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June 11, 2012 | By | Posted in Governor

PA: Economic development program gets new name, stricter rules

Administration undertaking changes without legislation
 
By Eric Boehm | PA Independent
 
HARRISBURG — Pennsylvania government’s best-known economic development tool has a new name but the same old purpose — funneling taxpayer dollars to private developers.

 
State Budget Secretary Charles Zogby announced that the Redevelopment Assistance Capital Program — known as RACP but frequently called “R-Cap” — will be renamed the Pennsylvania Economic Growth Initiative.
 
The new name will coincide with what the Corbett administration promises will be a stricter, merit-based selection process for projects that focus public investments on projects with a “clear, positive economic impact” and a priority on creating jobs.
 
"These important changes are much more than just a new name for an old program; they reflect Gov. (Tom) Corbett's insistence on positioning Pennsylvania to better compete in a global economy," Zogby said.
 
Earlier this year, the Republican-controlled state House passed a bill placing many of the same controls on future RACP debt and requiring the program to reduce outstanding debt from $4 billion to $1.5 billion over the next 20 years.
 
The bill is awaiting action in the state Senate, though Majority Leader Dominic Pileggi, R-Chester, has professed support for it.
 
Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, applauded the administration for tightening the rules on the program, but said it should be done legislatively.
 
"We do believe that you have to have the rule of law behind those changes to make them more permanent," Miskin said.
 
When RACP was created in 1986, it had a debt ceiling of $450 million. The current limit is slightly more than $4 billion, the result of politicians voting multiple times to increase it. The increases have come during both Democratic and Republican control of state government.
 
The changes announced by Zogby on Friday will limit the PEGI program debt to $125 million annually.
 
"This newly improved program will allow us to retire old debt instead of saddling it onto our children," Zogby said.
 
Nathan Benefield, research director for the Commonwealth Foundation, a free-market think tank here, said the program should be eliminated entirely after leaving taxpayers on the hook for billions of dollars in corporate welfare.
 
“Nonetheless, Corbett's proposal is a significant improvement — preventing many of the politically driven RACP projects we’ve seen in the past while slowing the growth of state government debt,” he said.
 
The name change comes as the Corbett administration faces criticism from all sides about what is potentially the largest economic development project the state has ever undertaken.
 
In an attempt to land an ethane cracker — a plant that turns natural gas into plastics and other materials — in Beaver County, the administration has promised Shell Co. more than $2 billion over 25 years. If the company chooses to locate in Pennsylvania, it could mean 20,000 jobs, according to administration estimates.
 
The cracker is not being paid for with RACP funding, but it has become a sticky subject for Corbett because it is closely related to the principle of RACP – using taxpayer funds for economic development.
 
On Monday, Corbett said the project was a “game-changer” and defended the annual cost of the tax breaks, most of which would go to other companies using the products created by the plant.
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