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While only four governors received an “A,” and seven governors fared the worst with an “F,” the Rendell administration received a “D” on the “Fiscal Policy Report Card on America’s Governors: 2010.”

The study, conducted by the Cato Institute, examined how the state’s governors approached spending, revenue and tax rates, particularly given the economic constraints of the last two years. The recent tax increases enacted by states have been the largest in many years, and state debt levels have doubled in the past decade. Faced with lower revenues, funding gaps in public pensions, and increased competition from a global economy, some governors met the challenges with fiscal prudence and others did not.

Some governors actually decreased spending during their tenures, rejected tax hikes and even called for legal caps on state budget growth. All of the “A” governors enacted or proposed some type of business tax reform.

The governors who received the lowest grades pursued large tax increases to balance state budgets and grow programs – to the detriment of their state’s economy, families and businesses. While the administration didn’t get an “F,” it narrowly earned a “D” by one point. Among the factors which earned the administration poor marks:

• A 2004 $1.5 billion increase that raised Personal Income Tax rates, business gross receipts taxes and cigarette taxes
• A 2006 veto of a bill that would have cut personal and corporate tax rates
• A 2007 proposed increase to the state sales tax rate
• A 2009 proposed increase to the state’s income tax rate and an ultimate $700 million package of tax increases, including higher cigarette taxes and a delay in the phase-out of the Capital Stock and Franchise tax
• A 2010 proposal to broaden the sales tax base, broaden the corporate tax base, increase taxes on oil companies, and raise taxes to fund higher transportation spending.

The ongoing budget crisis that Pennsylvania, along with almost every other state, will face is not entirely reflective of the short-term problems created by the recession, but rather, the long-term problems of soaring debt and unfunded obligations. As the state anticipates a change in administration and legislative session, the PA Chamber stands ready to work with lawmakers on spending and business tax reforms in order to make the Commonwealth both competitive and prosperous.

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.