PMA Bulletin -- June 5, 2013

Corbett Policies Spur PA Economic Resurgence

Over the years, Pennsylvania hasn’t been an exemplar for job creation and economic growth. A new mindset is in order, according to a study that shows that the pro-growth policies of the Corbett Administration have Pennsylvania rising quickly up the ranks.

Overall, the study Rich States, Poor States, by the American Legislative Exchange Council (ALEC) ranks us 34th in the nation, up from 40th just last year. One of the study’s authors, Jonathan Williams, said it’s the highest ranking ever for Pennsylvania and calls the state one of three to watch for future growth.

“Pennsylvania should be very happy with the results. It has earned the highest ranking in the six years we’ve done the study, and it looks to continue to improve,” Williams said. “It’s right there with Michigan (recently became a right-to-work state) and Ohio for old rust belt states that are really making a comeback.”

David N. Taylor, Executive Director of the Pennsylvania Manufacturers’ Association, credits the rapid turnaround to Governor Tom Corbett and lawmakers in the General Assembly who stand for limited government.

“We’re limiting spending, cutting taxes, and keeping the regulatory burden under control,” Taylor said. “This year we have an opportunity to keep the momentum going with more business tax relief, rightsizing state government, and enacting a transportation funding plan that will further energize our economy.”

The transformation is even more pronounced when compared to the woes of one of our neighbors and competitor states: Maryland dropped from 20th to 35th in rankings in just a few years. And it will almost certainly drop even further next year when the study takes into account a new tax in Maryland, which will be collected starting July 1. In the category of job-killing policy decisions, it ranks alongside with the recent call by senate Minority Leader Jay Costa (D-Allegheny)  to retain and increase the Capital Stock and Franchise Tax.

Dubbed the “rain tax”, the new Maryland tax imposes a fee on “impervious space” connected to a house or business. In simple language, homes and businesses will pay a tax on the amount of rain that falls on their properties but doesn’t sink into ground. The money raised from the tax, more than $14 billion, is intended to reduce storm water runoff into the Chesapeake Bay. The trouble is, no one has calculated the extent of the pollution from the runoff, or how much they’ll need to spend to mitigate it, according to Gene L. Burner, President of the Manufacturers’ Alliance of Maryland (MAM).

“Anne Arundel County (encompassing Annapolis) decided it needed one billion dollars. It was a completely arbitrary figure,“ Burner said. “So they decided to work backwards and they calculated the fees according to how much money they wanted to spend.” Burner said that one MAM member, Domino Sugar in Baltimore, will pay at least an additional $100,000 in annual taxes. “Just another in a long line of reasons why we are going to continue losing good paying jobs,” Burner said. “This disconnect down here is just unbelievable.”

Pennsylvania’s recent enactment of job creation polices has the state falling nicely in line with what Rich States, Poor States says the states need to spur development. The sixth edition of the study focuses on the growing momentum in state capitols for fundamental pro-growth tax and pension reform. It shows that nationally, states with competitive tax rates, reasonable regulations, and right-to-work laws were most likely to have a positive economic outlook than states with higher taxes and burdensome regulations.

The data ranks the 2013 economic outlook of states using 15 equally weighted policy variables, including various tax rates, regulatory burdens, and labor policies.

The economic development figures in Pennsylvania support the study’s conclusions.

In an e-mail, Steve Kratz, Press Secretary for the Department of Community and Economic Development, wrote that the commonwealth’s improvement in the ALEC report is a testament to Governor Corbett’s commitment to create an environment in which companies can grow, enacting historic business tax and regulatory reforms, and policies that encourage innovation, job creation and 21st Century workforce training.

“As a result of these policies, more than 125,000 private sector jobs have been created in Pennsylvania since January 2011 and the state’s labor force has grown by more than 100,000 to over 6.5 million,” Kratz wrote.

“The governor has accomplished this while eliminating a $4.2 billion budget deficit without raising taxes. The governor also provided the leadership needed for Pennsylvania to take a balanced approach to Marcellus Shale Development. As a result, Pennsylvania is well-positioned to be a national energy leader and hub of low-cost energy that will drive down the cost of doing business.”

Full ALEC “Rich States, Poor States” info on PA here