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PA Tops in Corporate Welfare
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 |
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|
Top Ten States |
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|
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% |
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|
Bottom Ten States |
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|
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% |
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Source: State Economic Development Expenditure Database, The Council for Community and Economic Research (http://c2er.org); U.S. Bureau of Labor Statistics. |
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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.