Pennsylvania Business Community Says 'No State Budget Groundhog Day'

HARRISBURG, Pa., Feb. 2 /PRNewswire-USNewswire/ -- More than thirty business organizations representing nearly 5 million non-farm, non-government private sector jobs assembled in the state capitol rotunda on Groundhog Day to say, "We don't want to wake up morning after morning to the same news in 2010!"  The Groundhog Day reference to the Bill Murray movie that made Punxsutawney world famous was used by business leaders to remind lawmakers and Governor Rendell that another late budget with increased spending and higher taxes would not be acceptable to them.

"In 2009, we suffered a protracted budget process that went 101 days beyond the deadline.  The gap between spending and expected revenues was filled with new and additional taxes that will cost the Pennsylvania business community about $2 billion over the next five years before modest – but much needed – tax reforms really take effect," said Pennsylvania Business Council President & CEO David W. Patti.  

Robert Wonderling, president and CEO of the Greater Philadelphia Chamber of Commerce said, "For Pennsylvania to weather the economic downturn and emerge a stronger, more vibrant Commonwealth, leaders in the public and private sectors must work together to address the challenges we face with the determination to make responsible choices, and the fortitude to move Pennsylvania ahead."  Wonderling, a former state Senator, said the business community hopes to work with state policymakers "to create a more competitive business tax climate that will promote business growth and job creation. Business leaders in our region and across Pennsylvania agree that tax competitiveness is a key element to the state's economic recovery and resurgence."

Steve Samara, president of the Pennsylvania Telephone Association reminded listeners that when the same group convened in the capitol in January 2009, "Pennsylvania's unemployment rate was 6.1%.  By year end [it was] 8.9%.  Many of our job creating industries … are hurting from the recession.  Eleven (11) Pennsylvania cities are now in 'distress' seeking relief under Act 47.  Others are on the verge.  A looming public pension crisis further threatens our fiscal health." Samara said that last year, the group implored state policymakers to deal with the budget and increase the number and quality of jobs in the Commonwealth through eight steps:

1. Don't increase taxes on the job creators.
2. Cut spending now to get our budget in line with our revenues.
3. Empower a "Grace Commission" to address costs.
4. Limit General Fund spending growth over the long-term.
5. Limit the issuance and use of irresponsible debt.
6. Adopt zero-based budgeting.
7. Reinstate "sunset" review and termination.
8. Conduct performance audits of existing programs.

"Those eight strategies," said Samara, "remain important in the preparation of Pennsylvania's future budgets."

Speaking for the coalition and especially smaller firms, Donna Partin, vice chair of NFIB/Pennsylvania Leadership Council urged policymakers to finish this year's budget on time. "But that does not mean a budget should be passed in a form that requires higher taxes or other business costs that threaten Pennsylvania's fragile economic climate," added Partin.  The small business advocate said the protracted budget process that went more than three months past the due date hurt many people.  "Many businesses who sold goods to or performed services for the state or state-funded social service agencies were not paid for months.  Other firms postponed equipment purchases or hiring decisions as they waited for policymakers to finally decide tax changes that would affect their bottom lines."

Gene Barr, vice president of the Pennsylvania Chamber of Business and Industry said, "Pennsylvania taxpayers … face the 11th highest overall tax burden in the nation … [and] cannot be expected to continue to fund state government's ballooning rate of growth."  According to Barr, "A study conducted in 2009 reveals that 78% of the burden of any increase in business taxes in Pennsylvania would ultimately be paid by workers through fewer and lower-paying jobs and by consumers through higher prices."  The state Chamber executive commended lawmakers who opposed higher taxes in 2009 and called on policymakers to understand that, "Higher taxes and bigger government hurt Pennsylvania's ability to be competitive."

