Pennsylvania Tops in Corporate Welfare

MAY 14, 2014 | by BOB DICK

Pennsylvania's system of economic development subsidies costs taxpayers hundreds of millions of dollars annually, yet this spending does little to promote overall job growth.

Given the state's fiscal hurdles, ending special subsidies to favored businesses would be a win for both fiscal responsibility and economic growth. Corporate welfare costs taxpayers more than $700 million a year (billions if you include interest from economic development spending bonds and from independent state agencies).

Corporate Welfare Grant & Loan Programs (Operating Budget) 2013-14 Budget (Thousands) 2014-15 Proposed Budget (Thousands)
General & Special Funds
Agricultural Research $787 $0
Agricultural Promotion, Education and Exports $196 $0
Ben Franklin Tech Development Authority Transfer $14,500 $14,500
Commonwealth Financing Authority Transfer $78,019 $82,505
Council on the Arts $886 $886
Discovered in PA Developed in PA $9,900 $9,900
Food and Marketing Research $494 $0
Grants to the Arts $8,179 $8,590
Hardwoods Research and Promotion $350 $0
Industry Partnerships $1,813 $1,613
Infrastructure and Facilities Improvement Grants $19,409 $19,409
Keystone Communities $11,300 $10,799
Keystone Works $1,000 $1,000
Livestock Show $177 $0
Marketing to Attract Business $3,442 $4,586
Marketing to Attract Tourists $7,435 $3,806
Municipalities Financial Recovery Revolving Fund Transfer $7,096 $5,250
New Choices/New Options $500 $0
Open Dairy Show $177 $0
Partnerships for Regional Economic Performance $11,880 $12,380
Pennsylvania First $37,800 $42,500
Pennsylvania Race Horse Development Fund $252,109 $252,159
Tourism-Accredited Zoos $550 $0
World Trade PA $7,296 $7,900
Youth Shows $140 $140
Total  $475,435 $477,923
Tax Credits
Film Tax Credit $60,000 $60,000
Job Creation Tax Credit $10,100 $10,100
Research and Development Tax Credit $55,000 $55,000
Keystone Opportunity Zone $87,400 $87,500
Keystone Innovation Zone $25,000 $25,000
Alternative Energy Production Tax Credit $10,000 $10,000
Total Tax Credits $247,500 $247,600
Total Amount $722,935 $725,523

Not only are taxpayers forking over more than $700 million annually, but these economic development programs don't produce greater job growth—at least not when compared with lowering the tax burden for all. As the chart below shows, the states in the top 10 of economic development spending saw their economies grow at a slower pace than those states in the bottom 10.

Expenditures on Economic Development Programs

Top Ten States

States

Total FY 2007-14

Population

Per-Capita

Job Growth FY 2003-13

Pennsylvania

$5,099,048,477

12,763,536

$400

2.56%

Ohio

$4,635,133,424

11,544,225

$402

-3.60%

California

$4,458,817,000

38,041,430

$117

1.69%

Louisiana

$3,269,130,453

4,601,893

$710

2.47%

New Jersey

$2,891,965,000

8,864,590

$326

-1%

Florida

$2,806,836,571

19,317,568

$145

3.02%

Kentucky

$2,390,976,948

4,380,415

$546

1.81%

Arizona

$2,386,631,775

6,553,255

$364

7.06%

Texas

$2,385,404,844

26,059,203

$92

19.30%

New York

$2,318,185,102

19,570,261

$118

5.38%

Average

$322

3.87%

Bottom Ten States

States

Total FY 2007-14

Population

Per-Capita

Job Growth FY 2003-13

Nevada

$483,109,516

2,758,931

$175

5.03%

New Mexico

$386,315,600

2,085,538

$185

3.38%

Rhode Island

$346,992,377

1,050,292

$330

-3.39%

Maine

$337,491,972

1,329,192

$254

-0.36%

Nebraska

$298,183,050

1,855,525

$161

6.81%

Delaware

$214,754,300

917,092

$234

1.37%

Vermont

$213,484,452

626,011

$341

1.30%

Montana

$197,028,847

1,005,141

$196

12.07%

New Hamphsire

$195,003,279

1,320,718

$148

2.54%

Idaho

$186,680,900

1,595,728

$117

12.49%

Average

$214

4.12%

Source: State Economic Development Expenditure Database, The Council for Community and Economic Research (http://c2er.org); U.S. Bureau of Labor Statistics.

Due to a projected budget deficit of $1.2 billion next fiscal year, Gov. Corbett and lawmakers are looking for areas in the budget to cut. Reducing corporate welfare, which has proven to be ineffective, would be a good first step toward balancing the budget and creating an environment hospitable for job growth.

For more solutions to PA's budget troubles, read our report, Blueprint for a Prosperous Pennsylvania.



comments powered by Disqus

Media contact:
media@commonwealthfoundation.org

(O) 717-671-1901

Who are We?

The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.