History made as Shapiro, Davis sworn-in as Pa.’s new leaders

Invoking the history of Pennsylvania, its founder William Penn, and various chapters of its storied past and present, Democrat Josh Shapiro was inaugurated Tuesday as the state’s 48th Governor. 

Amid cold, overcast surroundings, the 49-year-old former attorney general placed his hand on three Jewish Bibles and took the oath of office from Chief Justice Debra Todd. 

The three Bibles are of special significance to Shapiro, who is Pennsylvania’s third Jewish governor. One was a family bible; one was from Pittsburgh’s Tree of Life Synagogue, where 11 worshippers, including several Holocaust survivors, were killed in 2018 by a gunman in the deadliest antisemitic attack on U.S. soil; and one was U.S. Army-issued and brought into battle on D-Day, June 6, 1944, by Philadelphia’s Herman Hershman, a Purple Heart recipient. 

“Along the winding road that led to this moment,” Shapiro began, “I’ve been grounded in my faith and family.” 

Shapiro’s swearing-in ceremony on the steps of the state Capitol was one of two historic ceremonies taking place Tuesday in Harrisburg. Austin Davis was sworn in the state’s Senate chamber as Pennsylvania’s first Black lieutenant governor, and at age 33, is the country’s youngest lieutenant governor. 

Davis said his swearing-in sends a message to young people in Pennsylvania, particularly young people of color, that the Keystone State is a place where everyone is welcomed and can succeed. 

“I say to all the young people watching right now, who are worried and unsure about their future – that the American Dream is alive and well in Pennsylvania,” Davis said. “That no matter how you grew up, no matter where you come from, or what you look like – this Commonwealth will always be a place where you can create your own destiny.” 

Shapiro spoke of destiny as well. Acknowledging that he is “entrusted with this awesome responsibility,” he said he realizes “it is just for a moment in the long history of our Commonwealth” and that he is the “next link in the chain of progress.” 

Noting the presence of former Pennsylvania Governors Tom Wolf, Tom Ridge, Mark Schweiker, and Tom Corbett, Shapiro thanked his predecessors, particularly his immediate predecessor, Wolf. 

“Thanks to his leadership,” Shapiro said, “we now find ourselves in the strongest financial shape in the history of the Commonwealth of Pennsylvania, allowing us to make critical investments for tomorrow.” 

Shapiro emphasized that the presence of the former governor’s “formally celebrates the peaceful transfer of power.” 

His statement was one of several pointed references he made to political extremism and the Jan. 6 insurrection. 

“Here in Pennsylvania, we didn’t allow the extremists who peddle lies drown out the truth,” he said. “We showed that our system works and that our elections are free and fair, safe and secure.” 

Shapiro’s speech lasted approximately 45 minutes and covered a wide range of subjects, including abortion, diversity, education, environment, extremism, faith, family, gun violence, public safety, and religion. Staying away from specificity, Shapiro spoke largely in broad terms. His speech was aimed at unifying a Pennsylvania government divided and attempted to resonate not only with his supporters but also with those whose votes he failed to get. 

Having the reputation as a consensus builder, Shapiro is expected to put together one of the most diverse cabinets in Pennsylvania history. Despite the divided government in Harrisburg, Democrat and Republican leaders have spoken of having common ground when it comes to investing in education, investing in workforce development, and economic development. 

“I set out to build a Cabinet and senior team that looks like Pennsylvania,” Shapiro said, “and reflects the people and the communities that I just took an oath to serve and protect.” 

Shapiro’s inaugural speech often had the tone of the type of rallying cry heard on campaign trails. It also mirrored in some respects the lyrical oratory of former Democratic presidents Bill Clinton and Barack Obama. Shapiro is seen by many as a possible presidential prospect. 

Shapiro concluded his address by stating, And so, with my faith firmly rooted in we the people of Pennsylvania, with my heart open to others and my eyes fixed ahead, I am prepared to do my part to move our Commonwealth forward.” 

