Posts Tagged climate

Stagnation: PA business climate remains sluggish


Pennsylvania’s business climate remains sluggish as the commonwealth continues to struggle in the aftermath of the Great Recession.  Business conditions, employment levels and sales have all backslid over the past six months with owners blaming high taxes, government regulation and a lack of skilled workers for the malaise.

The Fall 2016 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research found half of the business owners and chief executive officers survey saying the state’s economy has gotten worse over the past six months, only five percent felt Pennsylvania’s business climate had improved during that time frame.

Comparatively, one year ago 42% felt the business climate had gotten worse, while six percent at that time said it had improved.  There is little optimism that business conditions will improve soon. Forty-four percent say they expect the state’s economy to continue getting worse over the upcoming six months, five percent expect to see an improvement in the business climate.

Along with that pessimistic overall prognosis twice as many businesses report having reduced their workforce as say they have added jobs.  The majority of businesses – 66% – reported that employment levels remained about the same over the past six months.  But, 21% said they have reduced their employee compliment while 11% added employees.  The picture improves slightly as the owners/CEOs look ahead to the coming six months.  Sixteen percent say they plan to add employees, 12% expect to reduce their workforce.

Sales have also taken a hit over the past six months.  Thirty-nine percent said their sales remained about the same from March thru September.  But, 39% reported decreased sales and were off-set by only 21% having reported sales increases.  Looking forward, 51% expect sales to remain stable.  Twenty-Four percent forecast an increase in sales, 23% are braced for a sales decrease.

Factors Impacting Business Growth

Among the factors cited by businesses for why they considered expanding their businesses over the past two years, but decided against expansion taxes and regulation topped the list of barriers.  Onerous federal regulations were cited by 41% of the businesses that considered, but rejected, expansion plans.  Coming in a close second was Governor Tom Wolf’s proposed tax increases cited by 40% as a reason why they did not expand. Pennsylvania’s tax structure was listed by 29% as having frustrated expansion plans.

Thirty-six percent cited onerous state regulations as a barrier to expansion, while another 35% cited the lack of a skilled work force.  Nearly half of the businesses surveyed said they currently have open positions for which they have been unable to find qualified applicants. Forty-two percent say they have been unable to fill one to five jobs; 2% have six to ten open positions; one percent has more than ten jobs unfilled due to lack of qualified applicants.

State Issues

Pennsylvania fiscal condition continues to be of concern to the business owners and CEOs participating in the Fall 2016 Keystone Business Climate Survey.  Eighty-five percent disagreed – 70% strongly so – with Republicans in the General Assembly having agreed to a $1.4 billion spending increase and then raising taxes to enact the current year’s state budget.

Looking ahead to what will likely be another epic budget battle next summer, 92% say the General Assembly must address cost drivers such as pension reform before considering an increase in taxes.  In fact, 34% said the state’s massive unfunded pension liability has caused them to not consider expanding in Pennsylvania.

Among pension reforms being considered is moving state employees from the current defined benefit pension system to a defined contribution plan. Thirty-nine percent of the businesses surveyed said they offer employees a company administered defined contribution plan to which the company contributes.  Only 3% of the private businesses surveyed continue to offer a defined pension plan.  Another 40% offer employees no retirement plans at all.

Earlier this year the General Assembly did pass, and Governor Tom Wolf signed into law, some modest changes to the state’s century-old liquor laws. Business owners/CEOs said those reforms did not go far enough.  Fifty-two percent would like for the state to completely privatize both retail sales and wholesale distribution of alcoholic products.  Another 26% would like to see just retail sales privatized.  Twelve percent said the recent changes were sufficient.

Pennsylvania has an abundant supply of natural gas, but additional pipelines are needed to get that gas to market.  Eight-nine percent agree – 60% strongly agree – that this resource should be developed and more pipelines built.  Nine percent disagree.  Twenty-five percent said easier access to natural gas would be a benefit to their business with an additional 14% saying it would be a major benefit.  Thirty percent said they do not utilize natural gas in their business.

Over the past nine years since the passage of Act 44 the Pennsylvania Turnpike Commission has diverted $5.2 billion to PennDOT to help pay for state highways and public transit.  This has resulted in annual fare increases for turnpike travelers.  Sixty-three percent of those participating in the Fall 2016 Keystone Business Climate Survey said this should end and fare revenue be used only to maintain and improve the turnpike.  Twenty-nine percent felt the sharing of revenue should continue.

Job Approval Ratings

President Barack Obama and Governor Tom Wolf continue to suffer from significantly low job approval ratings among the business community.  Eighty-four percent have a negative view of the President’s job performance; 86% disapprove of the job being done by Governor Wolf.

U.S. Senator Pat Toomey, who faces re-election in November, received a 50% job approval rating against 23% with a negative view of his job performance.  The job being done by U.S. Senator Robert P. Casey, Jr. is viewed negatively by 56% of the business owners/CEOs, 18% give him positive marks.  Likewise, 54% say Federal Reserve Chair Janet Yellen is doing a poor job, 15% approve.

Pennsylvania has three statewide constitutional or “row” offices. Two are serving by appointment, their elected predecessors having resigned after being convicted of crimes.  Auditor General Eugene DePasquale is the surviving official elected in 2012 still in office.  Seventy-three percent have no opinion of his job performance, with 14% saying he is doing a good job and 14% having a negative opinion of his job performance.  Likewise about two-thirds offered no opinions on state Treasurer Tim Reese or Attorney General Bruce Beemer.  Of those who did, 18% give Beemer a negative rating, 6% a positive one while 15% hold a negative view of Reese, 5% a positive view.

