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Marcellus Shale

June 6th, 2011

By Ellen T. Horan – President & CEO, GRCCI

So what is all the fuss about Marcellus Shale? Well, shale development is possibly the most significant energy innovation so far this century and Pennsylvania could become the second largest gas producer on the country, behind Texas.

That means massive opportunities for our state. Already, lease and royalty payments to land owners were over 1.7 billion in 2009 alone. Site construction and preparation has kept construction companies, engineers, lawyers, trucking companies and others busy with over 2300 wells drilled already. We are expecting to double that 2011. There could be 60,000 wells developed over the next decade.

 Once the gas is extracted, it needs to be piped to market at $1 million per mile of gas pipeline.

All of that influx of activity in northern Pennsylvania has also been a boon for hotels, restaurants and commercial real estate.

As late as 2000, shale gas was just 1% of American natural-gas supplies. Today, it is about 25% and could rise to 50% within two decades. It is estimated that there are 87 billion barrels of oil to be extracted from Marcellus – the largest natural gas field in the country and the second largest in the world. Shale has been a game changer in the energy market. Abundant, relatively low-priced supplies now make natural gas a highly competitive alternative to both nuclear and wind power and even to coal generation. It has the added advantage of being relatively low-carbon.

Perhaps biggest risks to realizing the benefits of Marcellus Shale are environmental. Concerns have been raised about the possibility that hydraulic fracturing could contaminate the aquifers. Shale is a dense hard rock and the extraction process that was developed in Texas involves fracturing the rock and infusing water and chemicals to release the gas. Fracking occurs below drinking-water aquifers, separated by a mile or more of impenetrable rock, but concerns are valid. With over 20,000 shale wells drilled in the last 10 years, the environmental record of shale-gas development is for the most part a good one. Nevertheless, one must recognize the damage that can be caused by just one poor operation.

Our state legislators are currently grappling with the issues of regulating this new industry.  They are also debating how this industry, which is tapping into a natural asset of our state can be leveraged to generate a financial stream… to not only offset the wear and tear on our roads and communities but perhaps also provide much needed revenue for our state budget which is struggling to meet education and infrastructure needs of the state. They would like to hear your thoughts on this emerging energy source and the stance they should take on environmental controls and on taxation of the drilling operations. Please go to GreaterReadingVoice.com to send our elected officials your thoughts.

At a time of increased energy anxiety and financial stress, the shale gas revolution is both a major innovation and a formidable new addition to our energy supply and asset base in Pennsylvania.

Fair Share Act

April 13th, 2011

By Ellen T. Horan – President & CEO, GRCCI

The budget is not the only fiscal issue facing our Commonwealth. A fair, predictable and even-handed legal system would provide a great “stimulus” to our lagging economy. Pennsylvania is one of only nine states that have not repealed or modified joint and several liability.

Too often lawsuits become attacks on ‘deep pockets’ in search of large awards or quick settlements from prominent defendants who played little role in causing the injury. Businesses, corporations, doctors, hospitals and governments are common targets.

Comprehensive legal reform would create jobs and stimulate investment in the Commonwealth while actually reducing the expenses of state, municipal, and school district governments.

 Current Pennsylvania law allows a defendant who is just marginally responsible for injury or harm to be made to pay 100 percent of the damages.  That is what is referred to as joint and several liability. We need meaningful reform to limit awards against defendants who are judged to have been only partially liable.  

The Fair Share Act proposes a compromise that would create a proportional liability system that includes important exceptions if a defendant is found liable for intentional fraud or tort; held liable for environmental hazards; held civilly liable as a result of drunk driving; or held more than 60 percent liable for the injury or loss.

The Fair Share Act was actually signed into law in 2002 but, because of a procedural technicality having nothing to do with the merits of the legislation, was thrown out by the Pennsylvania Supreme Court.  The Fair Share Act was passed again in 2005 but vetoed by Governor Ed Rendell.

In 2011 we have a real chance to achieve this important and meaningful reform.  The Fair Share Act has been introduced as HB 1 and SB 2 and is currently being debated in the House and Senate.  The bills are supported by Governor Tom Corbett.  Please send a letter to your state lawmakers urging quick action on these important bills, with no amendments. Go to the Greater Reading Voice section of the Chamber website to send an e-mail message today.

Thank you for your support of the Greater Reading Chamber as we advocate for a more completive business environment in Pennsylvania.

A Look at Govenor Corbett’s Proposed State Budget

March 16th, 2011

By Ellen T. Horan – President & CEO, GRCCI

Governor Tom Corbett certainly set the tone for debate last Tuesday as he introduced his proposed $27 Billion state budget that presented something I have not seen in my 20 some years of lobbying the state legislature… a decrease in public sector spending. His underlying message was “We have to spend less because people have less to spend. We must tax no more because people have no more to give.” He said we have gone from a nation that produced wealth to a nation that produces debt and the day of reckoning has arrived.

He pledged a budget that would adhere to 4 core principles: Fiscal Discipline, Limited government, free enterprise and reform.

He kept to his campaign pledge of no new taxes.