Congratulations on Shapiro’s swearing-in came from several fronts. Republican Leader Bryan Cutler (R-Lancaster) said in a statement that as a candidate, Shapiro “offered many policy proposals that provided a path to bipartisan accomplishment and real progress for shared goals. As we look ahead, it is our hope that Gov. Shapiro governs under that same spirit and with a true willingness to find common ground.” 

Bill Johnston-Walsh, state president of AARP Pennsylvania, also congratulated Shapiro and Davis. He added that AARP Pennsylvania applauds the commitment to public service shown by Shapiro and Davis and the message of inclusivity that’s been the essence of the Shapiro-Davis Transition Team, aligning as it does with AARP’s mission to lead positive social change and to find ways to improve the lives of Pennsylvania’s 50 and older population. 

“Recognizing that every Pennsylvanian deserves access to quality, affordable health care and home and community based-services when needed,” Johnston-Walsh said, “we look forward to working with the Shapiro Administration and the General Assembly to promote policies that guarantee residents throughout the Commonwealth can live and age healthy and well with the dignity and respect they deserve.” 

National Federation of Independent Business (NFIB) State Director Greg Moreland urged the Shapiro-Davis Administration and legislators to keep small businesses’ interests in mind. 

“Small business is the backbone of Pennsylvania’s economy, anchoring Main Streets across the state and creating a majority of all net new jobs,” Moreland said. “There is much work to be done to ensure small businesses in Pennsylvania can thrive. 

“NFIB stands ready to work with Governor Josh Shapiro, his cabinet members, and the Senate and House to adopt policies that help improve the business environment for small businesses in Pennsylvania.” 

NFIB hires late state senator’s chief of staff as new state director

Gregory Moreland. PHOTO PROVIDED.

The National Federation of Independent Business (NFIB) announced its newest state director for Pennsylvania on Monday.

Greg Moreland, a veteran and former chief of staff to the late Sen. David Arnold (R-Lebanon, Dauphin and York), now leads the small business organization’s Pennsylvania branch.

Moreland has over five years of experience in Pennsylvania government, where he has held positions as legislative intern for the Pennsylvania House of Representatives, policy analyst and policy advisor for Speaker of the House Mike Turzai and, most recently, chief of staff for Senator Arnold.

Arnold was in the Senate from Jan. 14, 2020 to Jan. 17, 2021 and died shortly after he was diagnosed with brain cancer. Prior to joining the Senate, Arnold held a 14-year term as Lebanon County’s district attorney.

“NFIB is thrilled to have Greg Moreland as our permanent voice of small business in Harrisburg,” said Greg Biryla, NFIB senior state director. “As we find ourselves in the middle of 2021’s legislative session and state budget process, NFIB and our Pennsylvania members need a state director who is prepared to hit the ground running, will be a leader for struggling small businesses still trying to get back on their feet, and someone who understands that NFIB’s advocacy is about defending and advancing the interests of main street.”

The NFIB is a member-driven nonprofit advocating for small and independent business owners across the country.

In the wake of the COVID-19 pandemic, those business owners need a voice speaking for them at the Capitol now more than ever, according to Moreland.

“They need a strong voice in Harrisburg that will speak out about the issues that most impact them on a day-to-day basis,” he said. “Our small business owners are busy running day-to-day logistics and creating jobs. I am eager to communicate their stories to lawmakers.”

TCI’s potential impact on fuel costs worries small business

Observers of the regional Transportation and Climate Initiative (TCI) that has involved Pennsylvania anticipate more announcements before Christmas about how the proposal will evolve in 2021, raising concerns that small businesses would be hurt by an eventual increase in gasoline and diesel prices.

“There couldn’t be a worse time to be talking about increasing the costs on small businesses,” said Rebecca Oyler, legislative director of the Pennsylvania chapter of the National Federation of Independent Business. While every state resident would be affected, she and others said, companies that do a lot of deliveries or that otherwise use trucking services will be the most impacted by prices that could go up 17 cents per gallon or more. “Any extra tax at the pump is really going to hit those businesses hard.”