As has been the case throughout the Keystone Business Climate Survey’s 22-year history the owners and chief executive officers hold the federal congress and the state legislature in very low regard.  Just 8% approve of the job being done by the United States Senate, 11% approve of the job being done by the U.S. House of Representatives.  Seventeen percent approve of the job performance of the Pennsylvania Senate; 19% approve of the job being done by the Pennsylvania House of Representatives.

Finally, the Lincoln Institute asked participants in the survey who they support for President of the United States and United State Senator from Pennsylvania in the upcoming November General Election.  Seventy-three percent said they will vote for the Republican nominee Donald Trump, 12% support the Democratic nominee Hillary Clinton and 6% say they will vote for Libertarian Gary Johnson.   Republican incumbent U.S. Senator Pat Toomey has the support of 81% of the owners/CEOs, Democratic challenger Katie McGinty has 12% support.

Methodology

The Fall 2016 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. from September 13 through October 5, 2016.  A total of 370 businesses responded to the survey invitation.  Of those 81% are the owner of the business, 14% are the CEO/COO/CFO and one percent a business manager.

Twenty-five percent of the responses came from the Philadelphia/southeastern part of the state; 18% from Pittsburgh/southwestern Pennsylvania; 16% from south/central Pennsylvania; 13% from northwestern Pennsylvania; 11% from northeastern Pennsylvania; 10% from north-central Pennsylvania; 4% from the Lehigh Valley and 3% from the Altoona/Johnstown area.

Complete numeric results are posted on-line at http://www.lincolninstitute.org

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This Week on Lincoln Radio Journal: Business Climate Survey Results


Radio Program Schedule for the week of May 9, 2015 – May 15, 2015

This week on Lincoln Radio Journal:

  • Eric Boehm has news headlines from PAIndependent.com
  • David Taylor of the PA Manufacturers Association is joined by Kevin Shivers and Neal Lesher from the PA Chapter of the National Federation of Independent Business for a Capitol Watch look at results of the Lincoln Institute’s Spring 2015 Keystone Business Climate Survey
  • Lowman Henry has a Town Hall Commentary on the epic failure of liberal public policy in Baltimore

KBCS Spring 2015 PATH

This week on American Radio Journal:

  • Lowman Henry talks with Michael Petrilli of the Thomas B. Fordham Institute about the impact on student achievement of closing under-performing schools
  • Andy Roth of the Club for Growth has the Real Story on Mike Huckabee’s record as Arkansas Governor
  • Eric Boehm and Katie Watson have a Watchdog Radio Report on using cigarette taxes to close state and local budget deficits
  • Lowman Henry has an American Radio Journal commentary on the epic failure of liberal policies in Baltimore

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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Business Climate Optimism Evaporates


Wolf Budget Proposals Deeply Unpopular Among Business Owners/CEOs

After nudging into positive territory last October for the first time since 2004, the outlook of Pennsylvania business owners and Chief Executive Officers has turned sharply negative in the wake of Governor Tom Wolf’s budget proposals. Every component of the governor’s proposed budget “reforms” received a sharply negative response from the state’s job creators in the Lincoln Institute’s Spring 2015 Keystone Business Climate Survey.

Four years of business friendly policies implemented by the administration of former Governor Tom Corbett created a positive outlook from business owners and CEOs for the first time since George W. Bush was still in his first term.  Albeit slight, in October 2014, 19% of the business leaders said the state’s economic conditions had improved during the preceding six months, while 18% felt they had gotten worse.  Six months later, the picture has taken a dramatic turn for the worse.  The Spring 2015 survey found 33% of the owners/CEOs responding that business conditions have gotten worse over the past six months, only 13% say business conditions have improved. Pessimism for the future has deepened, as 44% say they expect the state’s business climate to get worse over the coming six months while just 12% expect the Pennsylvania economy to improve.

Driving the dour mood among the people who actually run businesses – big and small – is a general disapproval of Governor Tom Wolfe’s budget proposals.  A total of 78% disapprove of his proposed budget, with 60% saying they strongly disapprove.  Just 17% gave the governor a thumbs-up; and only 6% strongly approve of his proposed fiscal policies.  Overall, 80% say the governor’s proposed state budget will harm Pennsylvania’s business climate – 56% say it will do significant harm – while 14% think his proposals will improve the state’s business climate.

The state’s job creators are bracing themselves for higher taxes.  As a side note, Pennsylvania’s high tax rates and stringent regulatory policies are viewed by the owners/CEOs as the biggest impediments to conducting business in Pennsylvania.  They now fear that situation is about to get worse.  Seventy-two percent say the proposed Wolf Administration changes to the state’s tax structure will result in them paying higher taxes, 36% say they expect to pay significantly higher taxes.  Only 3% expect their taxes to drop if the Wolf agenda is enacted, while 13% say they expect to pay about the same amount in taxes.  Another 11% don’t yet have enough information to render an opinion.

