PACB sits down with Pennsylvania House of Representatives Majority Leader Dave Reed for an exclusive interview to discuss the economy, the state education system, community banks, and more.
Nestled in the heart of Indiana County sits the county seat; Indiana PA. This sprawling swath of commonwealth that could rightly be considered Pennsylvania’s “flyover country” is far from being a dull or ordinary town as some cavalier observers may surmise. It has the distinction of being the “Christmas Tree Capital of the World”, a fact that will delight any small child who anxiously waits for December and the harkening of yuletide joy. Equally as impressive as any 9 foot tall blue spruce is the pride that swells up in residents who share a special kinship of living in the birthplace with one of Hollywood’s legendary silver screen actors; Jimmy Stewart.
From films the likes of “It’s a Wonderful Life” to “The Philadelphia Story”, the filmography of Mr. Stewart is too numerous to enumerate in their entirety for fear of leaving out one or two all-time classics.
Perhaps it was clever foreshadowing on the part of Frank Capra casting Jimmy Stewart as the lead in “Mr. Smith Goes to Washington”, a tale of a quintessential Americana folk hero sent to Washington to usher in an era of good government. But Mr. Stewart would not have the honor of being the most recent Indiana County native to find himself positioned to effectuate good government. Instead that honor goes to recently elected House Republican Majority Leader and Indiana County native Dave Reed.
A true champion of working across the aisle and offering creative solutions to make Pennsylvania economically vibrant, PACB President/CEO Nick DiFrancesco talked with Majority Leader Reed as they toured Indiana’s own “Jimmy Stewart Museum” and met with the senior leadership team of the modern day “Bailey Building and Loan” in Indiana First Bank.
Nick DiFrancesco (ND): You’ve had a very successful career thus far in representing this area. You’ve risen to leadership very quickly. You had a really good background coming up through the chamber and understanding the problems of small businesses and local communities. Tell us some of your perspectives as Majority Leader, a position where you can impact and influence policy.
Majority Leader Dave Reed (DR): It’s important to emphasize that this is certainly an opportunity. It’s an opportunity with the new administration. You know, folks have talked about the Republican-Democrat divided government and viewing it as a bad thing, but I think it could actually be a good thing because it forces both sides to negotiate and have a conversation unlike what has been happening in Washington DC the past couple of years.
Hopefully that conversation and dialogue can get us to somewhere most Pennsylvanians are, and that’s right in the middle. You have 10% of the public at one extreme and another 10% at the other and so our goal is to get to a place where 80% of the public believes we’re making sound policy decisions.
I consider it a great responsibility to be able to represent Indiana County, now for about a dozen years. My wife, Heather, and I have been very blessed to be part of a community that treats each other incredibly well. With three young kids sometimes it can be a struggle and balancing act with both parents working full time, but I still enjoy the part of the job back here more than I enjoy the part of the job in Harrisburg. The part of the job in Harrisburg is what everyone typically thinks of when you’re talking about an elected official, but it’s the work back home I find to be more meaningful. That’s where you’re really tackling the issues like helping folks with problems or getting involved with economic development projects. You really get an opportunity to form a community that can be long lasting.
ND: What are the top two or three goals that you’re hoping to accomplish as a state representative? You have your leadership position but there’s also things you take with you to Harrisburg that you want to accomplish that are not always the broad policy initiatives.
DR: I think it is about the broad policy initiatives. It’s about creating economic opportunities for folks and about creating jobs. It’s about helping people move from poverty to self-sustainability. I actually view government’s role in the 21st century, in a state like Pennsylvania, as we’re really just there to help folks make that transition. We want to make the most of every opportunity. Sometimes folks look at government as, “You need to create a new program. You need to give more money. You need to make sure everybody has a program that will fit every single need they have”.
I actually view government a little bit different. I think what we should be doing every day is finding solutions to make people financially independent from their government so they’re not relying upon their government to solve every problem for them. Rather the government is helping them gain the tools necessary to solve problems on their own and move up the ladder of success and towards self-sustainability.
That’s my broader vision for what we should be focused on every day and certainly there are items related and economic, jobs, and tax policy is focused on that. They’re all for the most part circling around the same issue of how do you help people be financially independent from the government and get them to a point of self-sustaining and create a better life for themselves.
ND: Obviously the economic aspects of the state are a grave concern to everyone and the Governor just released his budget proposal. I would assume one of your goals is to build a better business climate. Some thoughts on where we might go to help Pennsylvania create jobs and get our economy rolling again?
