AEDI Announces Worst States for Business

News Release from AEDI, April 23, 2013

“America’s worst states for business have little to be proud of since it is within their power to be more pro-business,” says Brent Pollina, Vice President of both the American Economic Development Institute (AEDI) and Pollina Corporate Real Estate, Inc. “These states need to stop talking about bad economic conditions and job creation; they need to implement policies that address these problems.”

AEDI and Pollina Corporate joined together to produce the annual Pollina Corporate Top 10 Pro-Business States, which is recognized as the “Gold Standard” for evaluating the pro-business status of each state. The study examines 32 factors over which state governments have control relative to efforts to be pro-business.

The annual report found that the lowest ranked states of 2012 are, in descending order, Hawaii, Pennsylvania, Minnesota, Massachusetts, New Jersey, Vermont, Wisconsin, Illinois, Rhode Island, and California. New Jersey, Rhode Island, and California have been ranked among the worst ten states six out of the last six years, with California dead last every year since 2004.

Of the other states (Wisconsin, Illinois, Massachusetts and Vermont), none has risen above the bottom 16 in six years with the exception of Massachusetts, which ranked 28th in 2007 and freefell to 44th by 2012.  Although not among the bottom ten, Maryland deserves special mention as it dropped from 13th in 2007 to 34th by 2012, the greatest six-year drop of all states.

“What don’t the governors and legislators understand about the fact that a hostile business environment creates the perfect storm for budget deficits, service cuts, unemployment, and poverty?” asks Pollina. 

“A hostile business environment creates high unemployment that results in lower tax revenues, creating high state deficits and cuts in services.  High rates of unemployment push more families from the middle-class to the lower-class and into poverty.

“Breaking this cycle should be priority one, but it does not appear the message is getting through in capitals of bottom ranked states,” explains Pollina.

According to the Center on Budget and Policy Priorities, nine of these worst states for business are also running high budget deficits for fiscal year 2013:  New Jersey ($506 million), Pennsylvania ($540 million), Minnesota ($1.9 billion), Massachusetts ($1.3 million), Vermont ($51 million), Illinois ($1.8 billion), Hawaii ($500 million), Wisconsin ($1.6 billion), and California a whopping $15 billion shortfall.

Consequently, 18 percent of the states represent 42 percent of all state debt for fiscal 2013. California’s extremely high deficit accounts for the lion’s share of this debt; however, the other states have nothing to be proud of.  Only Rhode Island indicated that they had no 2013 debt.

Lagging revenues has led to budget-cutting of historic proportions.  State budget cuts have been imposed on education, health care, life/safety, and pensions. “These cuts will further slow the economic recovery, undermining their efforts to create jobs and stabilize their economies,” Pollina adds.