Cutting the state’s onerous Corporate Net Income Tax (CNI) and eliminating the double taxation brought on by the Capital Stock & Franchise Tax have long been goals of business advocacy groups in Pennsylvania, but the Wolf Administration plan of coupling those cuts with other tax law changes creating a net increase in business taxes has business owners/CEOs opposing the entire proposed package.  Sixty-two percent disapprove of the governor’s proposed business tax plan, 25% voiced approval.

And that was the high point for the governor. Other proposed changes drew even stronger opposition from the business community.  His proposal to increase the state’s sales tax from 6% to 6.6% and to apply the sales tax to a wide array of products and services not currently subject to sales tax drew opposition from three-quarters (75%) of the respondents with 61% expressing strong disapproval.  Twenty-four percent agreed with the proposed sale tax hike.

Raise the personal income tax rate from 3.07% to 3.7%?  Eighty-three percent of respondents to theSpring 2015 Keystone Business Climate Survey said they disapprove, 70% voiced strong disapproval.  Sixteen percent approve of hiking the personal income tax (PIT) rate.

There is also deep suspicion over the governor’s plan to have the state pay a larger share of public education costs (with revenue from a higher and broader sales tax) and allow local school districts to decrease property taxes.  Seventy percent say any drop in property taxes will be temporary, and then property taxes will rise again.  Less than 2% say they expect a significant property tax cut as a result of that proposal while 13% say they might realize a slight reduction in property taxes.  That is offset by the 14% who expect to pay higher property taxes.

Respondents to the survey also now oppose adding a tax on companies drilling in the Marcellus Shale region.  In the Fall 2014 Keystone Business Climate Survey 51% approved of an extraction tax.  Support for that tax dropped to 45% in the current poll, while opposition rose from 44% last Fall to 50% in the current survey.

General Trends

Overall, Governor Tom Wolf has proposed a state budget that would add $4.6 billion in increased spending to the state’s current $29.4 billion budget.  By a wide margin, business owners/CEOs say that is too much.  Eighty-four percent say his spending increases are too high; 11% think they are about right; and just 1% think they are too low.

Government regulation is cited as the biggest barrier to job creation by 64% of the business owners/CEOs participating in the Lincoln Institute’s survey.  That factor is driving the negative mood of job creators in that two of the most aggressive regulators in recent state history now serve as Governor Tom Wolf’s chief of staff and top policy advisor.  Thirty-six percent cited corporate taxation as a barrier to job creation while, 43% blame national economic factors.

Employment levels remained stable over the past six months.  Eighteen percent of the owners/CEOs said they employ fewer people, while 16% said they have increased employment.  Sixty-three percent reported employing the same number of individuals.  Looking ahead six months, 18% say they plan to add employees, 13% expect to employ fewer people.  Sales decreased at 32% of the companies participating in the survey, but increased at 28%.  Looking ahead 35% forecast rising sales, 18% are projecting a drop.

Job Approval Ratings

Governor Tom Wolf received a strongly negative job approval rating in his first appearance in theKeystone Business Climate Survey.  Sixty-nine percent disapprove of the job the governor is doing, while 14% approve.  Only President Barack Obama fared worse among the business owners/CEOs, 87% disapprove of the Presidential job performance with 10% voicing approval.

U.S. Senator Robert P. Casey, Jr. likewise finds himself deep in negative territory as 64% disapprove of his performance in office while 14% approve.  U.S. Senator Patrick J. Toomey fared better, with a 51% job approval rating against a 23% negative rating.  Toomey was the only federal official in positive territory. The owners/CEOs also approve of the job being done by new Federal Reserve Board Chairman Janet Yellen, 41% approve to 26% disapprove.  And U.S. Treasury Secretary Jack Lew drew an 8% approve against 44% who disapprove of the job he is doing.

The legal problems and controversies surrounding Attorney General Kathleen Kane have taken a toll on her standing among the state’s business leaders.  Her negative rating jumped from 49% in the Fall 2014 survey to 62% in the current poll.  Conversely, her positive rating dropped from 16% six months ago to just 7% in the current survey.  Even state Auditor General Eugene Depasquale, the only statewide constitutional officer to avoid scandal, finds himself in negative territory – as 21% disapprove of his performance in office, while 13% approve.  But, 65% offered no opinion.

Legislative bodies at both the state and federal levels continue to be unpopular.  Just 11% approve of the job being done by the U.S. Senate, 79% disapprove.  The U.S. House of Representatives earned a 20% approval rating with 71% voicing disapproval.  The Pennsylvania Senate is viewed positively by 26% of respondents, and 56% disapprove.  The Pennsylvania House of Representatives fared best among the legislative chambers, with a 28% approval rating against a 55% disapproval number.

Methodology

The Spring 2015 Pennsylvania Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. between April 1 and April 28, 2015.  A total of 351 responses were collected.  Of those, 83% were from the owner of a business, 14% from the CEO/COO/CFO.  Less than 2% were from a state or local manager of a business.

Geographically, 27% of the respondents were from southeastern Pennsylvania; 18% from southwestern Pennsylvania; 19% from south central Pennsylvania; 11% from northeastern Pennsylvania; 9% from the northwestern portion of the state; 9% from north central Pennsylvania; 4% from Altoona/Johnstown and 4% from the Lehigh Valley.

Complete numeric results of the poll are available at www.lincolninstitute.org.

