Jul 12, 2011

New direction leads away from big government

Guest Column by Kevin Shivers

The General Assembly closed its session last month having enacted a number of highly consequential initiatives that mark a sharp departure from the destructive governing philosophy that dominated Harrisburg during the previous eight years.

Eight years ago, Harrisburg’s answer to a similar problem was very different. The previous governor responded to a much smaller deficit with more than $1 billion in higher taxes, including a 10 percent increase in the personal income tax. He also proposed new or higher taxes or fees every year of the last administration.

On the spending side, the budget adopted last month is smaller year to year by more than $1 billion. It’s the largest spending reduction in decades — made necessary because the last administration increased spending more than 40 percent during the previous eight years — nearly twice the rate of inflation.

And a new law reforming the state’s unemployment system, one of the most expensive and unaccountable systems in the country, will save hundreds of millions of dollars over the long term. One new element requires that beneficiaries actually look for work as criteria to collect. Another prevents payments to people who receive giant severance packages from their former employers. Sensible as they are, these reforms would never have been approved by the crowd that left in January.

So in fiscal terms alone, Harrisburg today is unrecognizable as the special-interest playground it was just last year. But the changes are even deeper.

Not only does Harrisburg spend less, it interferes less in the private economy.

Earlier this year, the legislature repealed a law requiring that all new homes be equipped with fire sprinkler systems. Experts testified that the law increased the price of a home in Pennsylvania by about $10,000, a substantial sum to new homebuyers and a burden on the state’s already weak housing market.

It adopted a law that transforms the regulatory culture, requiring agencies to provide scientific data that justify new regulatory mandates. In other words, the state can no longer impose costly new burdens based only on the whims of regulators and activists. There has to be a provable need and a measurable public benefit before the government can restrict whole industries, block projects or impose mandates for their own sake.

Perhaps the most dramatic change in Harrisburg alters the heavily unbalanced legal system, which is recognized as one of the worst in America and a major threat to everyone but personal-injury lawyers.

Despite withering pressure from personal-injury lawyers, Gov. Tom Corbett and the legislature last month repealed the so-called Joint and Several Liability doctrine. Under that system, defendants in civil lawsuits could be ordered to pay 100 percent of the jury award even if they are proved to have caused only 1 percent of the damages.

For decades, businesses were under constant threat of being dragged into lawsuits not because they were actually guilty, but because they had insurance and assets to attack. It was especially brutal on small businesses, an uncounted number of which were destroyed by predatory lawsuits.

Under the new law, defendants will pay in proportion to the damage they actually caused. In other words, if a business is found to have caused 5 percent of the damage, it would pay 5 percent of the jury award. Not only will the new law result in fairer outcomes, but it will discourage junk lawsuits from being filed in the first place.

Pennsylvania still faces many challenges. And it is encouraging to see that Corbett and legislative leaders like Rep. Mike Turzai, RAllegheny, and Sen. Jake Corman, R-Benner Township, are not content, even after having made such remarkable progress so quickly. But the results of what has already been achieved will be more freedom, more competition and more jobs for Pennsylvania.

Kevin Shivers, of Harrisburg, is Pennsylvania director of the National Federation of Independent Business.

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