2006 Keystone Business Climate Survey

==Links==
* Lincoln Institute
KEYSTONE BUSINESS CLIMATE SURVEY
Spring 2006
Dour Mood
===Business climate, state government, getting low marks===
Confidence in Pennsylvania's business climate remains shaky, although
it has improved somewhat from last years record low levels. 
Meanwhile, approval of government performance - especially the
Pennsylvania General Assembly - continues to decline. Those are the
key trends to emerge among employers who participated in the Lincoln
Institute's 2006 Keystone Business Climate Survey.
The aborted legislative pay raise and continued inability of the
General Assembly to deal in any meaningful way with the problems
confronting the state have taken a significant toll on its standing
among members of the business community. Employers have historically
not given the General Assembly high marks for its performance. A
year ago the state Senate had a 25% approval rating, with 48% holding
a negative view of its job performance. In the current poll,
approval of the Senate dropped to 9% and the disapproval rating rose
to 72%. Numbers for the House of Representatives were similar:
approval of that chamber's performance dropped from 24% one year ago
to 11% now; disapproval rose from 50% last spring to 71% in April,
2006.
Employers don't just blame the legislature for the state's ills. 
Governor Ed Rendell eked out a 10% job approval rating (up from 8%
last year) against an 84% negative job performance rating (up 4% from
last year.) Other Keystone State politicos whose disapproval rating
was higher than their approval rating include State Treasurer Robert
P. Casey, Jr., (11% positive, 45% negative); and U.S. Senator Arlen
Specter (29% positive, 57% negative). 
On the federal level, mirroring his slide in nationwide polls,
President George W. Bush's approval rating fell from 68% last year to
49% in the spring 2006 survey. The President's negative job
performance rating rose from 28% to 39%. U.S. Senator Rick Santorum
saw his positive job approval rating drop from 56% last spring to 52%
this year, while his negative rating rose from 23% last year to 33%
in the current survey. Federal Reserve Board Chairman Ben Bernanke
made his first appearance on our survey with a 28% positive rating
versus a 9% negative rating. Since he has only been on the job a
couple of months, 63% have yet to form an opinion of the new fed head.
====Business Climate====
The Lincoln Institute found record pessimism among employers in both
2005 Keystone Business Climate Surveys. The first poll for 2006
finds a modest improvement in confidence levels, although they remain
well below the historical average. Twelve percent said business
conditions in the commonwealth have improved over the past six
months; 56% say business conditions remain relatively stable; and 32%
said business conditions have gotten worse. That is down from the
44% who told us last September that business conditions in the state
had declined.
Exactly half (50%) of those participating in the survey expect
business conditions in Pennsylvania to remain about the same as they
are now for the coming six months. Thirteen percent expect business
conditions to improve, while 37% say the Pennsylvania business
climate will get worse. That number is down from the 46% who
predicted a worsening economy in September 2005.
Employment levels are either stable or growing modestly. Seventy-two
percent of the state's employers polled said that employment levels
at their company is about the same now as it was six months ago. 
Sixteen percent reported having more employees, 12% said they have
fewer. Looking ahead six months, 71% are predicting their employment
levels will remain constant, while 21% expect to add employees, and
9% expect to employ fewer individuals.
Winners outnumbered losers in sales figures. Thirty percent reported
sales have increased over the past six months, while 24% reported
decreased sales. Forty-six percent said sales remained constant. 
Looking ahead six months, 50% say sales will likely remain level; 33%
expect sales to rise; and 16% expect sales to drop.
====Issues====
Although Property Tax Reform remains one of the top issues in
Pennsylvania, the state's employers don't expect reforms to
be "meaningful." Ninety-one percent said reforms would fall short of
what they want; only 6% expect property tax reform to have any
significant impact on their operations. Revenue on taxes from
anticipated slot machine gambling operations are not viewed as a
solution to the property tax problem. Seventy-four percent said
revenue from slots taxes would not result in a decrease in their
property taxes, while 11% think they will see a property tax cut as a
result of gambling tax revenue.
In order to reduce property taxes, participants in the Lincoln
Institute's Spring 2006 Keystone Business Climate Survey said they
would support a combination increase in income and sales taxes (30%)
to make up for the lost revenue. Twenty-nine percent would like to
see only a local sales tax and 12% would support only raising local
income/wage taxes. Another 20% feels the current system should not
be changed.
There are significant concerns in the business community over the
impact of a recent U.S. Supreme Court decision that upheld the taking
of residential property by local municipalities to enable private
developers to build higher tax-yielding structures on the land. 
Ninety percent disagreed with that court ruling, 79% strongly so. 
Only 9% agreed with the court's ruling on the use of eminent domain.
When it comes to wages, the state's employers are generally opposed
to an increase in the minimum wage, and in the use of prevailing
wages. Sixty percent said Pennsylvania's prevailing wage law should
be repealed; only 20% favor keeping the law which inflates the cost
of public works projects. Fifty-five percent oppose increasing the
minimum wage - with 44% strongly opposing such an increase. Thirty-
eight percent support an increase in the minimum wage. As a result
of a minimum wage increase, 22% said they would hire fewer employees,
while only 1% said they would increase hiring. Sixty-six percent
said a minimum wage hike would have no impact on the number of people
they would employ.
Pennsylvania's ongoing struggle with medical malpractice insurance
reform is having an impact on employees. Twenty-seven percent of the
employers surveyed said that during the past year their employees
have reported difficulty in obtaining health care due to doctors or
other medical personnel having closed their practice or eliminated
some services as a result of Pennsylvania's medical malpractice
laws. Fifty-nine percent reported having no difficult.
====Methodology====
The Lincoln Institute's Spring 2006 Keystone Business Climate Survey
was conducted electronically from April 2, 2006 through April 25,
2006 via e-mail link to selected distribution lists. As of the
survey deadline, 121 employers had responded to the poll. Complete
numeric results can be obtained at http://www.lincolninstitute.org.
Category:Issues