DR: There are a lot of economic philosophies out there. Certainly we tried the stimulus spending philosophy for several years across the country and it didn’t really pan out how folks would have liked it to have panned out. We’re more successful when we look at competitive tax rates for job creators and getting government out of the role of picking winners and losers, which means ending corporate welfare and closing tax loopholes. We have to get to a point where we’re letting businesses fail or succeed based on their own merits, employees, technology and products, not because there’s someone in Harrisburg that is playing favorites with them.
I think you couple that with investing in infrastructure like roads, bridges, water, sewage, internet access and then of course the key is creating a workforce that mirrors the job opportunities that are out there. Not just sending folks through educational programs for the sake of doing so, but mirroring those programs towards the jobs that are available.
When you do those four things combined, that’s when you gain that long term prosperity that we’re really looking at to rebuild our communities and make them sustainable for Pennsylvania families.
ND: One of the Governor’s big initiatives is “Schools that Teach” and wanting to make sure we improve the educational system in Pennsylvania. What are your thoughts on how the Governor and House and Senate Republicans can come together to move our school systems forward?
DR: We all collectively have an interest in good public schools. We’re very blessed here in Indiana County that we have some great public schools. I wouldn’t go so far as to say they’re perfect because you can always find things to improve upon, but they’re very good public schools.
When we have a discussion on education it can’t just be about dollars. There are those that like to focus on the concept that more money will yield better results. Certainly the quantity of dollars you put into the system is part of the discussion, but so is the quality and the product that the system produces. I think we need to talk about how much money is the appropriate dollar to spend on education, where is that money going to come from, like moving away from school property taxes, and we need to look at the cost drivers just like how any business would operate. Pension costs are one of the largest cost drivers for education right now. Most importantly we need to take note of the types of reforms that we can put in the system that will get better results for the children and the communities the schools are operating in.
ND: You brought up the idea of reviewing school property taxes to pay for education costs. Do you think there’s an opportunity to address the property tax issue in a meaningful way in light of what the Governor has come out and proposed?
DR: I do because I believe he is probably the first Governor that views it as a legitimate issue to be dealt with. The last few administrations really didn’t take the issue very seriously. Not that the Governor’s plan is perfect, but it’s at least in the ballpark of looking at a major shift in how we provide funding to our public schools. Moving it away from the homeowner and looking at statewide revenue sources as a means of shifting that burden.
ND: Last year you did a lot of work addressing the issue of poverty in the state and trying to examine the root causes. I know one of the results of that in depth work was looking at allowing Prize Linked Savings in the state for banks and credit unions, now that federal legislation would allow banks to engage in this type of activity. How do you see this proposal enabling more sustainable savings strategies for families?
DR: This is something we had looked at for a couple of years now and we were really restricted by what the federal government would allow to have happen in a state like Pennsylvania. Now that we have that ability, it’s a great opportunity for folks who have struggled to develop good savings strategies and now this offers some incentives for them to do so.
The great part is that it isn’t a government initiative because it is run by banks, like our state’s community banks, where it builds that relationship and helps take consumers from one economic situation up the ladder to a better economic situation. That is essentially what government should be about and I think it is part of the mission of community banks as well.
ND: I think it’s something that we’re here at the Jimmy Stewart museum when you have the quintessential community banker in George Bailey, from “It’s a Wonderful Life”. What do you think is the role that community banks play in Pennsylvania’s economy, as well as towns like Indiana that dot our landscape?
DR: Community banks provide a nice opportunity to fill in the gap in a community where maybe you have the national banks out there playing at one level, but the community banks really have that personal connection with the folks in the community and really know what’s going on within that community. Often times they’re looking at more than just the bank’s bottom line. They’re looking at what’s best for the community, what’s best for the consumer, and what’s best with the individual or the family that they’re dealing with.
I think that’s a unique perspective that really has great value in today’s day and age where a lot of things have become so impersonal with technology and the internet. Community banks really offer that personal relationship.
ND: The budget proposal the Governor unveiled included a significant increase on tax-paying commercial banks, irrespective of asset size. Any across the board tax increase is going to disproportionately impact the smaller institutions, a number of which operate in your district. Considering the economic conditions of our state do you think assessing government subsidies should be considered before industry crushing tax hikes?
