Compared with the rest of the country, Pennsylvania's economic performance over the past decade has been anemic with job growth ranking 47th among the 50 states. Population growth and the ability to attract and retain young people also rank near the bottom. This distressing picture has come about despite spending "some of the most dollars per capita of any state on job creation and business expansion."

	Two Views on the Brookings Study: 'Back to Prosperity' Other View / Thomas Hylton: State hasn't made wise investments on economic development

While we agree with Brookings' description of Pennsylvania's lackluster economy, we could not disagree with them more about the causes of Pennsylvania's slow growth or the policy recommendations that will spark renewed vitality in the commonwealth.

The Brookings Institution study, which was prepared by their Center for Urban and Metropolitan Policy, claims that Pennsylvania's dismal comparative performance is largely the result of "sprawl," "weak and uncoordinated planning" and state development spending they say has failed to target sufficient aid to established municipalities. It goes on to assert that Pennsylvania does not fully realize the importance of education and skills and does not have sufficient revitalization tools in place.

We argue that the Brookings report is manifestly wrong on every one of these points. The facts are that Pennsylvania spends huge amounts of money every year on job training and work force development, higher education and redevelopment efforts. Moreover, the state has established a plethora of programs for revitalization of depressed areas including tax increment financing, Keystone Opportunity Zones, tax abatements and a myriad of grant programs for business development. Furthermore, Pennsylvania has not stinted in its financial support for new technologies, doling out millions of dollars for the Digital Greenhouse, biotech and other cutting edge technologies to promote commercial development of research. Spending for education and skill development and revitalization tools are not in short supply in Pennsylvania.

In all likelihood, our regional agencies will be surprised to learn that their efforts are weak and uncoordinated. Undoubtedly, the Brookings report describes planning efforts that way because those efforts have not produced the outcomes Brookings views as desirable, i.e., they haven't prevented people from moving to the faster-growing communities.

The report also asserts that costs to taxpayers rise because of the growth in new communities. However, the data simply do not bear that out. For example, many of the faster growing municipalities in Allegheny County provide services at a much lower per capita cost than the city of Pittsburgh.

Moreover, the assertion that the state's economic development spending is targeted toward newer areas at the expense of older areas is belied by Brookings' own data. The report attempts to show that recent allocations by the Department of Community and Economic Development have failed to "target aid sufficiently on established municipalities." They measure this by looking at the dispersal of business assistance from seven DCED programs beginning in 1998 through mid-2003. Of the $863 million distributed, the so-called "older" communities received a 57 percent share.

Cities, which make up a big portion of "older" Pennsylvania, received $88.51 per capita in DCED funding while the so-called "newer" Pennsylvania municipalities got just $71.11 per capita. These figures hardly make the case that Pennsylvania's major urban cities were deprived of funding in order to favor faster growing suburbs.

The Brookings study also examined the dispersal of funds from the three largest DCED programs. A close look at the grants to Pittsburgh and the remainder of Allegheny County raises serious doubts about the assertion that established urban areas have gotten short shrift. The city of Pittsburgh received $50 million in assistance, over half of the total allocation to Allegheny County. On a per-capita basis, Pittsburgh received $150 in DCED funds, while all other municipalities in the county received an average of $52 per capita. Again, the data simply do not support the notion that older urban areas are being short-changed.

Surprisingly, the study pays no attention to the key role played by the cost and performance of Pennsylvania schools. Our schools are some of the most expensive in the nation (as measured by spending per pupil) yet our students exhibit poor performance on the SAT, ranking 45th among all states in 2002. In most municipalities in Allegheny County, school property taxes account for two-thirds or more of the total property tax bill, which, across the county, averages nearly 3 percent of the market value of the real estate. Is it any wonder that people and businesses have moved to surrounding lower tax areas? Yet, school taxes and academic performance, which play such an important role in people's decisions about where to live, receive no mention.

Brookings focuses their report on sprawl and weak planning and pays only lip service to the role of business taxes in the state's economic woes. They fail to mention that in 1991, Pennsylvania's Legislature approved the most massive tax hike in state history by boosting the corporate income tax to an eye-popping 12.25 percent and raising the capital stock and franchise tax to 13 mills. At the same time, the personal income tax was raised by 50 percent to 3.1 percent. As a result of this ill-advised tax hike, Pennsylvania's already weak recovery was hobbled for years afterwards and has never really recovered a strong footing. Unfortunately, the 1991 tax grab sent a clear signal to the business community that Pennsylvania is not serious about creating a friendly business climate. Undoing that damage is obviously of paramount importance.

Pennsylvania's economic growth and development are heavily restricted by a raft of stifling regulations such as prevailing wage requirements, binding arbitration laws and the absence of a Right to Work law. The prevailing wage law boosts the cost of publicly funded projects in Pennsylvania by 10 to 15 percent resulting in unnecessary expenditures in the tens of millions of dollars annually. Binding arbitration in Pennsylvania greatly favors the unions and leads to extremely generous contracts.

Finally, we note that study after study has shown that states with a Right to Work law have, on average, much stronger economic growth than non-Right to Work states. Sadly, the Brookings report does not acknowledge or attempt to take into account these extraordinarily important factors that impact so greatly on the state's economic performance.

Despite an enormous increase in economic development spending during the 1990s, and the launching of many new programs, Pennsylvania was not able to stimulate a significant, sustained pickup in growth. And where business gains are modest, job gains will also be modest. In such an environment, young people looking for a career path job will inevitably look to other parts of the country.

In sum, tax burdens, regulatory constraints on the marketplace and poorly performing, expensive schools are far more responsible for Pennsylvania's relatively dismal economic growth record than are urban sprawl or uncoordinated planning -- contrary to the impression the Brookings report wishes to convey. By viewing the economy and population trends through the lens of urban policy analysts, the report has ignored most of the truly important factors that determine the degree of prosperity in the state.

As a result, most of their policy prescriptions will do little or nothing to return Pennsylvania to robust economic health.