Since 2020, Pennsylvania has lost 49,000 residents to domestic migration, according to Census data. The commonwealth has also lost interstate migration in 13 of the past 14 years. Over the last decade, Pennsylvania lost about 280,000 residents to other states.

Pennsylvania’s outmigration carries some foreboding economic consequences. Health care groups worry that “the state’s working-age population is shrinking and its retired population is growing larger.” Another state agency predicts that “the state’s rural communities will shrink, grow older and strain limited social and health services.”

So, where are so many Pennsylvanians moving to? They are relocating to states with greater economic opportunities.

Pennsylvania continues to lose residents to Florida, South Carolina, Georgia, Virginia, and Texas. Interestingly, migration to Pennsylvania comes from only a handful of states, including New York, New Jersey and California. In short, residents are leaving high-tax states for low-tax states.

Crucially, Pennsylvania has lost ground to its neighbors in West Virginia and Ohio.

The Mountain State has charted a new course for prosperity, reversing a century of decline. “New census data suggests that West Virginia recently became a net in-migration state for the first time in state history,” writes Jonathan Williams and Chandler Averette from the American Legislative Exchange Council.

West Virginia’s dramatic turnaround stems from its adoption of free-market policies. Such policies include enacting tax reductions, codifying a regulatory climate that attracts businesses and energy producers, and creating the Hope Scholarship program, which delivers educational options to every child.

Ohio’s model parallels West Virginia. The Buckeye State reduced taxes for all employers, cut excessive regulations, ended bureaucratic delays, and enacted universal educational choice.

Gov. Josh Shapiro has commented that he’s tired of losing to “friggin’ Ohio.” But if he wants Pennsylvania to compete with Ohio, he should follow Ohio’s example.

Unfortunately, Shapiro’s proposals take Pennsylvania in the wrong direction. His budget proposal fails to remedy Pennsylvania’s outmigration problem or make the commonwealth open for business. Instead, he proposes copying the states with declining populations rather than states with growing economies.

His spending binge — an 8.1% increase over last year’s enacted budget — creates a $5 billion budget deficit. Even worse, he continues to push a new energy tax that would drive up the cost of electricity for homeowners.

His proposal also includes $1.6 billion in corporate welfare spending, creating five new programs that siphon public money toward “economic development” projects. But these subsidies and tax credits won’t drive growth; instead, lower taxes, less regulation, and increased educational options for all Pennsylvanians will.

Shapiro’s calls for levying new taxes on recreational marijuana and “skill games” and draining state savings will neither make Pennsylvania a better place to live nor fix the budget deficit.

In fact, the governor’s proposal will only exacerbate the commonwealth’s issues. To keep spending at the rate Shapiro wants would require a tax hike of $1,900 per family by next year. His plan will only drive jobs and families away to Ohio and West Virginia.

Instead, lawmakers must focus their attention on policies that grow Pennsylvania’s economy and make the commonwealth more attractive to businesses, workers, and families.

This requires fiscal responsibility to protect families from Shapiro’s tax hikes. Lawmakers should curtail the rate of government spending growth and address cost drivers in welfare programs by promoting work. Also, preventing deficit spending and lowering taxes on businesses and incomes would spur economic growth. Lawmakers should also block Shapiro’s proposed energy taxes, ensuring lower costs for families while unleashing Pennsylvania’s energy production.

Pennsylvanians need broad relief and a serious effort to review the more than 164,000 regulatory restrictions that hamper growth and job creation. Proposals to review each regulation and give legislative oversight to the bureaucracy would make Pennsylvania more competitive.

Finally, families value educational options. With this budget, lawmakers need to focus education funding on students, delivering both opportunity and cost savings. This should start with Lifeline Scholarships to help low-income students in failing schools.

This policy agenda would make Pennsylvania a more competitive and attractive destination for businesses and families. A state budget that protects families from tax increases, provides regulatory relief, and delivers educational opportunity will make Pennsylvania prosperous once again.

(Nathan Benefield is the chief policy officer for the Commonwealth Foundation.)