PENNSYLVANIA Business Roundtable Department of Community and Economic Development Secretary Responds to Roundtable News Story by Dennis Yablonsky
The Pennsylvania Business Roundtable describes itself as “an
For example, the Pollina Report methodology is clearly biased
association of CEOs of large Pennsylvania companies . . . [that] in favor of “right to work” states; this being the second highest
understand how changes in the world and national economies will criteria under “Stage I Factors.” This is evidenced by the fact that
affect Pennsylvania, and how the public and private sectors can nine of the top ten ranked states are “right to work” states. While this
work together to promote economic growth.”
is certainly an issue that businesses consider, in my almost four years
As Secretary of the Department of Community and Economic as Secretary of DCED, I have yet to encounter a business reloca-
Development (DCED) for the Commonwealth and a former CEO tion or expansion project where the “right to work” issue has been
of a private sector company, I share this global outlook and value a deciding factor in a business decision-making process.
the Roundtable’s input in promoting greater public-private coop-
It is also evident that the Pollina Report methodology gives
eration to spur economic growth in Pennsylvania.
extra weight to factors of concern to large corporations. This
That being said, I must disagree with the July 24th edition of emphasis discounts the fact that the majority of jobs created in
the Roundtable Newsletter’s report on the Commonwealth’s eco- our economy are created by small businesses.
nomic competitiveness, as assessed in a report by Pollina Corpo-
Finally, and perhaps most importantly, the time period that
rate Real Estate, Inc. The Pollina Report simply does not present the Pollina Report selected for its statistical analysis of factors
a fair and balanced evaluation of Pennsylvania’s competitive po- such as job creation/loss, infrastructure and quality of life does not
sition and in particular what has been accomplished in the past take into account current information that would otherwise reflect
the dramatic and positive impact that Governor Rendell’s eco-
The Pollina Report is one of many issued by organizations nomic policy and program initiatives have had on the state.
that attempt to rank cities, states and nations in terms of com-
More important than the statistical criteria for the selected
petitiveness and business climate and a variety of other factors. analysis is the reality of what is being done to return Pennsylvania
Many of these reports attempt to draw conclusions based on an to economic vitality. Here, the evidence paints a far different and
objective evaluation of economic and other data. However, oth- more positive picture.
ers have inherent methodological biases that undermine the qual-
Since taking office in 2003, Governor Rendell has worked
ity and reliability of their results. The Pollina Report, unfortu- with the Legislature to enact an economic stimulus program de-
nately, falls into this second category. Study: Nuclear Power Creates Millions in Economic Benefits
Nuclear energy’s star is rising again with the ongoing volatility in the fossil fuels market. Now a new study shows that nuclear
power brings other economic benefits as well.
Exelon Nuclear’s three generating plants in Pennsylvania increased the state’s economic output by more than $229 million
in 2004, not including the value of the electricity the plants produce, according to a recently released study.
With the value of the power included – the method used by most economic impact studies – Exelon Nuclear’s positive
impact to the state’s economy increased to $2.6 billion in 2004.
The study was conducted by the Nuclear Energy Institute in Washington, using a model developed by the federal government.
It analyzed employment and production data from Exelon and economic data from Limerick Generating Station in Mont-
gomery County, Peach Bottom Atomic Power Station in York County and Three Mile Island Unit 1 (TMI) in Dauphin County, the
Commonwealth of Pennsylvania and the federal government.
“We have long known that our nuclear plants generate electricity at low cost and with no harmful emissions,” said Rich
Lopriore, Exelon Nuclear Senior Vice President. “Exelon Nuclear is very proud that these plants are also powerful economic
engines for their communities and the Commonwealth.”
The study’s 38-page report, Economic Benefits of the Exelon Pennsylvania Nuclear Fleet, contained the following major
Direct and indirect compensation from the Exelon Nuclear plants resulted in $293.1 million in labor income in Pennsylvania in
signed to reinvigorate the Commonwealth’s economy. The pro- new projects in 2005 and the top location for manufacturing
gram includes business tax reductions totaling $1.1 billion annu- projects in all of the US and Canada.
ally. These tax cuts have been designated in large measure to assist
From, December 2004 to December 2005, Pennsylvania had
the manufacturing sector and encourage businesses to invest in a net gain of 5,034 small businesses.
innovation and increase Pennsylvania’s global competitiveness.
A record number of more than 750 companies have made
These business tax cuts have improved Pennsylvania’s
commitments to over 71,000 new jobs in the Commonwealth in
rankings in each of the last three years as reported by The Tax
Foundation, a 70-year-old bi-partisan tax policy organization in
In the manufacturing sector alone, the Governor’s Action
Washington, DC. The Foundation reports that the Commonwealth Team has completed 425 projects since January 2003, projects
improved significantly to rank 16th best in the nation in 2005.
that will create more than 34,000 jobs. Of these projects, more
Among other things, the Pollina Report asserts that unfavor- than 25 percent involved new companies relocating to Pennsylva-
able workers’ and unemployment compensation rates affect the nia. Not only do these companies find the business climate and
Commonwealth’s business climate. Curiously, the study failed to
economic development programs far from mediocre, they are willing
note that unemployment compensation rates have been reduced
by $200 million and that worker’s compensation costs have been • The Beacon Hill Institute, an economic policy center at Suf-
reduced by over $100 million since the Governor took office.
folk University recently ranked Pennsylvania 11th among states for
The Report also cited poor infrastructure and high job losses competitiveness in the technology sector.
as factors contributing to Pennsylvania’s low rating.
