If Governor, I Would . . .

Posted: May 04, 1994

Whilliam H. Tickner, of Exton, asks: "Pennsylvania has been losing ground economically to other states over the years. What legislative steps would you support to improve the commonwealth's competitiveness?"



Recently I visited the headquarters of AMP, one of Pennsylvania's major businesses. AMP employs 8,000 people in this state, 21,000 worldwide and recently decided to create 600 new jobs - in North Carolina. The chief executive explained to me that it just didn't make good business sense to expand in Pennsylvania.

This is one of many examples of the loss of jobs in this state because of an unfriendly business climate, including the highest corporate net income tax in the nation. The biggest challenge facing the next governor is how to keep good jobs in Pennsylvania and attract new jobs here.

I have prepared a balanced, comprehensive and responsible economic plan. It is a pay-as-we-go plan. It seeks no new taxes. In fact, it contains plans for reductions in the very taxes that are driving businesses away. For every

dollar in tax cuts, it identifies a dollar in spending cuts. Every dollar invested in new priorities comes from a dollar in savings.

My plan calls for:

* Cutting Pennsylvania's corporate-net income tax from 12.25 percent to 9.9 percent immediately. We can't wait years to become competitive with neighboring states. The Pennsylvania Economy League has reached the same conclusion.

* Establishing a permanent investment tax credit to reward employers for creating jobs in Pennsylvania.

* Reforming the rule-making process at the state Department of Environmental Resources. Pennsylvania's environmental standards must be predictable and consistent.

* Increasing support for four-year "tech prep" programs and other programs that prepare Pennsylvania's young people for careers of the future.

* Creating a $100 million dollar "New Skills Partnership," a program to provide displaced workers with vouchers to attend approved job training programs and work with companies to provide customized training.

* Cutting government spending by at least $1.5 billion over four years. To achieve these savings, the state must save only three pennies on every dollar it raises.


Emergency action is needed right now to protect public funds, including $40 billion in state and school employee pension funds, from the collapse of the biggest financial bubble in history.

The Wall Street gambling casino called the "financial derivatives" market is crashing, and it will take bank deposits and pension funds with it, unless someone in government finds the guts to admit that Lyndon LaRouche was right when he sounded the alarm about this crisis.

"Derivatives" are complex speculative instruments based on the future movement of prices, interest rates, currency values, etc. "Derivatives" traders use high-speed computers and borrowed money to make deals that even bank executives don't understand. Yet the "derivatives" market remains totally unregulated, while the face value of "derivatives" exposure by banks has gone from zero in the mid-1980s to over $12 trillion today!

Recently, the treasurer of Orange County, Calif., admitted losses of over $140 million of public funds invested in financial derivatives and other speculation. Portage County, Ohio, admits losses of over $3 million.

In this crisis, the following emergency actions are necessary immediately:

* Divest all state and municipal investments out of derivatives and related

financial markets.

* Impose LaRouche's 0.1 percent tax on all derivatives transactions and support similar action by the federal government.

* Pool public money to form an Infrastructure Credit Fund for low-cost lending within the commonwealth to create productive jobs in transportation projects, like the cross-state magnetically-levitated train; water and power projects; and rebuilding urban infrastructure, including housing, sanitation, health and education.

* Support action by Congress to nationalize the Federal Reserve and convert it into a public Bank of the U.S. on the Alexander Hamilton model, to direct low-cost credit into industrial, agricultural and infrastructure development nationally, thus ending the mad "post-industrial" policy once-and-for-all.


Pennsylvania's business tax rates too often are cited as a disincentive to locating in Pennsylvania. As acting governor, I led the call for business tax cuts others now echo.

But it is not enough to cut taxes to create jobs: My program will create better jobs - high-wage jobs that will employ Pennsylvanians into the future. We must identify those industries that will be the leaders of the new economy, and target our incentive, training and infrastructure programs to meet those needs. I will promote long-lasting jobs with advanced technology and science- based industries.

Pennsylvania already leads the country in applying advanced technology to its traditional manufacturing industries, primarily through the state's Industrial Resource Centers (IRCs). Over the next four years, I will shift $15 million from existing capital asset financing programs to the Ben Franklin Partnership and the IRCs, and to a new program: the Small Business Information Technology Loan Fund. I will allocate $5 million per four years to create a revolving loan program - the Small Business Information Technology Loan Fund - to help small business owners upgrade their information capabilities to benefit from the forthcoming information highway.

I will work with private lenders to establish a State Revolving Technology Operating Capital Loan Fund to provide $25 million in loan guarantees for entrepreneurs with a proven prototype product or process, but who lack the initial operating capital to get the product into the marketplace. And I will establish a Transportation Technology Revolving Loan Fund to make Pennsylvania the nation's leader in creating the transportation system of the future.

