State Business Subsidies Fuel Sprawl, New Keystone Research Study Finds

Research Conducted for new Brookings Institution Back to Prosperity Report

New KRC Web Map Displays Allows Interactive Display of Data on 1333 Subsidy Locations

Harrisburg, December 9 – For the first time, members of the general public will be able to easily find out how and where state economic development subsidies are being spent, thanks to a new Web site developed by the Keystone Research Center, www.keystoneresearchmap.org.

The new site goes live today in conjunction with the release of a pioneering report on business subsidies and sprawl authored by KRC.

The new KRC report, Economic Development Subsidies in Pennsylvania: Do They Fuel Sprawl?, was commissioned by the Washington D.C.-based Brookings Institution and summarized in its report, Back to Prosperity just released statewide to wide press attention. 

Summarized in the Brookings report, the stand-alone KRC study contains a wealth of additional detail on the subsidy and sprawl nexus in Pennsylvania and nine major metropolitan areas.

Based on a data base painstakingly assembled from Department of Community and Economic Development and Web sources, KRC analyzes 1333 subsidies worth $719 million distributed from Pennsylvania’s three most business assistance programs since July 1998.

Users of the new KRC map site can explore this data by creating maps and data reports on subsidies received in areas ranging from the state as a whole down to a few blocks. Data reports on subsidies include the name of the company receiving funds, the municipality where the business is located, and sometimes the exact address of the business site, the amount of the subsidy, and the program from which the subsidy came.

The KRC report on economic development subsidies finds that

• Pennsylvania does not use economic development dollars to counteract the outward movement of jobs and the tendency of this to reinforce sprawl.  Statewide, outer townships receive as many subsidy dollars per person ($58 per capita) as older communities.  
• First-class townships – older, inner suburbs that account for 12 percent of the state’s population – receive just four percent of state subsidy dollars to help them ward off job and population loss.
• Subsidies to industrial and business parks – 135 projects totaling $98.9 million in our data base -- have the greatest bias towards new suburbs. On a per capita basis, outer townships receive 2.2 times as much in subsidies to industrial parks as older Pennsylvania. Suburban industrial and business parks are concentrated in the Pittsburgh, Scranton-Wilkes Barre-Hazelton, and Erie areas. 
• Economic development subsidies play a significant part in the emergence of huge distribution centers that increasingly dot Pennsylvania’s rich farmland.  Out of $89.2 million from one program going to distribution industries, 13 mega-projects in outer suburbs received exactly half of the money.

"Business subsidies to outer suburbs further undercut older Pennsylvania," said Bruce Katz, director of the Center on Urban and Metropolitan Policy at the Brookings Institution. "They threaten to foreclose the potential for a high-wage future centered on older communities with the infrastructure, amenities, and concentrations of skilled labor necessary.”

According to Greg LeRoy, director of the national best-practice clearinghouse on business subsidy accountability and a nationally recognized expert, “The KRC reports breaks new ground in research on subsidies and sprawl.  It is based on the very first data base accessible to researchers on the location of all businesses receiving a large number of subsidies from major subsidy programs in a state.”