Pennsylvania’s tradition of concentrating economic power in the hands of a few has proven to be inadequate at best, and harmful at worst.
Corporate welfare spending makes this concentration of economic power possible. Our state has the dubious distinction of ranking 1st in the nation in handouts to privileged interests since 2007. It's no surprise that growth in jobs, income, and population have been anemic during this time.
Supporters of corporate welfare, or government-led economic development, believe public officials can spend money more wisely than the people who earn it. But this couldn't be further from the truth.
From 2005-2015, states spending the most on corporate welfare saw slower economic growth than states spending the least. This lack of a correlation between government subsidies and economic growth is indicative of their ineffectiveness.
Failed corporate welfare programs impose real costs on working people. For instance, in 2014, the state doled out $200,000 to a Kraft Heinz plant in Lehigh Valley, but less than two years after receiving the grant, the plant announced it was closing. Now the Department of Community and Economic Development (DCED) is asking for a reimbursement from Kraft Heinz.
If DCED weren't in the grant making business to begin with, taxpayers would not be on the hook for “clawing back” ill-advised grants. And the time and money devoted to the grant process would not be wasted but rather used to create viable economic opportunities in the private sector.
Sure, private sector actors leading the way on economic development won’t always succeed. However, they're more likely to make better investment decisions than government actors, who are too often influenced by politics.
Put simply, entrepreneurs are best equipped to make rational economic decisions. This is why the private sector is the true engine of job growth. And it's why CF has suggested eliminating the more than $790 million in government grants, loans, and tax credits.
|Table 1. Corporate Welfare Grant & Loan Programs||2015-16 Budget (Thousands)|
|Agricultural Promotion, Education and Exports||$250|
|Alternative Fuels Funding||$7,091|
|Ben Franklin Tech Development Authority Transfer||$14,500|
|City Revitalization and Improvement Fund||$8,000|
|Commonwealth Financing Authority Transfer||$88,812|
|Council on the Arts||$892|
|Food Marketing Research||$494|
|Grants to the Arts||$9,590|
|Hardwoods Research and Promotion||$350|
|Infrastructure and Facilities Improvement Grants||$19,000|
|Life Sciences Greenhouses||$3,000|
|Machinery and Equipment Loan Fund||$45,568|
|Marketing to Attract Business||$2,005|
|Marketing to Attract Tourists||$7,014|
|Municipalities Financial Recovery Revolving Fund Transfer||$3,000|
|Neighborhood Improvement Zone Fund||$39,401|
|New Choices/New Options||$500|
|Open Dairy Show||$177|
|Partnerships for Regional Economic Performance||$11,880|
|Pennsylvania Race Horse Development Fund||$250,563|
|Transfer to the Nutrient Management Fund||$2,714|
|World Trade PA||$5,829|
|Film Tax Credit||$60,000|
|Job Creation Tax Credit||$10,100|
|Research and Development Tax Credit||$55,000|
|Keystone Opportunity Zone||$79,300|
|Keystone Innovation Zone||$25,000|
|Resource Enhancement and Protection Tax Credit||$10,000|
|Alternative Energy Production Tax Credit||$2,000|
The savings realized by eliminating these programs could be used to lower tax rates across the board, help bridge the budget gap, or a combination of the two. Taking economic power out of Harrisburg and putting it back into Pennsylvania's communities is what true economic justice looks like.