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Results of the Public Opinion Focus Group on Educating for Opportunity and Social Impact Financing on November 19, 2014


Compiled by Erik Randolph on behalf of the Lincoln Institute of Public Opinion Research, Inc.
Revised February 2, 2015

ABSTRACT: With the assistance of the Pennsylvania Association of Nonprofit Organizations, the Lincoln Institute of Public Opinion Research convened a public opinion focus group on the issue of social impact financing (SIF) as an innovative approach to using private dollars to fund increases in public programming and reduce the need for costly social services in the future.

 

Social impact financing, also known as social impact bonds or pay for success financing, is an innovative financing mechanism whereby private investors finance social programs with the objective of increasing positive outcomes and decreasing public dollars spent on remedial measures. If the programs are successful in meeting benchmarks specified in the contract and verified by an independent third party evaluator, the investors receive a return on their investments based on the public sector savings. Discussion points included the following:

 

* What is Social Impact Financing?

 

* What types of programs are best suited for Social Impact Financing?

 

* What is the government’s level of involvement?

 

* What levels of government can successfully use Social Impact Financing?

 

* What happens to the savings that are realized through social impact financing programs?

 

* What other non-monetary benefits can result from social impact financing projects?

 

o The use of an independent evaluator can help service providers effectively quantify their programs and benefits and can help public funders reduce wasteful spending to ineffective programs.

 

o The level of collaboration necessary for a successful Social Impact Financing Program requires improved efficiency and collaboration among government agencies and service providers.

 

* What is currently being considered in Pennsylvania and where are we in the process?

 

Public Opinion Focus Group: Beyond Poverty-November 19, 2014 Session 1: Educating for Opportunity: Social Impact Financing: 10 a.m. – 12 noon

 

Background

During the 2013-2014 legislative session, the Majority Policy Committee of the Pennsylvania House of Representatives created the Empowering Opportunities: Gateways-Out-of-Poverty Initiative. This Republican Caucus initiative recognizes that current efforts to address poverty are in need of revision and subsequently searches for opportunities to address barriers that entrap individuals in impoverished conditions and to replicate outcome-based solutions.

 

The initiative is divided into five broad areas for the development of policy and legislative proposals: Outcomes That Matter, Life Skills 101, Benefits That Work, the Essentials, and Educating for Opportunity. With the assistance of the Pennsylvania Association of Nonprofit Organizations, the Lincoln Institute of Public Opinion Research convened a focus group on proposals in the areas of Educating for Opportunity and Outcomes That Matter.

 

The focus group consisted of leaders from the non-profit sector who provide human services to alleviate social problems associated with poverty. The Honorable Todd Stephens, State Representative for the 151st Legislative District of Pennsylvania, presented on the topic of Social Impact Financing (SIF) for early childhood education programs as part of a developing legislative proposal.

 

Social impact financing, also known as pay for success financing, is an innovative financing mechanism whereby private investors use private dollars to fund increases in public programming in order to reduce the need for costly social services in the future. For example, if a program meets specified goals as measured by an independent third party evaluator, then the governmental entity responsible for funding that program pays the investors a return on their investment. If the SIF-funded programs are successful in producing the desired outcomes, governments save money through the averted future costs, more efficient implementation, or both. If the programs do not meet the negotiated benchmarks that result in reduced government spending, the government does not pay a return on the investment.

 

Social impact financing is a fairly new concept. While examples of its implementation are relatively few, they are increasing steadily throughout the United States across a variety of programs. The focus group was presented with some examples, including details describing how New York and Massachusetts utilized the social impact financing mechanism to help fund job training and rehabilitation of former convicts as a way of reducing recidivism. By reducing recidivism rates, the states save money on their criminal justice and prison systems, and a portion of those savings are used to repay the investors.

More pertinent to the legislative proposal being considered for Pennsylvania, Salt Lake City and Chicago have utilized social impact financing to fund early childhood education programs. According to materials provided to the focus group, the Utah program provides early childhood education services to 3,500 children and the Chicago program provides early childhood education services to 2,600 at-risk children.

Make-Up of Focus Group

The leader of the discussion was Rep. Todd Stephens. The session was moderated by Lowman Henry, chairman and CEO of the Lincoln Institute of Public Opinion Research, Inc., and recorded by Erik Randolph, Erik Randolph Consulting. Staff in attendance were Brianda Freistat, Research Analyst, Majority Policy Committee; Ashley Grimm, Legal Counsel for the House Republican Caucus; Jenny P. Stanton, Executive Director, House Majority Policy Committee.

The participants were as follows:

* Anne Gingerich, Executive Director, Pennsylvania Association of Nonprofit Organizations (PANO);

* Blair Hyatt, Executive Director, Pennsylvania Head Start Association;

* Daniel Leppo, Director, Grants Management, Community Action Association of Pennsylvania;

* Caryn Long, Executive Director, Feeding PA;

* Ashlinn Masland-Sarani, Policy and Development Director, ARC of Pennsylvania;

* Britton Miller, Director of Public Policy and Civic Engagement, PANO;

* Michelle Sanchez, Director of Program Evaluation and Reporting, Maternal and Child Health Consortium of Chester County;

* Eric Saunders, Executive Director, New Hope Ministries.

Discussion Points

The following summary is a compilation of the points made during discussion of the focus group and does not necessarily reflect the opinions of all participants.

The concept of social impact financing was generally well-received as a potential new source of funding, and the participants were interested in learning about the idea.