The TCI is a proposal among 12 states in the Northeast and Mid-Atlantic and Washington, D.C., to limit carbon pollution created by transportation. Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia are the states that have shown support.

While the cost would not be a direct tax on fuel, a system could be put in place where caps on fuel use are created, requiring companies that go over that cap to pay toward a fund that would create additional initiatives to reduce carbon emissions. Money raised would be invested in green energy programs that would include encouraging private investment in electric-charging stations, converting buses to electric and improving public transit. The extra cost would be passed onto fuel consumers, which reports have shown could be up to 53 cents per gallon for diesel, Oyler and others said.

“This is a significant hit, particularly on people who have to drive for a living, such as distributors, or for their jobs or for necessities for those who live in the rural parts of the state,” said John Kulik, a spokesman for the Pennsylvania Petroleum Association, which represents independent fuel distributors.

Pennsylvania already has the second largest gasoline tax in the United States behind California.

TCI is facilitated by the Georgetown Climate Center, which has held information sessions with the public, businesses, and other stakeholders over the past several years. After a webinar in September, the TCI said a final Memorandum of Understanding, or MOU, among the states and Washington, DC, could be expected “later this fall.” Vicki Arroyo, executive director of the climate center, said that an update on the MOU is on track for before Dec. 21, which is the start of winter, but might not come before then. (Go to transportationandclimate.org for more details.)

Supporters of the TCI have been clear that some costs would go up but that the benefits will outweigh those costs. Arroyo noted that the investments in green-energy infrastructure will create jobs and new systems that might lead to lower fuel costs in the future, as well as providing tangible improvements in air quality. And even if fuel costs go up, she added, those costs don’t necessarily have to be passed onto consumers.

Once a MOA is agreed upon, Arroyo said, the next steps would be for the individual states to work on guidelines, which would be the state Department of Environmental Protection in Pennsylvania. Neil shader, director of communications for the state DEP, said it is too early to say how that process will play out. “Too many variables to be able to speculate with any certainty,” he said.

Arroyo noted that guidelines likely would take months if not years to produce, so after the anticipated end of the pandemic.

Kulik, Arroyo and Oyler agree that the details of TCI will be ironed out in the regulatory process. They point out that guidelines already are being drawn up for the Regional Greenhouse Gas Initiative (RGGI), which is a similar effort but would limit carbon pollution in the energy-producing sectors, such as plants that create electricity. This past summer, the state legislature had passed measures that would have required Gov. Tom Wolf to go through the legislature before regulators could create rules that would increase prices on energy or fuel, but Wolf vetoed those bills.

Kulik said TCI initially was expected to advance in the summer but concerns about the pandemic led to the delays and the anticipated update this fall. While the concerns about the pandemic remain, Arroyo said, the additional webinar, outreach and work since summer have positioned the stakeholders to proceed with the MOA.

The TCI traces its roots to 2010 when leaders in several states created a “Declaration of Intent to reduce greenhouse gas emissions, minimize the transportation system’s reliance on high-carbon fuels, promote sustainable growth and address the challenges of vehicle-miles traveled,” according to the TCI website.

Some of the biggest pushes for TCI and RGGI came after President Donald J. Trump had pulled out of the Paris Agreement on climate after he took office in 2017, Oyler and Kulik said, adding that the thinking was that regional leaders should act if the country was pulling back. Oyler and Kulik pointed out that President-elect Joe Biden has indicated that he intends to bring the United States back into the Paris Agreement, so they suggest that the regional initiative should be delayed for that reason, too.

“Perhaps it makes more sense to see what the Biden Administration will do,” Kulik said. “A national approach makes more sense than a regional approach.” That, at least, would put all the states on the same foundation and not have businesses in some states at a competitive disadvantage, he added.

However, Arroyo said that, while she is confident that a Biden Administration will propel green-energy initiatives, nationwide agreement on any climate-based plans would be years away. That will be true, she added, even if Democrats gain control of the Senate after the Jan. 3 special election in Georgia where two senate seats are up for grabs.

