Going Down!

Pay Raise Drives Drop in Legislative Approval Ratings

The job approval rating of both the Pennsylvania Senate and House dropped dramatically over the past six months in the wake of the on-going pay raise controversy.  The Lincoln Institute’s Fall 2005 Keystone Business Climate Survey found that 72% of the business leaders surveyed now hold a negative view of the Senate’s job performance, up from 48% last spring; while 71% disapprove of the job being done by the House, up from 50% in the spring survey.

The Keystone Business Climate Survey also found widespread disapproval of the legislative pay raise. Ninety-two percent said they oppose the raise, with 73% indicating they strongly disapproved.  Eighty-three percent of the respondents said the pay raise should be repealed.

The use of “unvouchered expenses” to circumvent the state constitution and take the pay raise early has drawn near unanimous opposition from the Pennsylvania Business community.  Ninety-seven percent said they are opposed to the practice, with 89% saying they strongly disagree.  Not a single respondent voiced support for the use of unvouchered expenses, while 3% offered no opinion.

Eighty-two percent of those participating in the Lincoln Institute survey said they expect the pay raise to become a major issue in next year’s gubernatorial and legislative elections.  As a result of the pay raise issue, 63% expect to see more incumbent legislators than usual lose their re-election bids.

There is strong support in the business community for a constitutional convention to consider fundamental changes to the structure of state government.  Eighty-four percent said they agree that such a convention should be held, while 16% voiced disagreement with the concept.  Of the changes that could be considered, 58% said the size of the General Assembly should be significantly reduced.  Twenty-eight percent offered no opinion on such a move, while 14% said the General Assembly should remain at its current size.

Business Climate Continues to Erode

Business confidence in Pennsylvania’s economy continues to erode according to the Lincoln Institute’s latest Keystone Business Climate Survey.  Only 11% of the Pennsylvania business leaders surveyed said conditions in the state have improved over the past six months, down from the 17% who reported improving conditions in the spring survey, and a significant drop from the 29% positive response in the September, 2004 poll.

There was a spike in the number of respondents who said business conditions in Pennsylvania had gotten worse over the past six months.  Last spring 33% reported worsening business conditions, the September survey found an eleven percentage point jump to 44% reporting deteriorating business conditions. Forty-five percent said business conditions had remained relatively unchanged over the past six months.

The silver lining in past surveys has been that even while reporting a worsening of business conditions over the past six months, most were inclined to be optimistic about the future.  The current survey lacks that optimism.  Forty-six percent said they expect business conditions to continue to worsen over the coming six months, while just 11% said they expect the state’s economy to improve. Another 42% expect conditions to remain about the way they are now.

Employment levels are also down.  Twenty-five percent said they are employing fewer people now than they did six months ago. Fifteen percent said employment levels are higher, while 59% said they remained constant.  There is some moderate optimism looking ahead: 16% say they plan to increase over the next six months the number of people they employ, while 13% are projecting further cuts.

Sales are up at 32% of the businesses whose chief executive officer responded to the Keystone Business Climate Survey, and down at 27% of the companies.  Over the coming six months, 29% are projecting sales to increase – but that is down from the 48% who forecast improving sales when answering the spring survey.  Eighteen percent said they expect sales to drop over the coming six months, and 50% say they expect sales to remain steady.

Despite the economic difficulties, few firms are leaving or moving operations from Pennsylvania.  Just 3% said they moved some of their operations out of the state over the past six months.  Five percent considered moving some of their operations, and 11% considered moving all of their operations.  Only one-half a percent moved operations into Pennsylvania from another state.   Over the coming six months, 85% said they will not consider moving all or part of their operations from Pennsylvania.  Six percent said they are considering moving all their operations from the state, and 9% are considering moving some of their operations.

Job Performance Ratings

The negative view of the economy expressed by business leaders in the Keystone Business Climate Survey has affected the job performance ratings of key political and economic leaders.  President George W. Bush’s job approval rating dropped from 73% in the spring survey to 68% in the current poll.  Federal Reserve Board Chairman Alan Greenspan’s job approval rating saw the biggest drop – from 70% in March to 59% in the current survey.

Among Pennsylvania politicians only U.S. Senator Arlen Specter saw an improvement in his standing with the business community, but his positive job approval rating stood at only 29% in the spring survey, and it ticked up to 34% in the September survey, with a 42% negative rating .  The state’s junior U.S. Senator, Rick Santorum, saw his positive job approval rating drop from 60% in March to 56% in the current survey.  Governor Ed Rendell’s job approval rating dropped into the single digits – just 8% positive as opposed to the 80% who disapprove of his performance in office.

In the race for the Republican nomination for governor, former Pittsburgh Steeler great Lynn Swann received 25% of the vote in the Lincoln Institute Survey, followed by former Lt. Governor Bill Scranton with 14%, State Senate Majority Whip Jeff Piccola with 6%, and former business association leader Jim Panyard (who entered the race while the poll was being taken) received 2%.

Methodology