Monday, February 13, 2006

Should Southwestern Pennsylvania Secede?

In today's global economy, regions compete for jobs, investment, and talent, not states. Businesses decide to locate in Buffalo, Cleveland, or Pittsburgh, not merely New York, Ohio, or Pennsylvania. People live and work within economic regions, and so they don't move to "Florida," "North Carolina," or "Pennsylvania," they move to the Miami region, the Charlotte region, or the Pittsburgh region.

Pittsburgh's Competitiveness Depends on Harrisburg

So if southwestern Pennsylvania is going to attract jobs and investment, it needs to be competitive with other regions, on things like taxes, energy costs, school quality, and environmental quality. Unfortunately, in a number of key areas, the Pittsburgh region can't make it itself more competitive because the policies that determine competitiveness are made in Harrisburg, not Pittsburgh. For example, unlike many other states, the vast majority of business taxes on manufacturing firms in Pennsylvania are collected at the state level, not the local level. Transportation funding is collected and allocated from Harrisburg. Most of the major economic development programs are administered primarily out of Harrisburg.

Southwestern PA Issues Are Different

It would be one thing if each region in Pennsylvania faced the same problems and opportunities, and if they competed with the same set of regions in other states, but they don't. Southwestern Pennsylvania has different competitor regions and different competitive issues. Energy costs in Pennsylvania are competitive with states to the east, and uncompetitive with states to the west. Land, infrastructure, water, and other development issues differ dramatically across the state. And the innovation and entrepreneurship opportunities are much greater in southwestern Pennsylvania and Philadelphia than in the rest of the state.

Two Pennsylvanias?

There is growing evidence that there are at least two different Pennsylvanias - one south and east of the mountains (Allentown, Bethlehem, Harrisburg, Lancaster, Philadelphia, York), and one north and west (Altoona, Erie, Johnstown, Pittsburgh, Scranton, Wilkes Barre). While jobs grew slightly in the state as a whole between 2002 and 2005, the Pittsburgh region actually lost jobs. In fact, Southwestern Pennsylvania was one of only two regions of the state to lose jobs over the past three years (the other was Philadelphia), and it lost jobs at a higher rate than Philadelphia. In 1999-2002, the Pittsburgh Region was actually growing faster than the state average, and matched the U.S. growth rate during that period, but in the following three years, it not only stopped growing, but lost jobs.

Southwestern Pennsylvania Is Disadvantaged Relative to Other Regions

Most of the top 25 regions in the country dominate their state's policy-making, either because of their size or because they are the capital of the state. For example, Boston is the state capital of Massachusetts and the Boston region contains the majority of the state's population. The Minneapolis-St. Paul region contains both the capital of Minnesota and the majority of the state's population. The Seattle, Washington and Portland, Oregon regions contain the majority of their states' populations, and are located only an hour's drive from the state capitals.

In contrast, southwestern Pennsylvania represents less than 20% of Pennsylvania's population. It is not the largest region in the state. It is not the state capital, and is more than a three hour drive away. Among the top 25 regions in the country, only two other regions are similarly disadvantaged - San Diego, and Tampa/St. Petersburg.

Is it any wonder southwestern Pennsylvania has a hard time getting attention for its issues in Harrisburg?

The Need for A More Regional Approach to State Policy and Programs

"Secession" isn't a desirable or feasible option. But a more regional approach to state economic development policy is both desirable and feasible. The founders of our country decided that a federal system provided the best structure for administering government - those functions of truly national character should be administered from Washington, while the rest should be left to the states.

Pennsylvania could follow a similar approach - continue to operate some functions at the state level, but delegate others, particularly those that are economic development-related, to each region. This would not have to be done uniformly across the state - regions that have effective regional planning and decision-making mechanisms in place could be given authority to allocate state funding, while the state would continue to administer programs in regions that are not willing or able to do so.

A regional approach to state economic development programs would recognize the diversity of opportunities and challenges across the state, and enable each region to position itself most effectively for growth. Each region, and the state as a whole, could benefit tremendously.

For a more detailed analysis, download The Need for More Regionalism in State Policy.


Anonymous Anonymous said...

The state bureacracy does not add value. It is just an extra tax on program delivers in the region.

8:17 PM  
Anonymous Anonymous said...

It will never, ever, ev-er happen.

3:49 PM  

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