After an overview of the social impact financing concept, a discussion was had on the benchmarks that would need to be met in order to repay investors. There was some concern that some of the benefits that service providers provide to those in need of their services are difficult to quantify.

However, it was noted that many funders have already been requiring service providers to quantify the benefits, and as a result many non-profits have been moving toward greater quantification of the benefits of their services.

Representative Stephens and his staff explained that social impact financing programs can be used at all levels of government, including state, county and municipal governments. Any government that realizes a reduction in future costs by investments in preventative measures is able to structure a social impact financing program. Many questions from the participants focused on who would be responsible for repaying the investors in the benchmarks were achieved. Representative Stephens and his staff explained that the government who was ultimately receiving the benefit of reduced special education costs (in the early childhood education context), would be responsible for repaying the investors at the end of the program.

Social impact financing requires a significant government commitment to make it successful. The legislature is necessary to pass enabling legislation and provide for the appropriations necessary to cover the cost of the repayment if the benchmarks are achieved. The executive branch is necessary, because the agencies are administering the government programs and are contracting with service providers to provide the needed social services. In the difficult economic climate that Pennsylvania finds itself, the participants were concerned that social impact financing programs could be used as a way to divert traditional state funding away from programs to fund other areas of need rather than be used to supplement the traditional state-funding to expand the programs. Some of the participants suggested that any money saved by the government ought to be reinvested back into the same program areas and not diverted for other uses. There was also some concern about whether the government would be able to set aside a yearly appropriation in an amount that would cover the Commonwealth’s liability if the benchmarks were met under the contract and a repayment to investors was necessary. Potential solutions may include creating a mechanism to set aside the money, such as a revolving fund. These were also discussed in depth.

Discussion points included that unless the government realizes an overall drop in the demand for funding of a program, it is unclear where the money would come from to pay the investors for their return. Consider the starfish analogy, whereby throwing a starfish back into the ocean will help that particular starfish, but there are thousands of other starfish stranded on beaches. In other words, while a government program might help a select group of people, there are still many others who still need help from that same government program, thus the demand for the government program funding may not be reduced.

In response to the starfish analogy, it was stated that an independent third party evaluator would use data to verify savings specific to the definitions and terms that are set forth in a contract whereby the government would be a party to that contract. Also, if the program doesn’t achieve those specified outcomes, the risk is on the investors who would lose out and the governmental entity would not be liable to pay the return to the investors.

Besides, there are several examples today where these contracts are being implemented. Nonetheless, it is important to note that a willing government partner is a crucial component of any social impact financing arrangement.

The ability to develop the necessary metrics to make the concept work appears to be a challenge. Although some non-profits do a good job at program evaluation, many others do not. Additionally, the nature of the populations may contribute to the difficulty because the populations tend to be transient, thus, among other things, making the ability to do longitudinal metrics arduous, especially without additional funding. These concerns would again be addressed at the discretion of the investor/third party intermediary as a negotiating party.

Furthermore, some aspects of providing human services are very difficult to measure. In some cases, good metrics just do not exist. These programs may not be a good fit for social impact financing. Finally, there is a difference between priorities of human services and those aspects of human services that are conducive to measurable outcomes. Subsequently, social impact financing may not be applicable to all social programs, meaning that it may be suitable only for those areas that can be easily measured. Social impact financing bases the repayment on quantifiable measurement. If a program is unable to quantify its data, social impact financing is not the right funding model. That is why it is important to use social impact financing as a supplement to traditional state funding rather than to repay it completely.

However, as was presented, from the experience of several social impact financing deals now being implemented in the United States, representatives from those nonprofit organizations were amazed at what they could measure when an expert was brought in to help with their quantification systems. While it was significant work to upgrade those data systems, the nonprofit organizations indicated it was well worth the effort.

Additionally, the metrics for measuring program outcomes are evolving and improving with time. For example, Goldman Sachs sponsored a social impact financing deal in Salt Lake City, and it recently financed another deal in Chicago. For the subsequent deal, Goldman Sachs revised the metrics for repayment based on lessons it learned from the Salt Lake City deal. The second deal was increased by a substantial hike in investment amounts, climbing from $7 million for the first investment in Salt Lake City and secondly $17 million, in Chicago.

Follow-Up Comments

Bringing in private investors to fund social programs raises fascinating questions. Why is it that government often cannot make programs or assets work financially when for-profit companies using those same assets can? Is there perhaps not some other way for government to become more disciplined? While these questions were left unanswered, social impact financing may be a way to bring discipline into the system, enabling government to become quantitatively-based with measurable outcomes. And once those systems are in place, it may no longer be necessary to continue social impact financing for that specific program.

Representative Stephens introduced a co-sponsorship during the last legislative session and has spent the last seven months touring the Commonwealth to meet with social service providers, school districts, philanthropists and investors. Representative Stephens explained that it was his intention to sponsor legislation that would enable a social impact financing pilot program in early childhood education to take place in Pennsylvania. He suggested that the proposed pilot program have pilots in each of the following areas: Philadelphia, Pittsburgh, a third class city, and a rural setting to evaluate the ability to replicate social impact financing programs throughout Pennsylvania.

About the Author:

Erik Randolph is an independent researcher who specializes in evaluating government policies, programs, budgets, and legislation, quantitative analysis, and fiscal and economic modelling. As a consultant, he has provided assistance to organizations, legislators, and governments in four different states in the areas of welfare policy, budgeting, transportation policy, and criminal justice.

