Pa. lawmakers take aim at affordability

10-bill package would address energy, housing, child care costs

MECHANICSBURG -- Pennsylvania lawmakers plan to unveil a 10-bill package in October aimed at cutting household costs, easing business expenses and addressing problems ranging from rising electric bills to housing shortages.

Rep. Thomas Kutz, R-Cumberland, said Tuesday the Pennsylvania Growth and Affordability Plan, or GAP, will address seven areas: child care, personal health and wellness, energy, small businesses, large and new businesses, housing, and student loans.

The House Republican Policy Committee held a hearing on the plan at the Silver Spring Township Municipal Building, bringing together representatives from the Pennsylvania Chamber of Business and Industry, PPL Electric Utilities, and the Central Pennsylvania real estate industry.

Kutz said the full package will be unveiled when lawmakers return to session in October.

"Economic growth and affordability really go hand-in-hand," Kutz said. "Economic growth drives the entire economy for our Commonwealth and our localities here, and affordability is what allows our individuals and families to afford to be able to live and work and raise families in Pennsylvania."

One proposal discussed Tuesday could provide direct relief to PPL customers.

Shelby Linton-Keddie, senior director of government, regulatory policy and external affairs for PPL Electric Utilities, said eliminating Pennsylvania's gross receipts tax on electricity would save the average residential customer about $12 a month, or roughly $150 a year.

"Eliminating Pennsylvania's gross receipts tax on electricity would provide meaningful and immediate relief to customers," Linton-Keddie said.

She cautioned that eliminating the tax wouldn't solve the larger problem facing electric customers.

"Twelve dollars monthly savings, while important, does not fully address the larger affordability challenge," she said.

Linton-Keddie said increases in capacity-market costs during the past two years have added about $22 a month to the average PPL residential customer's bill.

PPL delivers electricity to about 1.5 million customers in 29 counties across eastern and central Pennsylvania. The company doesn't generate electricity. It buys power for customers who use its default service and passes those generation costs through without markup.

Linton-Keddie said Pennsylvania needs more electricity generation to meet growing demand and avoid future reliability problems. She said the state should consider changes to energy laws and whether utilities should be permitted to own generation under certain circumstances.

Housing costs produced another major focus of the hearing.

Matt Madden, operating principal of Keller Williams of Central PA, said Central Pennsylvania continues to suffer from a shortage of available housing, particularly at prices younger buyers can afford.

Prices have continued to rise while interest rates have increased, making an already tight market harder for first-time buyers to enter, Madden said.

He said local builders disappeared from the market after the Great Recession, while regional and national builders concentrate on projects that provide higher profit margins.

That has reduced the variety of homes available.

Madden also pointed to lengthy municipal and state approval processes that can add time and expense before construction begins. He said Pennsylvania could encourage predictable approval timelines, allow greater housing density, and give municipalities incentives to plan for actual housing demand.

"Housing affordability is a workforce infrastructure just as much as roads, utilities and broadband are," Madden said.

He said the shortage affects the entire housing market. Older homeowners who want to downsize often can't find suitable homes, so they remain in larger houses. Those houses don't reach families looking to move up, which means fewer starter homes become available to first-time buyers.

For younger Pennsylvanians, Madden said delaying homeownership also delays their ability to build wealth through rising property values.

"There's just fewer people enjoying the American dream," he said.

Neal Lesher, vice president of government affairs for the Pennsylvania Chamber of Business and Industry, focused on Pennsylvania's tax structure and regulatory climate.

Lesher said lawmakers have made progress by reducing the corporate net income tax and changing how businesses can deduct previous losses, but he said Pennsylvania remains less competitive than some neighboring states.

He also called for additional changes aimed at small businesses, including allowing them greater use of net operating loss deductions.

"For businesses, cash is like water," Lesher said. "It's going to go to the least restrictive place."

Lesher also said Pennsylvania businesses face costs beyond the tax rates themselves because navigating the state tax system can require accountants, attorneys, and other professional help.

"We really should focus on simplicity, especially in the tax code," he said.

Child care also emerged as part of the affordability and workforce discussion.

Lesher said large employers may be able to provide on-site child care or other benefits, while smaller businesses often lack the resources to offer similar programs.

Kutz discussed a proposed Pennsylvania Family Savings Account that would allow families to save money tax free for expenses including child care, adoption, and infertility treatment. Money not used for those purposes could eventually roll into a college savings account and later into a Roth individual retirement account.

Rep. David Rowe, R-Snyder/Union/Mifflin/Juniata, chairman of the House Republican Policy Committee, said the package is intended to examine how state taxes, regulations and other policies contribute to higher costs.

"Affordability is not simply about what things cost," Rowe said. "It's about how much Pennsylvanians get to keep of their own hard-earned money."

Kutz said lawmakers will continue gathering feedback before introducing the full GAP package in October.