DR: When you look at the bank shares tax there have been a number of changes during the last couple of administrations and the last change was talked about being revenue neutral and it didn’t turn out that way, as far as the commonwealth goes. I think the Governor’s looking at a way of getting back to neutrality on the bank shares tax but unfortunately his proposal would amount to, from what I’m told, a 40% increase in bank shares tax for a lot of Pennsylvania based banks. That’s a pretty disturbing number on face value so a lot of the discussion will focus on how you readjust the structure in an appropriate fashion, but not do so in a manner that’s going to completely drive Pennsylvania based banks out of business.
Tim Kronenwetter: You talked a little about the Bank Shares Tax and I think it brings up the issue of how our bank is a mutual institution, as opposed to a commercial bank, and so we fall under the taxing regimen that is the Mutual Thrift Institution Tax. I think a fair amount of people don’t understand the differences between financial institutions and how a policy decision that effects one type of institution could have either a positive or negative impact on the other institutions that are operating under a different governance structure.
DR: There’s an opportunity out there to help folks understand the differences and the different rules that you’re playing under, especially as a closely held mutual institution. Most folks, unless they have a background in the banking industry, aren’t aware of the nuanced differences of the different types of banks. Whether you are paying the bank shares tax or the mutual thrift tax, depending on how you’re structured within the community.
Part of that goes back to educating legislators on the different issues that are faced. You and I have talked about a number of the issues for a few years and it has helped me understand those issues at a deeper level. I’m not sure those relationships exist everywhere within the commonwealth but I think that local perspective is invaluable. Folks just assume all banks operate the same way unless they know differently. It again goes back to the idea of community banks being about relationship based banking.
ND: We spent some time at the Jimmy Stewart Museum. This is quite a community you represent and has been growing for quite some time. Can you talk a little about the local economy because it seems like it wasn’t as impacted as some of the surrounding areas and has really been performing strongly?
DR: We took a dive in the 1980’s and 1990’s when the coal industry moved out of the area, particularly when a major employer with four to five thousand jobs left. We had to rebuild our economy basically from scratch. We went from a dominant player, the coal industry, to a more diversified economy with the banking industry, energy industry, healthcare and the university. Looking at where we’ve come from and where we’re at today, I’d say we have a stronger economy. Having that kind of diversified economy has allowed us to change with the times and I think that’s been a benefit to the school system and to the community at large.
If you look at downtown Indiana, there are very few downtowns that are as vibrant as Indiana and I’ve traveled the entire state. In most of these communities you have every other store front being unoccupied for 3, 5, 10 and even 15 years. Store fronts in Indiana come and go within a couple weeks or months and you just don’t have that in every community.
That’s part of the reason my family and I enjoy the feeling of really being a part of this community and having the opportunity to give back.
George Evans: Do you think it’s important to have some early wins with the Governor and working together to accomplish mutual interests? To reduce the concept polarization that is going on in Washington, to get that electorate, the 80% in the middle, to say ‘well they’re doing something right’. How do you see your side of the aisle wanting to get something done?
DR: That is part of the challenge I face in the leadership position I’m in today because you certainly have both ends of the spectrum represented in Harrisburg. The key is preventing it from turning into gridlock like you have in Washington. I personally think no one benefits from it turning into Washington where the two sides won’t talk to each other and no one wants to work together. I still feel like the state level of government is your last opportunity to really have a true bipartisan working relationship. There are going to be disagreements, and that’s going to happen, but if you can focus on the areas where there can be agreement there’s an opportunity to really get a lot accomplished.
You look at the budget and I think that’s a perfect example. Are we going to increase spending by $5 billion in one year? No. Are we going to increase taxes by $2.5 billion in one year? No. I think the Governor is fully aware of that even though that’s the budget that he proposed. Within his budget there are a lot of items where there is mutual agreement that we want to address be that pensions, school property taxes, or business tax reform. The key will be picking those areas of agreement apart and dealing with them individually and then bringing it back together for a finalized budget product. The numbers to start off with are just off the chart but once you break it down I think you have that opportunity.
ND: You keep an extraordinary schedule with your work so when it’s time to loosen the tie what do you do in your free time?
DR: Apparently what I like to do now is coach tee-ball, spend Saturdays at swim meets, and watch Disney Jr. It’s certainly a much different life with three young kids but it’s wonderful. Pretty much everything my wife and I do outside of the work environment is focused on them in one way or another.
This interview can be found featured in the April 2015 issue of Transactions. Not a subscriber? Visit the Transactions page on this website or call PACB at 717-231-7447 to start receiving the magazine.