Erik has twenty-seven years of extensive experience in government and for seventeen years taught principles of economics for the Harrisburg Area Community College. He developed the first microeconomic model to test how welfare benefits influence behavior when he was a special assistant to the Secretary of Public Welfare for the Commonwealth of Pennsylvania, and he led a chartered team at the department to evaluate the problem of economic disincentives. Prior to his service to the department, he spent nineteen years as an analyst for the Committee on Appropriations of the Pennsylvania House of Representatives. While working for the Committee, he evaluated and forecasted costs for legislation, worked on and analyzed state budgets, handled analysis of special fund revenue and capital budgeting, researched and wrote legislation, and conducted special research projects for the chairman.

In the early part of his professional career, Erik worked in the field science and technology policy for the U.S. General Accounting Office (since renamed the Governmental Accountability Office), New York State, and the Commonwealth of Pennsylvania.

Mr. Randolph has a Master’s Degree from the College of Humanities at Rensselaer Polytechnic Institute in science and technology studies, where he concentrated on the economics and policy of science and technology. He has two Bachelor degrees from the Pennsylvania State University, one majoring in mathematics and the other in political science.

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No Turn-around Yet for PA: Businesses Business Climate Survey finds conditions continue to worsen


Weighed down by concerns over a possible increase in the minimum wage, uncertainty over health care; and excessive regulations, Pennsylvania’s business climate continued to get worse over the past six months. That is the key finding of the Spring 2014 Keystone Business Climate Survey, conducted by the Lincoln Institute of Public Opinion Research semi-annually for the past 20 years.  The survey asks the owners and chief executive officers of business in the state – the people who actually make our economy run – their opinion on the condition of the state’s business climate and key issues confronting the commonwealth.

On the issue of raising the state’s minimum wage, 78% stood in opposition with 17% favoring a minimum wage increase; 5% offered no opinion.  Sixty-three percent said the minimum wage has no impact on their business, largely because their employees already earn above that standard.  Of those who would be affected, 21% said they would cut employee hours if a minimum wage increase were enacted; 18% indicated they would reduce the number of people they employ, 3% said an increase in the minimum wage would cause them to go out of business.  Less than one percent said they would expand their business if the minimum wage is raised while one percent said they would hire more employees.

Business Climate

Twenty-six percent of the business leaders responding to the Lincoln Institute survey said business conditions in Pennsylvania have gotten worse over the past six months, while 14% said business conditions have improved; 59% said they remain about the same.  To the degree there is any good news, the number of respondents indicating business conditions have gotten worse has decreased over a year ago when 35% said business conditions had worsened.

Looking ahead, 24% expect the state’s economy to continue to decline, while 19% predict an improvement and 55% say they expect the state’s business climate to remain about the same.  That is a slightly more optimistic outlook than six months ago when the Fall 2013 Keystone Business Climate Survey found 30% predicting worsening business conditions.

Employment levels are down at 18% of those businesses polled, and up at 15%.  That is a substantial improvement from one year ago when 27% reported lower employee rosters and only 8% had increased their number of employees.  Looking ahead, 18% project increasing their workforce, while 10% plan to cut the number of people employed.

Sales are up at 24% of the companies responding and down at 36%.  A year ago only 17% reported increasing sales while 46% posted a drop in sales.  Over the coming six months, 36% say they expect sales to increase; 12% expect sales to decline.

Job Performance

President Barack Obama continues to post the worst job approval ratings in the 20-year history of the Keystone Business Climate Survey.  Eighty-nine percent of the CEOs and business owners responding have a negative view of the president’s job performance, 8% offered a positive view.  U.S. Senator Patrick J. Toomey scored the highest job approval rating from the business leaders with 51% offering a positive assessment of his performance in office and 25% with a negative view.  Conversely, sixty percent disapprove of the job performance of U.S. Senator Robert P. Casey, Jr., while 15% approve.  Federal Reserve Chairperson Janet Yellen is relatively new to the post, so about half the respondents have yet to form an opinion on her job performance. Of those who have, 15% offered a positive assessment, 37% negative.  U.S. Secretary of the Treasury Jack Lew has a 7% job approval rating against a 43% negative view.

Governor Tom Corbett’s job approval rating improved six percent from last fall as 49% now give him a positive rating and 35% disapprove of his performance in office.  Attorney General Kathleen Kane is viewed negatively by 47% of the business leaders surveyed with 12% offering a positive view.  Sixty-six percent offered no opinion on the job performance of State Treasurer Rob McCord, 14% held a positive view and 20% view him negatively.  Likewise a majority, 72% have no opinion on state Auditor General Eugene DePasquale.  Ten percent have a positive view of his performance in office; 18% a negative view.

Legislative bodies fared poorly in the view of the business executives participating in the Spring 2014 Keystone Business Climate Survey.  Ninety-two percent hold a negative view of the U.S. Senate with just 2% approving of the senate’s job performance.  The U.S. House of Representatives garnered a 19% positive rating against a 74% negative rating.   Closer to home, 56% disapprove of the job being done by the Senate of Pennsylvania, 23% approve.  The Pennsylvania House of Representatives posted the relatively best number of 27% approving and 54% disapproving of the job they are doing.

