REP. JAKE WHEATLEY

Believe it or not, there are things state House and Senate members of both parties agree on when it comes to supporting emerging businesses, particularly the tech sector startups spinning out of Pittsburgh’s universities.

The disagreements are over how best to do that.

To help bridge that gap, committee Chair, state Rep. Jake Wheatley, D- Hill District, hosted other members of the House Democratic Policy Committee in a March 29 wide-ranging discussion with three representatives from local entities on nurturing homegrown businesses and talent, attracting new businesses, and retain them. The meeting was held at 2000 Technology Dr. in Uptown.

Though much of the conversation revolved around lowering the state’s 9.99-pecent corporate tax rate, Wheatley noted that a week earlier, he and his house colleagues had passed a resolution to eliminate one of the stranger business regulations on the books—denying businesses the ability to depreciate major assets until they are disposed of or sold. No other state does this.

REP. AUSTIN DAVIS

“As you are aware, HB 2017 would address this issue,” said Jenn Beer, Senior Director of Government Affairs for the Greater Pittsburgh Chamber of Commerce. “I want to thank all of you who voted to pass this bill, particularly Chairman Wheatley, which passed in a strong bi-partisan way earlier this month.”

Beer also suggested that—in addition to lowering the corporate tax rate, of course—she also pushed for the state to lift its cap on companies claiming net operating losses. Pennsylvania is among the few states that do this.

“This is a red flag for businesses,” she said. “For cyclical companies—like manufacturers, and emerging high-growth tech start-ups—that means effective tax rates in Pennsylvania are several times higher than in competing states.”

She also agreed with Pittsburgh Technology Council President and CEO Audrey Russo who, among things, recommended modifying the boundaries and expanding Keystone Zones, which offers emerging companies tax incentives for being located in distressed areas.

“It’s one of the few things we can do,” she said. “But the zones need to be changed because the city has changed.”

Russo also recommended the state of Pennsylvania look at states like Texas, which sells itself—with low taxes and a skilled workforce—as a single entity; Tennessee—which has incentivized tech growth in healthcare, and Illinois—which has made it easier for entrepreneurs to gain access to supply chains.

“Part of it is optics,” she said. “With the coasts thinking of relocating—it’s not just Amazon—the more we can do to position ourselves, the better we’ll be. Don’t just sit there and wait for (funding proposals), get out on the road and tell our story.”

Russo also said we also need to sell the state to “angel investors.”

“We have some great investors here, and while it’s growing, it’s not growing as fast as our benchmark cities,” she said. “We’ve had one IPO since I came here in 2007. They had seven in Salt Lake City last year alone.”

As for maintaining the workforce needed to entice and keep emerging businesses here, Jennifer Wilhelm of the Urban Redevelopment Authority, echoed the others in recommending support for more Career and Technical Education programs for middle school, and for more internships.

“We need to keep students and businesses close,” she said. “Build some kind of cooperation into the education system so entrepreneurs and businesses can cultivate people as young as sixth grade.”

Wheatley and fellow committee member state Rep. Austin Davis, D-McKeesport, thanked the speakers for their insights and agreed with them that the state has to take the long view, which Wheatley admitted is politically difficult.

“We have to get away from ‘triage budgets’—what can we get enough votes to pass—and an antiquated tax structure that we can only patchwork to bring in revenue,” said Wheatley. “We have to put our cards on the table and get together as Pennsylvanians and say, here’s how we get to where we want to be in 20 years.”

 

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