HARRISBURG - Even as state officials scramble for new sources of revenue to help balance the beleaguered budget, they are coalescing behind a plan to add this item to the long list of Pennsylvania products exempted from the state sales tax: Helicopters.
The little-publicized copter clause emerged yesterday as a component of a tax-code revision being debated in the state House.
And though the overall budget agreement has nearly unraveled, it appears Democrats and Republicans in both legislative chambers, as well as Gov. Rendell, back an idea that holds out the promise, at least, of as many as 300 new jobs.
Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said the proposal was part of an effort to lure Sikorsky Aircraft Corp., one of the world's premier helicopter makers, to expand its operation in Sadsbury Township, west of Coatesville.
Arneson said Sikorsky has told lawmakers it expects to add 300 jobs, with an average salary of about $60,000, at the Coatesville site.
Officials said the move would cost the state little. So few helicopters were sold in Pennsylvania last year that they generated less than $100,000 in sales-tax receipts, an amount that officials believe would be easily offset by an estimated $500,000 in annual income-tax receipts from Sikorsky's new hires.
"It costs $100,000 and it creates 300 jobs," Steve Crawford, Gov. Rendell's chief of staff, said last night. "That's a pretty good trade."
Sikorsky wants to move production of its S-92 commercial helicopters to the Coatesville site to free up more space in its Stratford, Conn., plant for its growing Black Hawk, Seahawk, and other military aircraft business, company spokesman Paul Jackson said yesterday. The S-92 is a hulking chopper used by heads of state as well as companies transporting workers to offshore oil rigs.
Currently, the helicopter's frame and engines are built in Connecticut, and the shells are sent to Chester County for interiors and custom fixtures. The aircraft are then returned to Connecticut for completion of sale.
The legislative proposal would make the sale of helicopters and helicopter parts, installation, and repair tax-free.
Helicopter giant Boeing, which has a plant in Ridley Township, Delaware County, also has pushed for the exemption, officials said.
Sikorsky, a subsidiary of United Technologies Corp., would not say whether it would abandon its plans if the General Assembly failed to pass the tax exemption. "Clearly, we would need to reassess the business case," Jackson said.
A similar effort by the aviation industry, seeking an exemption for all aircraft, came up short last year.
The proposed helicopter tax exemption "is a key part of the decision, absolutely," Jackson said. "We have other facilities too, in Florida and places where there are existing tax breaks. Just from a purely business case, it's a competitive issue."
When the Coatesville facility, formerly Keystone Helicopter Corp., was acquired by Sikorsky in December 2005, it employed just 400. Today, it employs 1,100 people, including 200 contractors, Jackson said.
The proposal comes at a time when state lawmakers are debating whether to tax cigars, smokeless tobacco, small games of chance, and tickets to plays, concerts, museums, and zoos to help fill a gaping budget hole.
As The Inquirer reported Sunday, during the 55-year history of the state sales tax, various industries and interests have persuaded legislators to exempt everything from gold bullion to airline food, candy, and gum.
Coatesville City Council President Martin L. Eggleston said last night that he hadn't heard about the plan to expand the Sikorsky plant but that new jobs would be welcome. "The Coatesville area is struggling with employment. Obviously, 300 jobs would help us, unless they bring in 250 from outside."
The proposed helicopter exemption drew criticism yesterday from one quarter. Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, a liberal-leaning Harrisburg think tank that has studied the sales tax, said adding things such as helicopters to the exemption list is, for legislators, the new WAM - Walking Around Money, the nickname for state grants given out to favored groups in lawmakers' home districts.
"The tax system is like a leaky bucket and legislators keep on putting new holes in it," Ward said. "The best thing they can do is plug the holes and keep the water."