HARRISBURG - When Republican Tom Ridge ran for governor in 1994, he pledged to make the state more business-friendly.

However, Pennsylvania still has a long way to go before its tax structure will encourage businesses, according to a financial magazine.

Ridge, indeed, has focused on improving the business climate, and he says the state has jumped from 45th to 16th in job growth and that 250,000 new jobs have been created.

Democrats say that's not much different from the gains made during the last two years of the Democratic administration of former Gov. Robert Casey.

But Ridge's campaign rhetoric might suggest to some voters that Pennsylvania is on the way to becoming a business nirvana.

That is not the case when it comes to the state's tax structure and the way it levies taxes on business, according to the June issue of CFO, a Boston-based magazine for chief financial officers.

The magazine conducted a random sample of 300 of the largest 1,000 public companies in the U.S. The magazine received 91 responses from tax directors of large companies.

It was an expansion of a survey conducted by the magazine in 1996. At that time, Pennsylvania was ranked the fourth-worst state nationally.

In the magazine's 1998 survey, Pennsylvania was again found by businesses to have one of the toughest tax departments and most confusing tax laws.

Massachusetts and California tied for the worst state tax systems for business, according to the survey, followed by Pennsylvania, Illinois and New York.

Pennsylvania had actually moved from the fourth to third worst tax climate in the nation for business, according to the survey.

All of this is a vital factor apparently in business relocation and job creation, according to two unnamed tax executives with large Pennsylvania firms who are quoted by the magazine.

One told the magazine "We never look to expand here and taxes are a major reason for that." Another said the current tax system has "a negative economic development aspect to it."

What they are talking about, by and large, is not tax rates per se, but the way taxes are levied.

The magazine stated, "For corporate taxpayers, problems start immediately upon doing business in the state. The multiple taxes are backed by a crazy quilt of outdated, incomplete laws and regulations.

"As a result, auditors in Pennsylvania can create new interpretations of state tax law, often contradicting previous audits and interpretations."

It goes on to say, "Even when the laws are clear, they are often tough on business."

The tax appeals process in Pennsylvania - described by the magazine as "onerous" - is one of the worst in the nation for business, according to the survey. It's a three-tiered appeal process: first through the Department of Revenue, then the state Board of Finance and Revenue, and finally Commonwealth Court.

The first two steps aren't particularly friendly to business, the article indicated, and one tax executive said companies need to appeal three times to get a fair and impartial hearing.

State Secretary of Revenue Robert A. Judge Sr., a member of Ridge's Cabinet, said the administration is gradually trying to improve the tax climate. He cites all the business tax cuts signed into law by his boss.

"The one unfortunate thing is that tax policy doesn't change overnight," Judge said.

Every year, his department combs through tax law and proposes updates to streamline the code, and his door is open to business to talk about tax policy and most major companies have taken him up on the offer, Judge says.

Maura Donley, executive director of governmental affairs for the State Chamber of Business and Industry, agreed the tax structure is a factor that companies consider in expansion or relocation. And there is no mistaking, she said, that the "current structure is burdensome."

But Donley said she believed the article didn't convey the extent to which the state Department of Revenue is working to change the tax structure. "What's lost is they are making a lot of effort," Donley said.

Moreover, many of the changes require legislative action and cannot be accomplished solely by the department, she said.

While Judge and Ridge do generally get good marks for their efforts from business, the survey by CFO magazine suggests Pennsylvania still has quite a way to go before businesses are beating down the door to expand in Pennsylvania.