"Harrisburg needs to stop spending money faster than Pennsylvanians can earn it," explained David N. Taylor, executive director of the Pennsylvania Manufacturers Association.  "Pennsylvania's budget problems start with a spending problem," Taylor reminded listeners. "It is likely that the current budget deficit will be at least $400 million [and] our current budget is balanced by some $2 billion in federal stimulus funds that will not be available in the future."  Adding to the bad news, Taylor reported Pennsylvania has an Unemployment Compensation Fund debt approaching $2 billion and a looming increase in pension fund liability of $5 billion.  "We need an austerity budget in FY 2010-2011 that reduces expenditures to meet revenues," Taylor concluded.

Pennsylvania's business community recognizes that it "needs to be part of the solution," said Daniel R. Tunnell, president and CEO of the Pennsylvania Broadband & Cable Association.  Tunnell urged policymakers to convene a private sector panel of executives, modeled along the lines of President Reagan's Private Sector Survey on Cost Control, known as the "Grace Commission," to recommend ways to reduce waste in government programs.  Tunnell said the group endorses similar efforts such as two resolutions under consideration in the state Senate.  "If Pennsylvania is to remain competitive in the world economy, it is essential that government provide services in the most efficient and effective manner possible, and the creation of this Commission can do much to assist in the endeavor," commented Tunnell.

David McCorkle, president and CEO of the Pennsylvania Food Merchants Association told listeners there are other steps Pennsylvania can take – many of which require no state appropriations – to make the state more competitive, more business friendly and a place where jobs are created.  "If we grow Pennsylvania's economy, business and personal tax revenues collected by the state will grow without tax rates being raised," offered McCorkle.  Suggestions included:

• Reduce regulatory burdens and obstacles to growth.
• Ensure health care availability and affordability for individuals and employers.
• Eliminate or reform prevailing wage and labor practices that drive up the cost of public projects.
• Enact reforms to make the state's legal system fair, predictable, and even-handed.

McCorkle was somewhat critical of "special deals, one-off economic development programs, and tax incentives [that] seldom have a real long-term impact on job creation.  Pennsylvania," said McCorkle, "is better off growing its economy and jobs by working to make the Commonwealth more competitive with other states and more competitive with other countries."

Greater Pittsburgh Chamber of Commerce President Barbara McNees summed up the position of the business community. "In order to be poised to take advantage of a recovery, Pennsylvania employers need to have consistent and predictable tax and regulatory policies. We can set the stage to recover more quickly than our competitor states by continuing the process of more efficient government with no additional taxes and cost cutting measures that produce a state budget on time and within the revenue constraints of these economic times."

Pennsylvania Competitiveness Council

(These organizations have all signed-on to the basic sentiment of the statements made today, but acknowledge some differences on positions and priorities on budget specifics.  Check with individual associations for more information. )

Associated Builders & Contractors, Inc., Keystone Chapter

Associated Pennsylvania Constructors

Associated Petroleum Industries of Pennsylvania

Broadband Cable Association of Pennsylvania

CompetePA Coalition

Electric Power Generation Association

Energy Association of Pennsylvania

Greater Philadelphia Chamber of Commerce

Greater Pittsburgh Chamber of Commerce

Insurance Federation of Pennsylvania

NFIB/Pennsylvania

PennAg Industries Association

Pennsylvania  Chamber of Business and Industry

Pennsylvania Aggregates and Concrete Association

Pennsylvania Association of Community Bankers

Pennsylvania Automotive Association

Pennsylvania Bio

Pennsylvania Builders Association

Pennsylvania Business Council

Pennsylvania Chemical Industry Council

Pennsylvania Chiropractic Association

Pennsylvania Coal Association

Pennsylvania Credit Union Association

Pennsylvania Food Merchants Association

Pennsylvania Institute of CPAs

Pennsylvania Manufacturers' Association

Pennsylvania Newspaper Association

Pennsylvania Oil & Gas Association

Pennsylvania Restaurant Association

Pennsylvania Retailers' Association

Pennsylvania Telephone Association

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SOURCE Pennsylvania Business Council