Business Reaction to Pennsylvania Governor's Economic Stimulus Package Not So Favorable

Pennsylvania Gov. Ed Rendell has gotten good play in the press about his proposed new economic stimulus package, but what do Pennsylvania businesses say about the plan?

Pennsylvania's business leaders raised a skeptical eyebrow last Tuesday at Rendell's ambitious $2 billion bond-financed plan to drive the state's economic revitalization.It would be better if Rendell cut taxes before looking at other solutions, said Jim Panyard, head of the Pennsylvania Manufacturers' Association.

All well and good, were it not for the fact that the average taxpayer will end up paying for the bonds through a 33 percent increase in the personal income tax, said Kevin Shivers, state director of the National Federation of Independent Businesses. ''This proposal breaks the bank, and our members have some serious concerns,'' he said.

The conservative Commonwealth Foundation, long an opponent of government spending, condemned the plan as wasteful of scarce taxpayers' dollars.

What is our view? State and local governments must be cautious with their spending during these tough economic times, but at the same time, they must continue to look at innovative solutions to jumpstarting their ailing economies. Is borrowing $2 billion the answer for Pennsylvania? Probably not. At the same time, some of Rendell's proposals strike us as deserving further investigation and support.

There are no short term fixes for state and local economies. Pennsylvania, like other states, will need to carefully work its way out of these difficult economic times. Ultimately, it is private business investment and consumer spending that will bring about a rebound in state and local economies. Managing costs of doing business remain important for all states, but especially higher cost states like Pennsylvania and Ohio. Pennsylvania officials should give more attention to these issues.

Is a tax cut the answer for Pennsylvania economic development? We don't think that will bring much relief to individuals or businesses in the short or intermediate terms either. What action should be taken? Manufacturers need to give more attention to long term innovation, new product development and global market positioning if they are going to capitalize on new market opportunities related to the emerging knowledge economy. That is where we would suggest giving greater attention in Pennsylvania. Also, that is where state and local economic development organizations should be focusing attention. Recently, we developed a new framework to help manufacturers capitalize on knowledge economy opportunities. Contact us for more information. Send us an email here.

Go here for more details on business reactions to the Pennsylvania economic stimulus proposal.