Site Selection Magazine, the “bible” for relocation ranked
The reality is that the Governor’s Economic Stimulus Plan
Pennsylvania 6th in new projects, 4th in the nation for manufactur-
includes more than $1 billion for infrastructure improvements
ing projects and #1 in the Northeast as a host for new and relo-
across the state. As for jobs, in just the past three years, over cated businesses.
132,000 new jobs have been created in Pennsylvania and the
Given this, most business people would be surprised by a
number of Pennsylvanians at work is now at an all-time high.
number of comments associated with the Pollina Report, includ-
The Corporation for Enterprise Development recently reported
ing a reference to tax changes made by the Rendell Administra-
that Pennsylvania improved from 32nd in 2002 to 6th nationally in tion as “mini steps.” It is hard to fathom how $1.1 billion in tax
2006 for volume of jobs created by start-up businesses.
cuts can be described as a “mini step.”
Finally, the Pollina Report asserts that “mediocre economic
We welcome factual analysis of our economy and sugges-
development programs” are a factor in Pennsylvania’s low show- tions for improvements to our business climate. Unfortunately,
ing in the study. There is no credible evidence to support this the Pollina Report and the related Roundtable commentary do
conclusion. In fact, Governor Rendell’s Economic Stimulus Plan not paint an accurate picture of the Commonwealth’s economy
has received numerous accolades from trade publications and
and are of little assistance as a springboard to the active engage-
has resulted in dramatic improvement in new business formation
ment of the Roundtable in working with us in a non-partisan
in the Commonwealth and business retention and relocation.
fashion to identify and solve the economic challenges that face
This is clearly illustrated by the fact that:
this Commonwealth. We encourage the Roundtable to become
IBM Business Consulting Services, an organization widely
partners with us as we continue to strive to advance Pennsylvania’s
recognized as the preeminent leader in the field of global site
selection recently named Pennsylvania the #1 destination for
Exelon Nuclear spent $76.2 million in Pennsylvania on materials and supplies.
The operation of Limerick, Peach Bottom and TMI and the secondary effects of those plants account for 4,003 jobs in Pennsylvania.
The plants employ a total of 1,903 people (not including full time security and other contract personnel).
The Exelon Nuclear plants generate $5.9 million in state and local tax revenue each year. Adding the economic activity generated by
the plants through increased business, corporate, payroll and personal taxes results in a total state and local tax impact of $19 million.
Key sectors of the local economy are also supported by the three plants’ large employment base. Spending by plant employees
boosts the sales and work forces of these industries, typically operated by local, small-business owners. Statewide impact of
employee spending in 2004 includes: Industry Jobs Created
Physicians, dentists, health care providers $9.2 million
Together, Limerick, Peach Bottom and TMI generated about 45.4 million megawatt-hours of electricity in 2004, enough power
for nearly 5 million households. This low-cost electricity helped keep energy prices affordable in Pennsylvania. In 2004, the average
production cost for the three plants was 1.15 cents per kilowatt-hour, compared with an average production cost of 2.47 cents per
kilowatt-hour for all other electricity generators in Pennsylvania. Production costs represent the operation, maintenance and fuel
costs of the plant. They do not include depreciation, interest or ongoing capital costs.
The research report is intended to provide citizens with a better understanding of the positive economic impact Exelon Nuclear’s
Pennsylvania plants and their employees have in Montgomery, York and Dauphin counties, the Commonwealth of Pennsylvania, and
the United States. Copies of the report are available by contacting Exelon Nuclear Communications at (610) 765-5530. Statewide Infrastructure Study Due Next Month As Special Transportation Commission Wraps Up Work in Harrisburg
The special transportation commission examining the state of Pennsylvania’s transit, systems, roads and bridges is due to file
a report with the Governor’s Office and the General Assembly by November 15. The nine-member Transportation Funding and
Reform Commission held its last ‘listening meeting’ in Harrisburg last month.
President of the Business Roundtable, Michael T. McCarthy said that the business community was anxious to see the final
report, which is expected to list suggested solutions for funding transit systems and highways in the future.
“One of the keys to business growth in any state is a solid and reliable transportation infrastructure,” McCarthy said.
“Policymakers understand that we need to improve our transportation systems.”
The Commission did issue a preliminary report in late August. Among the findings:
*Pennsylvania’s funding sources for highways and bridges are not keeping pace with construction cost increases.
*Despite increases in federal funding and bridge funding, Pennsylvania lags behind the national average percent increase by
one-third, which equates to $155 million per year.
*Pennsylvania has more than twice as many structurally deficient bridges as the national average.
*Focusing investment on high-volume major highways has left insufficient resources to address critical needs on the
Commonwealth’s 21,000 miles of secondary roads, 35 percent of which are rated “poor.”
*Lack of funding has precluded investments in technology, such as incident warning systems and motorist information
systems, which could help ease congestion.
The Commission did suggest some preliminary reforms.
*State funding is used to maintain the core existing system. Enable local funding options to pay for expansion.
*Dedicate funding from sources that grow with inflation.
*Provide market-based performance incentives to transit agencies that improve efficiency of service in the core existing
*Create a local taxing authority for transit.
*Streamline the existing funding structure.
*Use prudent bond financing for long-term capital needs.
*Explore private/public partnerships, including sale/lease of assets and use of toll revenues. Visit us at www.paroundtable.org