Report on Economic Development Ranks PA High, But Improvement Needed

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Harrisburg, PA – Pennsylvania ranks 10th among the 50 states in a new report from Good Jobs First sizing up states’ online disclosure of the companies receiving state and local tax breaks, cash grants, and other job creation subsidies.

Despite the high ranking, the Commonwealth gets an overall grade of C- in Show Us the Subsidies, which found a wide variation in the quality of the reporting across the states, as well as a great deal of room for further improvement.

The report mirrored the findings of a March report from the Keystone Research Center, which credited Pennsylvania for improving the disclosure of economic development spending, while calling for changes to ensure greater transparency and accountability.

Like the Good Job First study, Keystone’s report, Good Jobs, Strong Industries, A Better Pennsylvania: Towards a 21st Century State Economic Development Policy, found that the level of transparency in economic development programs is better in Pennsylvania than in most states. Still, it is not strong enough to answer such basic questions as do companies receiving subsidies actually create jobs, where do the subsidies go, what industries are subsidized, and what kind of wages do subsidized jobs pay?

“With the sharp economic downturn, now is the time to rethink how the state promotes economic development,” said economist Stephen Herzenberg, Keystone Research Center’s Executive Director. “Taxpayers expect economic development spending to be done prudently and with accountability for results.”

In the Good Jobs First report, researchers wrote that most business subsidy programs in Pennsylvania are disclosed via the state Department of Community and Economic Development’s Investment Tracker database, established during the Ridge Administration. While this online tool provides access to a great deal of data, it is also missing essential information and has technical glitches that make data difficult to search and analyze.

“The Corbett Administration and new legislature can signal their commitment to accountability by upgrading the Investment Tracker early next year,” Herzenberg said.

Good Jobs First and the Keystone Research Center are both non-profit, non-partisan research centers. Good Jobs First is based in Washington, D.C., while the Keystone Research Center is based in Harrisburg.

Across the states, online disclosure of economic development spending is becoming the norm, but there is wide variation in the quality of the reporting and about a dozen states are still keeping taxpayers completely in the dark, according to Show Us the Subsidies.

Illinois, Wisconsin, North Carolina, and Ohio were found to have the best economic development disclosure.

“With states being forced to make painful budget decisions, taxpayers expect economic development spending to be fair and transparent,” said Good Jobs First Executive Director Greg LeRoy. “Claims that sunshine would hurt a state’s business climate have been discredited, trumped by people’s rising expectations about government information being online.”

In addition to the new report, Good Jobs First also released two new online tools: Subsidy Tracker incorporates subsidy recipient information from numerous states into a searchable database; and Accountable USA feature web pages summarizing each state’s track record on subsidies. All these resources are available free on the Good Jobs First website at www.goodjobsfirst.org.

“The outpouring of job-subsidy data is a breakthrough for state government transparency and accountability,” said Good Jobs First Research Director Philip Mattera, principal author of Show Us the Subsidies and leader of the six-person team that produced the report, Subsidy Tracker and Accountable USA. “Enhanced disclosure makes it much easier to monitor the tens of billions of dollars in taxpayer revenues that are being diverted to private parties each year.”

Show Us the Subsidies rates the reporting practices of 245 key economic development subsidy programs from around the country on the inclusion of information such as company-specific dollar amounts, job-creation and wage numbers, and the geographic location of subsidized facilities. Programs are also evaluated in terms of how easy it is to find and use the online data. Each program is rated on a scale of 0 to 100 (with extra credit for including advanced features). The scores for the programs in each state are then averaged to derive a state score.

The report’s key findings are as follows:

  • 37 states provide online recipient disclosure for at least one key subsidy program.
  • Good Jobs First rated the states with the best averages across their programs as Illinois (82), Wisconsin (71), North Carolina (69) and Ohio (66). Pennsylvania averaged 43.
  • Since 2005, half a dozen states have enacted legislation mandating subsidy recipient reporting in one or more program, the most recent being Massachusetts. Several other states have moved toward transparency through administrative action alone.
  • Four states provide recipient reporting for all the key programs examined: Missouri, North Carolina, Ohio, and Wisconsin.
  • Of the 245 programs examined, 104 of them (42%) have online recipient reporting.
  • For the country as a whole, the average program score is 25. Ignoring states with no disclosure, the average rises to 59. Using letter grades, Good Jobs First gave Illinois the highest grade (B) and Wisconsin a B-; 25 states received some sort of D and the 13 states with no disclosure at all got an F.

To read more about the report’s findings or how Pennsylvania scored, go to www.goodjobsfirst.org/showusthesubsidies.

“Our findings tell two different stories,” LeRoy said. “The first is one of the steady spread of transparency across the nation. The other is that some states still inexplicably keep taxpayers completely or partially in the dark. The accountability movement has made great advances but still has a long way to go before job subsidies are as transparent as other categories of state spending, such as procurement.”