A new report on economic freedom released this week by the Fraser Institute ranks Pennsylvania 27th among the 50 states. The report notes that states with the most economic freedom enjoyed a $55,000 average GDP per capita while the least-free states averaged just $48,000—a $7,000 difference per person.
Say you’re working your way through college, supplementing student loans with a part-time job managing inventory at Wegmans. You make a decent hourly wage, but your health insurance benefits are key, saving you thousands per year in premium costs. Then, one Monday, your boss tells you part-timers are no longer eligible for benefits.
Jim VanBlarcom, a busy Bradford County dairy farmer, set a work day aside to come to Harrisburg and tell his story to Gov. Tom Corbett's Marcellus Shale panel. Royalty money from leasing farmland helped him double his dairy herd size, and he's glad the industry's here.
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Is placing 39 out of 50 in any competition acceptable? Most people would say no, which is why a new index published by the American Legislative Exchange Council (ALEC) is so unsettling.
Released on an annual basis, the Rich States, Poor States index ranks states based on their economic performance and economic outlook. In the first category, Pennsylvania performed poorly, ranking 39th. Future economic performance doesn’t look promising either. The authors of the index place Pennsylvania in the bottom ten at 41.
The rankings are based on fifteen different variables that include tax rates, debt service as a share of tax revenue, labor regulations, and tax or expenditure limits. Pennsylvania ranks poorly in nearly all of these areas year after year. As Jana Benscoter of Watchdog points out, Pennsylvania’s economic outlook ranking has never been higher than 33rd.
This isn’t surprising given the dramatic growth of government spending and taxation since 1970 and Pennsylvania’s inhospitable regulatory environment, both of which are roadblocks to job creation and prosperity.
But Pennsylvania doesn't have to continue down this path. If the commonwealth lowers the tax burden on businesses and families, restrains spending growth, and fixes its regulatory climate, we can shed these low rankings and grow an economy that works for everyone.
We're at a watershed moment, with a choice between the largest tax hike in Pennsylvania's history or reducing government spending to leave more in the pockets of Pennsylvanians. It's a choice between prosperity or economic stagnation.
Last week, CF President & CEO Matthew Brouillette appeared on PCN’s Call-In Program with Steve Herzenberg, the Executive Director of the Keystone Research Center, to discuss Gov. Wolf’s costly budget proposal. While Herzenberg defends Wolf’s budget proposal, Matt points to some of the hard realities it will bring to every family in Pennsylvania.
Even though Gov. Wolf campaigned on a promise to not raise taxes on middle class families, his budget proposal would hit them with the largest tax increase in the state’s history.
In attempt to soften the blow of this broken promise, Gov. Wolf wants to implement property tax rebates. Matt explains that even this will fail to help Pennsylvanians since, over the next two years, less than $0.30 of every dollar in new state taxes will be used for property tax rebates.
Rather than put a heavier burden on Pennsylvania’s taxpayers, Matt explains that the government’s focus should be on “creating opportunities for everyone and reduc[ing] the burden of entry into the workplace and the middle class that are trying to grow businesses.”
Watch the full discussion on PCN’s Call-In Program.
The stories continue: more jobs, increased tax revenue and cheap energy, all from the free-market production of Marcellus Shale gas.
Take last week's report from the Central Pennsylvania Business Journal: A study commissioned by Sunoco Logistics says two of its pipeline projects will produce more than 30,000 jobs across Pennsylvania, including as many as 400 permanent positions once the project is complete. The projects are also projected to generate $23 million in personal income tax and contribute $4.2 billion to the state’s economy.
The pipeline project is just one isolated example:
- Dura-Bond’s Steelton plant “plans to add 150 jobs after being awarded a contract to produce $400 million worth of pipeline for the 540-mile Atlantic Coast Pipeline in West Virginia, Virginia and North Carolina,” according to PennLive. The work at the Dauphin County facility is expected to extend through March 2017.
- Sunoco Logistics’ Marcus Hook Industrial Complex — an 800-acre energy hub for the processing, storage and export of natural gas products — continues to expand and add jobs as Delaware County officials work to identify additional business opportunities for it, reports the Philadelphia Inquirer. Sunoco Logistics’ pipelines serve the complex.
- New Jersey’s largest gas and electric utility will decrease the typical residential gas bill by 31 percent in February and March, according to NorthJersey.com. Public Service Electric & Gas “has repeatedly cut the cost of gas to its lowest rate in 14 years as a result of low-cost gas from the Marcellus Shale formation in Pennsylvania and surrounding states,” the website said.
A new tax on Marcellus Shale drilling could put at risk these jobs and countless future projects. The economic benefits from a revived natural gas industry are impressive. Marcellus Shale counties saw more than double the employment growth of non-Marcellus counties last year. While government programs continue to hand out individual grants and loans, they can't compare to the industry's track record of improving employment for entire counties with zero cost to taxpayers. Government programs simply pale in comparison to the revitalization spurred by natural gas.
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.