Pennsylvania should be the leader in the development of new technologies that will improve not only environmental but also economic performance. I have already demonstrated what can be done: The Recycling Market Development Task Force I chair has promoted the recycling industry in Pennsylvania by developing markets for recycled products. The result: a cleaner environment and 10,000 additional jobs.


We must recognize Pennsylvania's current position in the national scope:

* Pennsylvania has the highest business taxes of the 50 states.

* We were ranked in last place for business starts last year.

* Pennsylvania has lost more than 100,000 highly skilled, high-wage jobs since 1989.

* Pennsylvania spends the fourth highest amount of dollars per student in the country, but ranks in the bottom five states for SAT scores.

* Pennsylvania ranked first in the nation for teachers strikes.

Jobs: The plan I intend to initiate as governor is centered on a Jobs Voucher Program that reduces an employer's tax bill by up to $2,000 for each job created. At least 10 states have instituted job vouchers, creating more than 100,000 jobs in those states. It is time to go to work.

By lowering the corporate net income tax and the corporate stock tax to the midway point of the 50 states - 7 percent and 6 mills, respectively, Pennsylvania will be competitive again. I have proposed reinstitution of the loss carry forward provision, cutting state spending by $1.1 billion, overhauling Department of Enviornmental Resources and stimulating economic development with a $650 million funding authority for job development in targeted Pennsylvania regions. It is time to go to work.

Education: The Volpe administration is committed to replacing teacher strikes with final and binding arbitration, annual report cards for schools and teacher testing.

Safe streets: Life sentences will be served, not commuted. More full-time police will be on the street and death warrants will be signed within 30 days after referral to my office.

By tying business-tax reductions to job creation, with a quality-educated workforce to compete again, in safe streets and communities, Pennsylvania will once again be in charge of its destiny as the workshop of America. It is time to go to work.


More than legislation, we need leadership.

As treasurer I did not need new laws to become the champion of middle-class Pennsylvanians by:

* Pioneering the first family and medical leave program in state government and offering space for daycare in Treasury.

* Saving the state's college student loan program and starting first-time home buyer and other affordable housing programs targeting middle-income


* Earning an extra $100 million transforming Treasury's investment practices and saving taxpayers $500 million more by resurrecting Treasury's power to stop wasteful state spending.

After the Rodney King verdict riots, the legislature did not say, ''Catherine, what can you do so riots don't happen in Pennsylvania?" I took the lead on my own. I called my staff together and six weeks later we launched a $50 million "City Start" program to build homes in low-income neighborhoods by hiring unemployed neighborhood residents. Soon after, our first project began in Philadelphia.

Of course the legislature is a critical and co-equal branch of government. But it is the governor who leads.

As governor I will ask the General Assembly to enact an 8 percent Personal Income Tax cut for every individual taxpayer and 75,000 affected small businesses.

This $1.6 billion cut over four years will be paid through 41 spending cuts and 7 savings initiatives, each of which has been released to the media in full detail.

Mark Singel, who favors giant corporate tax cuts, criticized my 8 percent

cut for individuals and small businesses as "pandering."

Yet as state senator, Singel voted twice to reduce the Personal Income Tax.

First he flip-flopped on abortion, then capital punishment and now he's flip-flopped on the Personal Income Tax.

You would think people would get sick of this flip-flopping and elect a sincere leader.

That's one reason we say, "Catherine Baker Knoll. Performance, not politics."


To increase Pennsylvania's competitiveness, attract business and generate jobs, I will:

* Implement a long-term fiscal policy that combines equitable and stable

revenues with controlled spending, systematic savings, accountability standards and performance measures.

Contrary to the other candidates, I strongly oppose corporate tax cuts. They are reactionary and represent symbolism, not substance. They are based on disastrous economic policies of the Reagan-Bush era. All economists agree that tax cuts do not create jobs - and one called state tax cuts "risky at best, foolhardy at worst."

Furthermore, corporate tax cuts will cost the state billions and will crowd out necessary investments in basic and higher education, job training and capital projects that strengthen our competitiveness.

* Strategically invest in infrastructure in order to adequately maintain our existing infrastructure and strategically invest in new projects - like the Mid-Field terminal at Pittsburgh's International Airport - that promote economic development and job growth.

* Target redevelopment capital assistance projects like the Pennsylvania Convention Center and the "Avenue of the Arts" along North and South Broad Street - that serve as a catalyst for economic revitalization and regional cooperation.

* Enhance workforce quality by demanding that schools perform, expanding youth apprenticeships, upgrading vocational education and investing in job training and worker retraining.

* Promote balanced environmental policies and enforcement strategies that encourage remediation rather than litigation. This is a particular concern for old abandoned industrial sites like the J&L facility in Beaver County. I support legislation which eases the liability concerns for municipalities, government authorities or nonprofit economic development agencies that take title to these abandoned properties and help finance their re-use. Remediation of these so-called "brown fields" will help preserve open space and discourage hinterland development.

Improving our economic competitiveness requires a long-term strategy involving careful fiscal management, strategic investments and aggressive leadership.

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