We're #1! Pa. Leads Nation in Corporate Welfare

MARCH 2, 2016 | News Release by COMMONWEALTH FOUNDATION

We’re #1!  Pa. Leads Nation in Corporate Welfare

Looking for State Budget Fixes? Cut $700 Million in Unfair Subsidies

March 2, 2016, HARRISBURG, Pa.—The Wolf administration claims important state spending has been “cut to the bone” and says only tax hikes will prevent more cuts to education and human services. But can a government topping the nation in corporate welfare at $700 million truly be funding the bare minimum?

Since 2007, Pennsylvania has led the nation in corporate welfare spending at nearly $6 billion, according to a report released by Commonwealth Foundation today.

“Before asking taxpayers for more, the governor and lawmakers should trim the fat of selective subsidies for private businesses,” commented Nathan Benefield, vice president of policy analysis for the Commonwealth Foundation. “Year after year, Pennsylvania directs millions of tax dollars to Hollywood movies, horse racing prizes, sports stadiums, and green energy projects, to name a few. Picking—and funding—favorites is not a viable path to economic growth.  

“Corporate welfare proponents promise economic growth but deliver higher taxes, higher prices, and waste. In fact, the ten states spending the least on subsidies saw faster job growth than the ten states spending the most.”

Where do Pennsylvania’s billions in subsidies go?

  • Horse Race Development Fund ($253 million in 2015-16)
  • Film Tax Credit ($60 million in 2015-16)
  • Redevelopment Assistance Capital Program ($5.4 billion in borrowed money since 1986)
  • Sports stadiums (nearly $600 million since 1999)
  • Alternative Energy Production Tax Credit ($2 million in 2015-16)
  • And dozens more programs

To fund corporate welfare programs, state government must tax or borrow. As government siphons resources from the private sector, businesses have less capital. Government effectively “crowds out” potential business investments, hindering overall job growth in the process.

Moreover, these programs are notorious for failing to deliver on their promises. Horse racing prizes funded through subsidies regularly go to non-Pennsylvanians. Additionally, for every dollar of film tax credits, Pennsylvania recouped only 14 cents in related business activity, according to the Independent Fiscal Office.

State ranking

Since 2007, Pennsylvania has spent more than any other state on corporate welfare, exceeding its closest rival, Ohio, by more than $1 billion. For six of the last nine years, Pennsylvania has been the top corporate welfare spender and is projected to be number one again in 2016.

Top Ten States for Corporate Welfare

State

Total
FY 2007-15

  1. Pennsylvania

$5,726,976,477

  1. Ohio

$4,651,124,150

  1. California

$4,281,661,000

  1. Florida

$3,013,753,905

  1. Texas

$2,955,086,186

  1. New York

$2,579,932,888

  1. Louisiana

$2,473,151,386

  1. Kentucky

$2,343,721,620

  1. Michigan

$2,338,380,452

  1. New Jersey

$2,103,076,000

Sources: U.S. Census Bureau; Bureau of Labor Statistics;

State Economic Development Expenditure Database,

The Council for Community and Economic Research (http://c2er.org)

“Unfortunately, Governor Wolf wants to spend even more on failing programs steeped in government favoritism,” Benefield continued. “If we truly want to create jobs and maximize our state’s business potential, ending—not expanding—corporate welfare must be a priority.”

Nathan Benefield and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 to schedule an interview.

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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.



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