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The Pennsylvania Chamber and other members of the CompetePA Coalition this week called on lawmakers to look to Pennsylvania's future competitiveness as work begins toward reaching the June 30 deadline for passage of a new state budget.

The members of the coalition, which comprises individual businesses and business and trade groups – fear the massive deficit facing the Commonwealth could create a climate of shortsightedness -- an environment which proved disastrous in 1991 and from which the Commonwealth still has not recovered.

The deficit now stands at $1.1 billion and could top $2 billion by the end of the fiscal year.

"We all understand that these are difficult times, but how we manage this crisis will determine our ability to compete for business investment and job creation for generations to come," said PA Chamber vice president Gene Barr in a press release recently issued by the coalition. "Our best strategy for dealing with the challenges we now face is with competitive tax policies that will help us retain jobs, keep our facilities open and, when possible, create new jobs."

The governor's budget proposal, the release noted, preserved the improvements to the business tax structure made in recent years and called for the continuation of the previously legislated phase-out of the Capital Stock and Franchise tax. But the governor's annual address is just the first step in what promises to be a long and continuous process, and CompetePA members warn that higher business taxes will remain a real possibility throughout the legislative negotiations.

CompetePA members are supporting further reform of the Corporate Net Income tax while vigorously opposing increased taxes on private sector employers.

The unified business community believes that eliminating the cap on Net Operating Losses and adopting a Single Sales Factor apportionment formula for the Corporate Net Income tax will go a long toward helping Pennsylvania companies now and for the long-term.

"Cyclical businesses and start-up companies, for example, are particularly vulnerable in a volatile economy, Barr noted. “A change in NOL policy would enable more job creators to ride out the current economic downturn rather than close their doors. This should be priority No. 1 during upcoming budget deliberations."