That means that the TCI remains important, Arroyo said, noting that the regional initiative would be the first in the country.

“There are a lot of benefits from these types of policies,” Arroyo said.

Small business owners say PPP program needs a tune up

Requirements for small businesses to be forgiven for federal paycheck protection loans are at the center of lobbying efforts to revise the program’s guidelines by industry leaders who say the aid package fails to address sector-specific challenges of the coronavirus recession.

The Paycheck Protection Program (PPP) provides small businesses a loan that can be forgiven if they use it to keep employees on their payrolls for eight weeks until the economy rebounds and they can return to work. But industry leaders say the restrictions on how employers can use PPP money could make it so there’s no work to which employees can return.

Officials from the Small Business Administration (SBA), the federal agency responsible for overseeing the program, say the loan can be 100% forgiven as long as borrowers use the money under specific requirements, many of which weren’t finalized until after the program began accepting applications.

The SBA is requiring borrowers to use at least 75% on payroll costs and no more than 25% for certain overhead expenses. The money needs to be deployed for rehiring full-time equivalent employees over the course of eight weeks following loan disbursal, whether or not they’ve been deemed “life-sustaining” by state officials and can conduct in-person business operations.

A reduction in full-time equivalent employees or payment below pre-pandemic levels at the end of eight weeks would result in the same percent reduction in how much of the loan is forgiven. Unforgiven loan funds would have to be paid back with a low-interest loan term — a 1% rate over the course of 24 months.

Small business and industry trade groups, such as the National Federation of Independent Business (NFIB) and the Pennsylvania Restaurant and Lodging Association (PRLA), are pushing for an easing of restriction on how employers can use fully-forgiven PPP loan funds.

According to letters submitted to Washington D.C. policymakers and Congress this past week, NFIB and PRLA officials are asking policymakers to extend the eight-week window to give companies more time to spend PPP money and still be forgiven. They are also asking lawmakers to alter the 75%-25% ratio of forgivable payroll to overhead expenses, respectively, that can be used with PPP loan money.

“We are going to continue to press for these items,” said NFIB Pennsylvania State Director Gordon Denlinger said in an interview last week.

Ben Fileccia, director of operations and strategy for the PRLA, said it’s going to be a while before the public feels comfortable returning to restaurants after a public health crisis. Fileccia said a recent National Restaurant Association poll shows some 2% of restaurants across the U.S. say they won’t be able to open after the crisis.

“Everything is going to ramp up but it’s going to take some time,” Fileccia said. “Eight weeks is not going to be a solution.”

More time needed

Forgiveness requirements will disadvantage businesses forced to cease operations if they can’t use the money to transition to normal operations after eight weeks, said Drake Nicholas, a partner with the Lancaster-based legal firm Barley Snyder. Shuttered PPP borrowers should have the option to use the loan money for payroll expenses once in-person operations can resume and employees can come back to work.

“If it’s shut down for two to three months, it’s not like a business is ready on day one to ramp up,” Nicholas said. “It puts that particular business at a disadvantage because once they’re able to reopen again, they’re probably going to have to draw on other lines of credit or other resources to start up again, where they could have used these [PPP] resources to support their payroll to get them ramped up again.”

Most member businesses surveyed by the NFIB said it will take longer than eight weeks for them to financially recover from the coronavirus-induced economic recession. The survey, conducted after lenders stopped taking PPP applications on April 16, showed 63% of respondents believed recovery will take them into next year.

Only half of small-business PPP borrowers who responded to the survey said they expect to have their loan be fully-forgiven. About 27% said they expect to have at least 75% forgiven, and 3% said they plan to use more than half as a loan.

But that’s not how the program is meant to be used, said SBA Eastern District Spokesperson Sonia Smith. The program was designed for employees to bring workers back onto payroll regardless of whether or not social distancing orders allow the business to resume operations.

“Some businesses might be able to recall their employees, and they may be able to work,” she said. “There are other businesses where you might just be paying [the worker] to sit at home. That is the intent of the program — to bring employees back onto the payroll.”

