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Fiscal cliff causing unease for Washington County businesses

Uncertainty causing many to remain in limbo

December 13, 2012|By CALEB CALHOUN | caleb.calhoun@herald-mail.com

With the fiscal cliff less than three weeks away, one area bank is accelerating its dividend payments, and a local business poised to hire more people is holding off to see what happens at the start of the year.

Susquehanna Bancshares Inc. Chairman and CEO William Reuter said Thursday that Susquehanna Bancshares issued a statement Tuesday saying the 7 cents per share 2013 first quarter dividend will be paid on Dec. 31, “due to the potential change in tax rates that would apply to dividends in 2013.”

“We typically would pay our shareholders in February for the first quarter,” Reuter said. “We are paying them in December to keep their tax rates low.”

According to published reports, dividends will be taxed at the same level as wages and salaries in 2013 if no action is taken by the federal government before the new year. That means the current top tax rates for dividends, 15 percent, will jump to 39.6 percent.

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The looming fiscal cliff is affecting Glessner Alarm and Communications, which is looking to expand after recently purchasing a local computer company, Neal Glessner, president of the company, said Thursday.

Glessner said the actions taken in Washington could affect his decisions.

“What happens will determine how aggressive our growth strategy will be and ultimately how many people we hire,” he said. “We’re waiting to see how the economy does at the start of the year.”

Hoffman’s Quality Meats owner Mike Trippett said what happens with regard to the fiscal cliff also could affect his decisions.

“What happens could affect the limited reinvestment capital we have, and you have to set your priorities,” he said, adding that when dealing with an issue such as the fiscal cliff, “You plan for the absolute worst and hope for the best.”

The fiscal cliff is a metaphor for across-the-board tax increases and cuts in federal spending scheduled to take effect at midnight, Dec. 31, if Congress and President Obama do not take any action before then.

Hagerstown-Washington County Chamber of Commerce President and CEO Brien Poffenberger said that the lead up to Dec. 31 could cause problems. 

“You’ve got this long run-up where we should be focusing on all kinds of things, be it the retail season around the holidays, increasing manufacturing, responding to consumer demand, but what’s dominating the headlines and the decision-making process is this threat of what’s going to happen,” Poffenberger said.

“If you’re a business looking at 2013 as an opportunity, everything is a question mark,” Poffenberger said.

“How can you make an informed decision and minimize risks, when what should be nonvariables are now variables?”

Reuter said there could be ripple effects if the federal government goes over the fiscal cliff.

“If there’s not a deal I’m worried that our capital expenditures will be delayed, hiring people will be delayed, and you could see a potential slowdown in people’s willingness to borrow money,” he said. “I’m confident we’re going to address this issue before Dec. 31. Markets, businesses, and the American public just don’t like uncertainty.”

Glessner described the situation as “frustrating” and added he was “hopeful but not confident” that a deal would get done before Jan. 1.

“I wish these politicians would realize they’re negotiating people’s livelihoods and it’s more than just a game,” he said. “There are an awful lot of people spending money on accountants and attorneys developing financial strategies and preparing for the worst.”

The private sector is not alone in facing potential damages from going over the fiscal cliff.

The four national parks in Washington County also could be hit hard. The coalition of National Park Service Retirees announced Wednesday on its website at www.npsretirees.org that the fiscal cliff ramifications could include an 8.3 percent cut in park budgets, resulting in up to nearly $190 million in cuts for the National Park Service. That, the website says,  likely could result in the termination of thousands of seasonal park rangers as well as the closure of many parks.

That could affect Antietam National Battlefield, Appalachian Trail National Scenic Trail, C&O Canal National Historical Park, and Maryland Heights at Harpers Ferry National Historical Park.

National Park Service Chief Spokesman David Barna said that members of the agency are not allowed to speak publicly about the fiscal cliff and that media questions are being referred to the Office of Management and Budget of the White House.

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