Pa. busi­ness own­ers to gov­ern­ment: Leave us alone

Daily Local News (West Chester, PA) - - OPINION - Low­man S. Henry Colum­nist

It was a sim­ple, yet re­veal­ing sum­mary of the prob­lems plagu­ing Pennsylvania’s busi­nesses. “Please stop try­ing to ‘fix’ it,” the busi­ness owner begged. “Leave us alone.” That plain­tive plea came as three new stud­ies show our state’s econ­omy is sag­ging un­der the weight of new reg­u­la­tions, higher taxes and un­sus­tain­able gov­ern­ment spend­ing.

Re­cov­ery from the Great Re­ces­sion of 2008-2009 has been one of the slow­est in his­tory. But, some states have bounced back faster and far­ther than oth­ers. Pennsylvania is not one of those states. The Fall 2016 Key­stone Busi­ness Cli­mate Sur­vey con­ducted by the Lin­coln In­sti­tute of Pub­lic Opin­ion Re­search found half of the busi­ness own­ers/chief ex­ec­u­tive of­fi­cers sur­veyed say­ing the state’s busi­ness cli­mate has got­ten worse over the past six months, and only five per­cent re­port­ing im­prov­ing busi­ness con­di­tions.

Like other states the peo­ple who ac­tu­ally run busi­nesses re­ported a dra­matic de­te­ri­o­ra­tion in eco­nomic con­di­tions in Pennsylvania dur­ing the Great Re­ces­sion. Op­ti­mism re­turned briefly dur­ing the Cor­bett Ad­min­is­tra­tion, but tanked less than three months into Gov. Tom Wolf’s ten­ure.

Gov. Wolf be­gan his ad­min­is­tra­tion push­ing for his­toric in­creases in both state spend­ing and in taxes. The Repub­li­can­con­trolled Leg­is­la­ture suc­cess­fully de­railed that ef­fort last year, but then caved into $1.4 bil­lion in higher spend­ing this year — earn­ing the dis­ap­proval of 86 per­cent of the own­ers/CEOs. All of this cre­ates a cli­mate of un­cer­tainty leav­ing one owner to com­ment: “We ex­pect another shoe to drop mak­ing it dif­fi­cult to op­er­ate in Pennsylvania.”

The big­gest shoe that hasn’t dropped is who will pay to bail out Pennsylvania’s mas­sively un­der­funded pub­lic pen­sion sys­tem. Busi­ness own­ers fear a sig­nif­i­cant por­tion of that bur­den will fall upon them. And the prob­lem is, to use a cur­rently pop­u­lar word, huge.

The Amer­i­can Leg­isla­tive Ex­change Coun­cil (ALEC) re­cently re­leased a study of state pen­sion sys­tems en­ti­tled “Unac­count­able and Un­af­ford­able.” It pegged Pennsylvania’s un­funded pen­sion li­a­bil­ity at nearly $212 bil­lion. The com­mon­wealth has amassed the 44th largest un­funded pen­sion li­a­bil­ity among the 50 states.

Com­pound­ing the prob­lem is Pennsylvania has lit­tle room in which to ma­neu­ver in find­ing new rev­enue streams (taxes) to fund the pub­lic pen­sion sys­tem. The Tax Foun­da­tion’s State Busi­ness and Tax Cli­mate In­dex found we have the 24th high­est state tax bur­den in the na­tion. We al­ready have the most dam­ag­ing taxes on the books: the Per­sonal Net In­come tax, Cor­po­rate Net In­come tax, and a broad-based state sales tax. Al­ready suf­fer­ing from a poor tax cli­mate, any move to ex­pand, in­crease or cre­ate new taxes would fur­ther erode our com­pet­i­tive­ness.

These fac­tors weigh heav­ily on the minds of busi­ness own­ers/CEO as they con­sider lo­cat­ing or ex­pand­ing in Pennsylvania. Forty per­cent said Gov. Wolf’s pro­posed tax hikes have caused them to not ex­pand their busi­nesses. That fac­tor was sec­ond only to the ex­plo­sion of new fed­eral reg­u­la­tions in im­ped­ing busi­ness growth.

Why should non-busi­ness own­ers care about all of this? Busi­ness re­lo­ca­tion into Pennsylvania and the ex­pan­sion of ex­ist­ing busi­nesses will re­sult in the cre­ation of new jobs. Penn’s Woods has lagged the na­tional av­er­age in job cre­ation in large mea­sure due to state taxes and reg­u­la­tions. The 2016 Key­stone Busi­ness Cli­mate Sur­vey found 21 per­cent of the re­spond­ing busi­nesses re­duced their em­ployee com­pli­ment over the past six months while only 11 per­cent added em­ploy­ees.

Thus Pennsylvania con­tin­ues on a down­ward spi­ral. And there is lit­tle op­ti­mism among those on the front lines of busi­ness ac­tiv­ity in the state for im­prove­ment at any point in the near fu­ture.

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