The Real Problem with the Specter Library
As part of the state budget deal, Gov. Rendell secured $600 million in new borrowing for pork-barrel projects, including $10 million for the “Arlen Specter Library” at Philadelphia University and another $10 million for the “John P. Murtha Center for Public Policy.” These monuments to politicians have sparked outrage, but represent only the tip of the iceberg in Pennsylvania’s debt-fueled pork spending.
The Redevelopment Assistance Capital Program (abbreviated RACP, but pronounced R-Cap) was created in 1986 with a debt limit of $400 million. This debt ceiling has been increased regularly, mostly under Gov. Rendell’s watch, with the latest $600 million hike increasing the limit to over $4 billion.
RACP is effectively state borrowing for “corporate welfare”. In addition to the Specter and Murtha projects, the other projects funded this year include a new facility for Highmark, a hotel in St. Marys, and a number of grants to unnamed businesses. RACP has often been used for sports stadiums, convention centers, and even to pay Harley-Davidson to stay in Pennsylvania a little longer. Borrowing on the backs of taxpayers for these types of handouts is not a proper role for state government.
For starters, RACP grants (though part of the state “capital budget”) are not true capital expenditures. Like a family borrowing to buy a home, or going into debt to expand a business, government can appropriately issue bonds to build new facilities, schools, and roads. But handouts to politically selected companies and special interests are an improper use of taxpayer-backed debt.
Furthermore, the use of state debt under Gov. Rendell represents an oversized credit card with an ever-increasing spending limit. It is one thing for a state to borrow for infrastructure projects and then pay off that debt over the life of the project, but Pennsylvania continues to borrow and spend more each year while only making the minimum payment due.
Few have adequately acknowledged the growing burden of debt in Pennsylvania. Gov. Rendell answered some critics of these new projects by claiming he could not use debt to finance ongoing operations (like libraries). What he fails to mention is that the fastest growing department under his watch is not Education or Public Welfare, but the Treasury – representing increases for interest payments on debt. Indeed, General Fund debt service has nearly tripled under Gov. Rendell, from $350 million to $975 million in the current budget. And this total under-represents the true debt burden because most state debt is buried in off-budget state agencies and authorities.
Finally, RACP has failed to produce the promised economic renaissance. Increasing RACP borrowing was part of the Rendell stimulus package of 2004 – along with other debt-financed programs like the Commonwealth Financing Authority – but no stimulus came. Pennsylvania falls among the bottom of the states in rankings of our business climate. The state remains an “outbound” state, with more residents leaving for other states than coming in. And while the Commonwealth has not suffered as much as others in the current recession, the state still lags the nation in economic growth.
Indeed, had RACP worked as promised, there would be little need to keep it going. Rather, despite the proven failure of debt-backed economic development spending, lawmakers are growing the program and throwing more money around for their pet projects. As the Specter Library and Murtha Center indicate, RACP is much more about “political development” than economic development.
The monuments to the late Congressman Jack Murtha and soon-to-be-former Senator Arlen Specter represent some of the most egregious examples of pork-barrel politics. But hopefully, they can also be a wake-up call to voters and lawmakers alike about the out-of-control debt spending that plagues Harrisburg and holds back Pennsylvania’s economy.
# # #
Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.