Nicholas said it is important employees receive wages while mandatory closures are in effect, but employers should have the option to use a greater share of PPP money to support revamping business operations.

“Some would argue that wasn’t what the law was intended, that it was intended to get employees back on the payroll as soon as possible,” he said. “I don’t see how you could take that position and say this program supports small business.”

With SBA’s PPP and disaster funds exhausted, agency turns to Congress for more

The $349 billion Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs) are tapped out after a hurried and uneven rollout that extended private lenders beyond capacity and left many businesses in peril.

Officials from the Small Business Administration, the federal agency responsible for rolling out both programs, said lenders processed more than 14 years’ worth of loans in less than 14 days.

The PPP launched April 3 with many guidelines still pending, but by April 15, the SBA reported it could no longer approve any loans submitted by private lenders facilitating the PPP until lawmakers approve more funds.

“By law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations,” the SBA said in an official statement this week, urging Congress to appropriate more funding to the programs.

“The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible,” SBA officials said. “We want every eligible small business to participate and get the resources they need.”

Kevin Kuhlman, senior director of federal government relations for the National Federation of Independent Business (NFIB), told Congressional leaders in an April 14 letter that half of member small business owners won’t have the resources to operate their business under current conditions in one to two months, citing a survey conducted in late March.

“As the program operates on a first-come, first-served basis, further delays in appropriations will slow the forgivable loan approval process and lock out those business owners who are only recently eligible to apply such as independent contractors and self-employed individuals,” Kuhlman wrote. “If the funds are exhausted or financial institutions are forced to limit applications, the smallest businesses will be harmed the most.”

Meanwhile, many small business owners are reporting that their EIDL loan status hangs in limbo status. A survey published April 9 from the NFIB showed that half of small businesses have applied for EIDLs, which offers qualifying businesses a $10,000 advance regardless of whether or not they are approved for their full requested loan amount.

Of those survey respondents who applied, only 4% had been approved while the vast majority of applicants still had not received any communication regarding their application. And by April 9, no business owner surveyed had received a loan or a grant, according to the April 9 survey.

“If the SBA is concerned that they cannot fulfill requests due to lack of appropriations, the SBA should communicate that funding issue with the public and request more funding from Congress, rather than limiting loans and grants to small businesses on the brink,” said NFIB President Brad Close in a letter to the SBA. “Small business owners are depleting their reserves and savings trying to keep their workforce intact and pay their bills as they wait for the Emergency Grant and subsequent EIDL.”

Hopes running high for trade-war resolution

As the trade war continues with China, observers in Central Pennsylvania and the Lehigh Valley hope the latest stalemate might budge if and when President Donald Trump meets with Chinese leaders at the international G-20 conference in late June and agree that both countries can resolve their disputes sooner rather than later.

An agreement was supposed to have been reached this spring, but it was delayed after China tried to make last-minute changes that were rebuffed by U.S. negotiators. Trump has since signaled that he would meet with Chinese President Xi Jinping at the economic conference of 20 nations to see if the talks can stay on track for possible resolution this year.

“Tariffs drive up costs,” said Darlene J. Robbins, president of the Northeast PA Manufacturers and Employers Association, which is based in Pottsville. “We want to see the administration be successful for bringing China back to the table.”

Robbins, like others, said that an agreement shouldn’t be made without careful thought, as China has not been playing by the rules for decades.

“No tariff is good,” Robbins said. “But we certainly need a fair and level playing field.”

Pennsylvania observers – from farm interests to manufacturers – note that the strength of the U.S. economy has allowed growth to continue, despite the trade disputes have not undermined growth, at least not yet. Several experts pointed out that the tariffs have helped some and hurt others, so opinions vary. But, they add, a resolution would be in everyone’s best interests.

In a May 15 article, Wall Street Journal reporter Greg Ip, explained how the tariffs are rippling through the economy:
“As with any tax, the person paying the tariff doesn’t necessarily bear its burden,” Ip wrote. “If the tariff is simply passed along to the importer, American businesses or consumers bear the burden. If Chinese exporters cut prices to avoid losing sales, they bear the burden.”

