Over the last decade state and local governments in Pennsylvania have spent billions of dollars on economic development subsidies and tax breaks for individual businesses.

Those subsidies are supposed to bring good jobs and a better quality of life to people in financially troubled communities. Unfortunately, there is still no way to know when subsidy money is going to communities that truly need it and when it's going to more affluent suburbs that don't need it--or even to undeveloped areas where it may contribute to suburban sprawl and damage the environment.

Haphazard, non-targeted distribution of economic development funds could be stopped if people the general public were fully informed and the distribution of subsidies was a transparent process--as it should be.

Right now, no comprehensive information is collected or disseminated on subsidies or their actual economic effects.

Using the sparse information that is available--plus special data requests to the Department of Community and Economic Development and lots of detective work--Keystone Research Center has documented that subsidies are deficient because in many cases:

PA subsidies go to business sites far from the workers and communities that most need job opportunities.

Subsidies go to businesses located on "greenfield" sites, often inaccessible by public transit, fueling sprawl and canceling out the impact of other Commonwealth programs for land preservation, environmental protection, and revitalizing cities and older towns.

The jobs created pay by many subsidies pay low wages by the standards of their industry and county.

What would solve these problems? Some very simple steps that Pennsylvania's state government could take right now.

Pennsylvania should collect, and publicly report on the internet, data on state and local subsidies, the jobs they create, the wages and benefits paid on the jobs created, and the address of the business using the subsidies (modeled on the KRC map at www.keystoneresearchmap.org.). Tax breaks given by the state or local municipalities to businesses should be reported in the same way.

Make the jobs created by business subsidies comply with basic wage and benefit standards and pay enough to support a family.

Make businesses refund subsidies to the extent that they do not deliver promised jobs and wage levels.

Give priority for subsidies to high unemployment and distressed areas and areas accessible by public transit.

The Commonwealth should produce a comprehensive annual economic development report (or "Unified Development Report") that adds up all the money spent on direct subsidies plus the revenue foregone because of state and local tax breaks.

The Commonwealth should consult the communities involved and provide an opportunity for public input before subsidies are distributed.

The Commonwealth should shift economic development dollars away from ad-hoc, non-strategic subsidies to individual businesses which too often translate into private gains rather than public benefits. It should shift economic development dollars to infrastructure, skills development, and education--public goods that benefit lots of companies, workers, and communities.

For Pennsylvania

Economic Development Subsidies in Pennsylvania: Do They Fuel Sprawl? by Dennis Bellafiore, Stephen Herzenberg, Meg Myer, and Allan Rothrock.

Many Pennsylvania Industrial Development Authority Loans Create Low Quality Jobs by David Bradley.

www.keystonereserchmap.org is KRC's ground-breaking interactive mapping site that shows how economic development assistance information can be made available more transparently.

Pennsylvania's Official "Investment Tracker"; the subsidy reporting website developed by the Department of Community and Economic Development.

How PA Feeds Sprawl and Creates Low-Wage Jobs Through Economic Development Subsidies (Power Point) by the Keystone Research Center.

PA House Bill 175 and PA Senate Bill 784, both introduced in 2007, which call for improved disclosure of information on state economic development subsides and tax breaks.

Outside Pennsylvania

A Second Chance for Cities (PDF) by Neal Pearce. The nationally syndicated column profiling KRC's subsidy map.

Sprawl of the Wild (PDF) in Government Technology. The national cover story on KRC's subsidy map.

Good Jobs First's Guide to Accountable Development by the leading national clearinghouse for information on economic development accountability.

Accountability for Economic Development Susidies by Minnesota State Senator John Hottinger. A review of work in Minnesota to pass accoutability legislation.

Economic Development Accountability Laws by Steve Lerch of the Washington State Institute for Public Policy

Accountable Economic Development (PDF) from the Center on Wisconsin Strategy.

In Search of the Great Pumpkin: Economic Development Accountability in North Dakota by Anne Nolan and Greg LeRoy.

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