Issues

Current state law allows governmental entities such as the state, counties, school districts and municipalities to deduct labor union dues and PAC (Political Action Committee) donations from employee paychecks and turn the proceeds over to labor unions.  A “paycheck protection” bill currently before the General Assembly would end that practice. Eighty-nine percent of the CEOs and business owners participating in the survey said they support such a bill and that unions should collect their own dues.  Five percent think the practice should continue.

There is a carve out in current state law that permits labor unions and business to stalk, harass, or threaten to use a weapon of mass destruction during a labor dispute.  Eighty-nine percent disapprove of those carve outs, 85% strongly disapprove.  Two percent voiced their approval.

Seventy percent of the businesses participating in the spring survey say they currently provide health insurance to their employees. Four percent said they provided health insurance in the past, but have discontinued the benefit.  Forty-six percent say the cost of employee health insurance is split between the employer and the employee with the employer paying the major portion; another 2% split the cost with the employee paying the larger share.  At 27% of the businesses the employer pays the full premium.  Fifteen percent said they did not and will not offer employee health insurance.

Looking ahead, 46% of the business owners and CEOs taking part in the survey said they will continue providing health care coverage to their employees, six percent said they plan to discontinue the benefit, another 32% were uncertain.

Legalization of marijuana for medical purposes has become a major issue in the 2014 Democratic primary for governor.  Fifty-seven percent of the business leaders say the drug should be legalized for medical purposes.  An additional 24% support legalization also for recreational use.  Thirty-seven percent want marijuana to continue remaining totally illegal.

In that Democratic primary, 42% of the CEOs and owners polled by the Lincoln Institute say they expect Tom Wolf to emerge as the party’s nominee for governor.  Eight percent predict a win for Rob McCord; while three percent say Allyson Schwartz will prevail and 3% expect a Katy McGinty victory.   A majority, 51% say they believe Governor Tom Corbett should be re-elected in November, while 34% suggest it is time for a new person to hold that office.

Methodology

The Lincoln Institute’s Spring 2014 Keystone Business Climate Survey was conducted electronically from March 21, 2014 through April 7, 2014.  A total of 378 business leaders responded.  Of those 80% are the owner of their business; 13% are the CEO/COO or CFO; 3% are a local manager and 1% a state manager.  Complete numeric results are posted at www.lincolninstitute.org.

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Treading Water: PA business owners/CEOs don’t see economic recovery


Although many key economic indicators are pointing to a slowly improving economy, employers in Pennsylvania say – at best – the state’s business climate is stagnant. More report lower employment levels than increased levels; and more businesses say over the past six months sales have declined rather than increased. Looking ahead six months, there is little expectation for a significant improvement in economic conditions.

Results of the Spring 2013 Keystone Business Climate Survey of business owners and Chief Executive Officers found by a two-to-one margin they say business conditions in the state have gotten worse over the past six months rather than better. Thirty-five percent said that business conditions in Pennsylvania have gotten worse, 17% say they have improved, 47% said business conditions remained about the same. Those numbers track almost exactly results of the 2012 Spring survey indicating the state’s economy has made little progress over the past year. Looking ahead, 33% expect business conditions to get worse, 19% say they expect some improvement, 47% expect conditions to remain about the same.

The business leaders surveyed continue to report declining employment levels. Twenty-seven percent said employment levels at their company are lower than six months ago, while 9% report having more employees. Sixty-two percent say their employment levels have remained about the same. The employment picture is worse than a year ago when 13% of the employers said they have increased their employee compliments and 20% reported a decrease. Looking ahead, 15% say they expect to increase the number of employees at their business, 17% are planning on a workforce reduction. Sixty-five percent say employment to remain about the same.

Sales are another area of concern. Forty-seven percent of the CEOs responding to the Lincoln Institute survey said sales have dropped over the past six months, while 17% reported an increase in sales. Another 36% said sales have remained steady. These numbers are considerably more negative than those reported last spring when 35% reported decreased sales and 28% reported a sales upswing. Looking ahead there is a bit of optimism: 27% expect sales to increase while 19% forecast declining sales.

Job Approval Ratings

President Barack Obama continues to be highly unpopular among Pennsylvania’s business leaders. Twelve percent offered a positive view of his job performance, while 84% disapproved. The job approval rating of Pennsylvania’s two U.S. Senators are going in opposite directions. U.S. Senator Pat Toomey’s positive job approval jumped from 47% last spring to 58% in the current survey, while his negative rating dropped from 23% last year to 19% this year. Meanwhile, U.S. Senator Robert P. Casey, Jr.’s negative rating increased from 62% last spring to 69% this year. His positive job approval also increased from 11% last spring to 14% in the current poll.

At the state level, Governor Tom Corbett’s job approval rating remains steady. Fifty percent give him positive reviews, up from 48% last year. His current negative number is 32%, exactly where it was one year ago. Attorney General Kathleen Kane’s first job approval test resulted in a 21% positive – 28% negative rating. New Auditor General Eugene Depasquale’s inaugural numbers found a 9% positive – 14% negative rating. State Treasurer Rob McCord weighed in with a 13% positive – 14% negative rating.

