Corporate Welfare: The New Budget Hostage

Gov. Wolf is withholding approval of corporate welfare projects until lawmakers agree to advance his legislative agenda.

According to a Pittsburgh Tribune-Review story, administration aides told Senate Republicans no economic development grants would be approved until lawmakers present Gov. Wolf with an acceptable budget.

The governor can offer this ultimatum because he must approve Redevelopment Assistance Capital Program (RACP) grants. RACP uses borrowed funds—with interest covered by taxpayers—to finance economic development projects.

The economic impact of RACP is questionable at best. Generally, states spending the most on economic development, AKA corporate welfare, see their economies grow at a slower rate than states spending the least.

Corporate welfare’s ineffectiveness is not the only strike against it. It also concentrates power in Harrisburg. The Tribune-Review story perfectly encapsulates why this is a problem. No one person should have the power to pressure legislators into voting for higher taxes by withholding approval of local projects. 

Pennsylvania must move away from a system that relies—at least in part—on politics to drive economic decision-making. Two pieces of legislation awaiting action in the Senate, HB 928 and HB 930, move Pennsylvania in the right direction. The bills impose debt and spending limits on RACP and Public Improvement Projects.

Reducing government debt and restraining its ability to grant corporate handouts is the moral and practical way to grow our economy.