“If imports shift to another country, no one pays the tariff — but Chinese are burdened by lost jobs and Americans by a higher price,” he continued. “And if production shifts to the U.S., some of what Americans pay in higher prices goes to other Americans as wages and profits.”

Some shifting of production already is helping in western Pennsylvania, said David N. Taylor, president & CEO of the Pennsylvania Manufacturers’ Association, which is based in Harrisburg. He pointed to a May announcement, reported by the Pittsburgh Post-Gazette, that U.S. Steel will be investing about $1 billion in western Pennsylvania facilities.

Gordon Denlinger, Pennsylvania director of the National Federation of Independent Business or NFIB, said such news is good for small businesses in the Pittsburgh area. Such a huge investment could create opportunities for new businesses to open and existing businesses to grow, as steel mills ramp up construction and then hire new workers.

“Certainly, small businesses will be benefiting,” he said.

Those positive improvements are important for everyone to recognize, said Taylor, who has been outspoken about how U.S. negotiators have a duty to make sure that any deal with China is fair. For decades, China has been cheating on trade, stealing intellectual property, limiting access to its own markets and conducting espionage – none of which should be accepted by a trade partner, Taylor said.

“Trade is for allies,” he said, adding that he fully supports free trade and open markets. “The principle of reciprocity stands above all others. Our national interest matters. Trade is necessary, but trade is for allies.”

Taylor credits Trump for making sure that any deal addresses the issues head on, though he said the implementation of Trump’s plans “has been messy.”

“He actually has defended our country and our economy against a hostile foreign power,” Taylor said. He isn’t confident that a deal will be reached soon, only because China hasn’t shown a willingness to change.

Mark O’Neill, media and strategic communications director for the Pennsylvania Farm Bureau, agrees that any agreement needs to be “fair and equitable.”

But for farmers, a deal needs to be reached as soon as possible, he said.

Pennsylvania farmers have been struggling for more than five years, predating the tariff crisis. But freer markets had helped, and farmers generally support open markets, he added. The tariffs are hurting farmers, but many farmers agree that there are important principles that need to be worked out with China.

The tensions with Mexico and Canada have had more of an impact on Pennsylvania, O’Neill also said. As long as the deal worked out to revise NAFTA is ratified by all three countries, the agreement will help the state’s farmers, particularly with opening dairy markets in Canada, he said.

“Our famers are very supportive of the current deal and would like to get it signed,” he said. “The political parties need to come together and hopefully they can.”

The North American Free Trade Agreement, which deepened trade among the United States, Canada and Mexico, took effect on Jan. 1, 1994. The Trump Administration sought to renegotiate the deal, saying it was outdated and unfair to U.S. workers. The new deal, called USMCA, was reached late last year but Democrats and Republicans in Congress need to ratify it. In late May, Trump threatened to add new tariffs to goods coming from Mexico unless Mexican authorities do more to stem the flow of people emigrating illegally from Central America into the United States.

Unlike counterparts in other parts of the country, Pennsylvania farmers export very little soybeans, pork and dairy to China. But those who raise such crops still are affected because prices are worldwide, so any changes globally will affect local operations, O’Neill said.

For soybeans, in particular, China cut imports by 97 percent, which means there is an oversupply – and lower prices – “everywhere,” he added.

The administration’s plan to offer financial payments to aid farmers for the duration of the trade talks will help, he said.

“But farmers don’t want payments. They would rather earn the money on an open market,” O’Neill said.

One concern is that supply chains are changing and that could hurt businesses long-term, as well as China’s latest threat to increase the costs of raw materials, said Tom Palisin, executive director of The Manufacturers’ Association, based in York County.

“Once you lose a market, it is hard to get that back,” Palisin said.

So far, a lot of consumers might not have noticed higher costs because some businesses have been holding off on price increases or had been stockpiling supplies until the trade tensions eased, several observers noted.

“But the hope was that the tensions would be short-lived,” Palisin said. “As it drags on, that isn’t always going to be possible.”