With 82,000 employees, labor costs are understandably a significant part of state operations. Corbett asked employees to be prepared to negotiate. He’s looking for pay freezes, salary rollbacks and increases in the modest 3% that workers currently contribute to healthcare.

Given that the biggest state government spending areas are in education and medical assistance, significant cuts are also proposed in these critical service areas. Generally speaking, spending is brought back to 2008 levels.

Other big spending cuts include the elimination of WAMS or spending for pet projects in legislator’s districts, and the Department of Community and Economic Development is proposed to go from 127 programs to 56. Noticeably absent from the Governor’s remarks was anything to do with transportation or infrastructure.

Other highlights of the Governor’s address include a call for the legislature to pass a legal reform bill that would eliminate joint and several liability which he called a job killer for PA.  He also called for the formation of two special Commissions.  One would look into leveraging the natural gas foothold we have with Marcellus Shale. He would like to see PA become the hub  for Natural Gas  as Texas is for oil. A second Commission will be formed to study opportunities to convert what is done in the public sector to the private sector, including, but not limited to the Liquor stores.

The Governor has proposed spending cuts that will inflict significant pain and start heated debates. You can expect your Chamber to be actively involved in this discussion that had to happen. Look for opportunities in the coming months to be involved through our Committees and Forums. Look for regular updates on the Chamber’s website.

Sustainability of Our City

February 8th, 2011

By Ellen T. Horan – President & CEO, GRCCI

This month, the Chamber will devote our State of Community update to the topic of municipal financial sustainability.  Since Reading filed for Act 47 protection this past year, our community is more aware of the issues facing cities.  You may be thinking this is a Reading problem, or an urban center problem.

The fact is, this is a problem facing our Townships and Boroughs too. 26 municipalities have declared Act 47 since the program began in 1987; only 6 have emerged. 54 municipalities have participated in the early intervention Program – 30 have been Cities, 24 have been Townships or Boroughs. 

The Mayor of Reading recently gave an update on the State of the City. I agree with the message he sent.  Act 47 was a positive move for the City.  It made available to the City financial experts to develop a short term plan to balance the budget. It also made available to the City experts in economic development and housing policy that are working on more strategic efforts to shore up the tax base of the City.

HOWEVER, the City faces a long term structural deficit that will require the State to act to change the ground rules under which municipalities operate. Cities are limited by state law to generating revenues from property and income taxes.  Think about what has happened to property values and income, particularly in the city, over the past several years as property values have declined and unemployment has risen.  Cities are also required to offer defined benefit plans to employees when the private sector has shifted away from those plans to defined contribution plans, like the 401(k) plan, over the past two decades because the private sector realized defined benefit plans were unsustainable.

The acceleration in pension plan costs to local government is exacerbated by PA law in binding arbitration. I was shocked to learn that PA court rulings have determined that a municipality’s ability to pay is irrelevant in an arbitrators ruling on a contract. Also, the City is required to pick up the full cost of arbitration.  Why wouldn’t any union hold out for arbitration under those conditions?

While we look to municipal officials to responsibly address their financial sustainability in passing balanced budgets while upholding core service delivery in the provision of public safety services, we need our state elected officials to step up and take on the difficult issues of pensions, binding arbitration and taxing authority. 

You can expect to see your Chamber involved in rallying statewide support on these issues.  We have already taken the leadership role of garnering support from Lancaster, York, Harrisburg, Lehigh Valley, Wilkes Barre and Pittsburgh. Look for a statewide movement in the coming year and attend the March 23rd State of the Community breakfast to learn more about key issues facing our communities. Register here.

New Year Resolution-Let’s Get People Back to Work

January 4th, 2011

By: Ellen T. Horan, President  & CEO

The biggest issue we face at the start of 2011 is lack of confidence.  It’s no wonder. There are over 9 million Americans on unemployment compensation.  There are another 9 million working part time because they can’t find full time work.  And 2 million have just given up looking for a job.

Consumer confidence is understandably shaken. 

So is employer confidence. The leading obstacle to job growth in this country is uncertainty. Employers are cautious to hire new employees or make major capital investments or start new product lines.

This past December, Congress took a positive, and welcomed step in instilling more certainty in tax rates for the coming two years. 

As we advocate for a pro jobs agenda in Washington and Harrisburg in the coming year we will continuously remind our elected officials that it is small business that creates the most new jobs in our economy.  Restraint on regulation and mandates is probably at the top of business’ wish list to create a stable environment for job growth.  Implementation of healthcare reform tops the list of issues keeping business people awake at night. The uncertain, yet potentially significant impact on labor costs is a huge disincentive to hiring.

Of course we need to be just as vocal about what we do want from our elected officials as we are about what we don’t want.  To create new jobs and get back in a hiring mode, we need Congress to address trade and currency issues.  We need to increase our education attainment levels and we need our public sector to renew investment in our aging infrastructure.

You can expect the Chamber to be proactive and prioritize these issues throughout the coming year.  We will keep you informed and ask you to get involved.  You may want to join one of our government affairs committees, join us on a trip to Washington, or use our website, greater reading voice, to send emails to our elected officials.  Most importantly, let’s proceed with confidence in2011 and get people back to work.

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