Disconnect

Columnist : L. Henry

Business leaders, politicians, see PA business climate differently

Listening to all the political ads over the past few weeks it sounds as if Pennsylvania’s economy is on the rebound.  Politicians of all stripes are taking credit for bringing more jobs into the state and for putting us back on the path to prosperity.  But, when you ask the people who actually create the jobs – the state’s employers – they hold a much different view.

The Lincoln Institute of Public Opinion Research conducted a survey of Pennsylvania employers recently and found that only 12% of them think the state’s economy has improved in recent months.  Nearly triple that number, 32%, said business conditions have actually gotten worse.  Only 13% of those surveyed expect the Pennsylvania economy to improve over the coming six months, while 37% actually expect business conditions to continue to get worse.

It is typical for those seeking re-election to view the world with rose colored glasses.  But, the difference between the perceptions of Pennsylvania’s elected class and those who are actually in the trenches creating jobs and trying to make a profit are especially pronounced.  The Lincoln Institute’s Keystone Business Climate Survey has been conducted every six months for the last 12 years, and never has business confidence in the state’s economy been mired at such low levels.

Part of the reason is that employers don’t see their elected officials coming to grips with the problems that directly affect them.  The legislature passed a number of tax cuts last December, only to have Governor Ed Rendell veto the bill.  Likewise, “fair share” legislation which would have limited product liability awards was passed by the General Assembly, only to be scuttled by Rendell’s veto pen.

Rendell has been touting the billions of dollars the state borrowed two years ago to finance so-called “economic development” grants and projects.  However, past Keystone Business Climate Surveys have found this approach to be highly unpopular with most employers.  That is because only a relatively small number of politically connected businesses actually benefit from the program – while all taxpayers are stuck repaying the hefty debt incurred by the state.

Property taxes are another concern of employers, who obviously must own or rent facilities in which to conduct their business.  Reform of the state’s system of property taxation is a major concern of the business community, but 92% in the latest Lincoln Institute poll said they do not expect “meaningful” tax reform to occur.  They also do not see revenue from slot machine gambling as a panacea – only 11% think gambling tax revenue will result in a significant cut in their property taxes.

All of this has resulted in record low approval ratings for both Governor Rendell and the General Assembly.  Only 10% of the employers surveyed hold a positive opinion of the governor’s performance in office, while 84% disapprove of the job he is doing.  Likewise, 72% think the state Senate is doing a bad job and 71% disapprove of the House’s job performance.

Despite the current dour mood of the business community, the Lincoln Institute’s poll did find some underlying reason for optimism.  First, employment levels at most businesses have remained stable or have grown modestly.  Second, winners outnumbered losers in sales figures.

This suggests that if at least a few of the government induced shackles placed on businesses in Pennsylvania were loosened or eliminated the state’s economy could take off.  The Keystone state has been in an unusually long period of malaise, and history would suggest the time is long past for the economy to rebound.  Were state government to actually get its act together long enough to enact meaningful property tax reform, cut business taxes to make Pennsylvania more competitive with other state, and address product liability and medical malpractice issues, the free market would take care of the rest.