As for legislative bodies, respondents to the survey gave the U.S. Senate a 95% negative rating with only 3% having a positive view of the upper chamber. Seventy-one percent hold a negative view of the U.S. House of Representatives while 23% give them a positive rating. At the state level, approval of the job being done by the House of Representatives has increased over the past year: 32% now approve of the state House up from 20% last Spring, but 48% hold a negative view of that chamber. Fifty-four percent disapprove of the job being done by the Pennsylvania Senate, while 25% approve.

State Issues

Governor Tom Corbett has outlined an ambitious legislative agenda, with privatization of the state’s monopoly liquor stores at the top of the list. The business owners and Chief Executive Officers responding to the Lincoln Institute’s Spring 2013 Keystone Business Climate Survey are in strong agreement with the governor that the time for privatization has arrived. Eighty-five percent indicated their support of ending the liquor monopoly and placing distribution and retail sales of shine and spirits into private hands. Of that number, 65% said they “strongly approve” of the Corbett plan. Twelve percent expressed their opposition.

Support for the governor’s other privatization plan, that to remove administrative operations of the Pennsylvania Lottery from government employees and place them into private hands received less support, but 53% did agree with privatizing lottery operations. Twenty-eight percent expressed opposition and 19% offered no opinion.

The controversial decision by Governor Corbett to not set up a state-based Medicaid health care exchange under provisions of the Affordable Care Act (Obamacare) drew support from 65% of the business leaders polled with 25% in disagreement and ten percent offering no opinion. To date, 62% said they have had to take no steps to comply with provisions of the act, while 15% reported having to increase employee co-pay to cover additional costs; 10% have cut staff or reduced hours; 8% have raised their prices and 5% have discontinued offering health care coverage to their employees.

A number of public employee retirement systems, ranging from those covering state employees to school districts and municipalities, are projected to experience a significant shortfall in funding in the near future. To deal with that, respondents to the Lincoln Institute survey said governments should require higher employee contributions (77%), cut benefits to retirees (57%), divert spending from other areas to cover the shortfall (25%), or raise taxes to cover the shortfall (4%). Eight percent suggested all of the above mentioned steps should be taken to deal with the problem.

Governor Corbett has proposed lifting the cap on the Oil Company Franchise Tax to raise additional state revenue for spending on transportation infrastructure improvements including roads and bridges.   Fifty-seven percent of the business owners/CEOs said they agree with that idea while 38% disagree. But, when asked if lifting that cap would result in an increase of the cost of gasoline at the pump of over 20 cents per gallon, support for the plan dropped to 28% while opposition increased to 69%. Of that 69% who disagreed, 47% expressed strong disagreement.

To provide additional funding for infrastructure, eighty-eight percent said the state should cut administrative overhead; 45% opined that spending in other areas should be cut and diverted to transportation; 30% would raise driver license renewal feels; 19% would raise gasoline taxes and 5% would raise general fund taxes. Fifteen percent said the funding crisis is overblown and no additional funds are needed.

As the governor and the general assembly work toward adoption of a 2013-2014 state budget, 56% of the business leaders participating in the Spring 2013 Keystone Business Climate Survey said state spending is too high and spending levels should be cut further. Thirty-seven percent said the current levels of spending are appropriate while 4% suggested state government should increase taxes and spending.

Federal Issues

In the debate over enactment of additional restrictions on the sale and purchase of firearms 31% said they would support additional restrictions, with 11% saying they strongly support additional restrictions. But, 68% said they oppose the placement of additional restrictions on the sale and purchase of firearms with 50% being in strong opposition to such additional restrictions.

Automatic federal spending cuts, official known as sequestration, took effect the beginning of March. Eighty percent of the businesses said the federal spending cuts have had no impact on their business. Twelve percent indicated sequestration had negatively impacted their business while 3% said the cuts have had a positive impact.

There has been much discussion and debate over the rising national debt. Ninety percent of the business owners/CEOs said the rising national debt will have a negative impact on the U.S. economy with 77% predicting a significantly negative impact. Five percent suggested the rising national debt will have a positive impact on the economy while 4% predict no impact at all.

Methodology

The Spring 2013 Keystone Business Climate Survey was conducted by the Lincoln Institute of Public Opinion Research, Inc. from March 8, 2013 through April 5, 2013. A total of 260 business leaders participated in the electronic survey. Of that number 80% were the owner of the business; 15% serve as CEO/COO/CFO; 2% are a local manager and 1% a state manager. Complete numeric results are available at www.lincolninstitute.org.

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This Week on Lincoln Radio Journal: PA Business Climate


Radio Program Schedule for the week of November 24, 2012 – November 30, 2012

This week on American Radio Journal:

  • Lowman Henry talks with Dr. John Goodman of the National Center for Policy Analysis about curing the health care crisis
  • Andy Roth of the Club for Growth has the Real Story behind the opportunity to deal with both taxes and entitlement reform
  • Former Congressman Phil English of Arent Fox talks about tax reform
  • Colin Hanna of Let Freedom Ring, USA has an American Radio Journal commentary on what the GOP must do to broaden its appeal

This week on Lincoln Radio Journal:

  • Eric Boehm and Melissa Daniels have news headlines from www.paindependent.com
  • David Taylor hosts a Capitol Watch roundtable discussion on results of the Lincoln Institute’s Fall 2012 Keystone Business Climate Survey with Kevin Shivers from the PA Chapter of the National Federation of Independent Business and with Matthew Brouillette of the Commonwealth Foundation
  • Lowman Henry has a Town Hall Commentary on why how you win is as important as winning

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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