taxes are being used to fund the state’s research and development, creating economic opportunity zones, and spurring job creation.
While the proposal is not a guarantee for enactment, the savings from holding back these programs could equal $180 million. However, the real value in the tax hiatus is in being used as a bargaining item for the upcoming budget battle to help bridge a $1.5 billion shortfall.
The problem with this, according to the Lehigh Valley Economic Development Corporation (LVEDC), these programs--specifically the Job Creation Tax Credit--is the one of main drivers in getting companies to relocate to the Lehigh Valley and crucial in helping existing ones expand.
Don Cunningham, president and CEO of LVEDC, views this tax credit is the focal point for the Valley’s competitive advantage and allows them to vie for business against much larger metropolitan areas in the Northeast (i.e. Philadelphia, Boston, New York).
The LVEDC estimates that $592 million in development, over 2,300 jobs being created, and nearly 20 major corporations relocating to the Lehigh Valley can be directly attributed to the state having things like a Job Creation Tax Credit program.
While the tax credits are normally a small part of the larger state grants and low interest loans that are used to finance construction development, they were important in getting development deals done for Bimbo Bakeries, Kraft Food Group, Nestle Waters, B. Braun and Samuel Adams.
Also losing programs like the Keystone Opportunity Zones can keep the Valley's cities from being able to redevelop homes in an effort to beautify and rebuild communities with the hopes of attracting more business.