Don’t Repeat Mistakes Of 2009


National Federation Independent Business

By Kevin Shivers for Pocono Business Journal

Small-business owners love challenges. The current economic climate is filled with them.  The “twenty-teens” provide the perfect opportunity to look at some decisions from the last decade that may have helped to shape the current economic climate. Let’s hope our policymakers in Harrisburg resolve not to repeat the same mistakes in the new decade.

Uncontrolled state spending
Spending has increased by a staggering 40 percent, double the rate of inflation. Had Pennsylvania held spending growth to inflation and population growth, Pennsylvania in 2008 would have enjoyed $3.8 billion surplus instead of a $2.6 billion deficit.

Bloated Pensions
Taxpayers in 2012 will have to pay a staggering $4 billion to cover pension obligations for state workers and public school employees because of a 2001 law that raised benefits. Pennsylvania is one of the only states to impose a Capital Stock and Franchise Tax, essentially a property tax paid by businesses regardless of whether they are profitable. Gov. Tom Ridge signed legislation in 2000 to eliminate the tax by 2010. Gov. Mark Schweiker’s decision to postpone the phase-out in 2002 set a precedent used by Gov. Ed Rendell to postpone the phase-out in 2003 and raise the tax in 2009.

Supreme Court overturns lawsuit abuse reform law
Lawsuit abuse costs every Pennsylvanian $1,200 a year in higher taxes and prices. In 2003, the state Supreme Court used procedural grounds to strike down Act 57 of 2002, the most dramatic reforms to Pennsylvania’s civil justice system in 50 years. The law modified the legal doctrine of joint and several liability that personal injury lawyers often use to snare as many defendants as possible in search of one with a deep pocket.  Despite a 2002 campaign promise to support the same reforms that were struck down by the Court, Gov. Ed Rendell in 2006 vetoed a virtually identical bill.

Personal Income Tax increase
Boston-based Beacon Hill Institute estimated the 2003 Personal Income Tax increase to 3.07 percent destroyed or prevented the creation of nearly 36,000 jobs and reduced investment, personal income, and disposable income by nearly $2 billion.

Job-killing wage increases
State and federal minimum wage increases have made it difficult for the most vulnerable, least-skilled workers to compete for jobs with higher skilled applicants. The U.S. Bureau of Labor Statistics reports teen unemployment now is at its highest rate in 17 years and African-American teen unemployment is four times the national unemployment rate.

Costly energy mandates
In 2004, Pennsylvania enacted a law that requires energy companies to generate 18 percent of their electricity from alternative sources like wind and solar. The Pennsylvania Utilities Commission estimates that solar and wind energy are 700 percent and 23 percent more expensive than coal, respectively.  Energy suppliers will inevitably pass these costs on to consumers. A bill under debate in Harrisburg would raise that threshold even higher and raise utility bills by $1,600 per household.

Costly sole-source contracting
Rules changes made in 2003 by the Rendell administration have made it impossible for small businesses to compete for state contracts.  State Auditor Jack Wagner reported the lack of competition, transparency and accountability in the state’s contracting process have cost taxpayers millions.

– Kevin Shivers is the Pennsylvania State Director of the National Federation of Independent Business in Harrisburg. Shivers has nearly 20 years of experience in the state’s legislative and political process. He serves as NFIB’s chief Pennsylvania lobbyist and leads the organization’s grassroots and political activities.  He can be reached at (717) 232-8582 or Kevin.Shivers@NFIB.ORG.