Accountable USA - Pennsylvania

Pennsylvania’s economic development “toolbox” contains some costly subsidy programs that need sharpening to achieve greater accountability. The Opportunity Grant Program and the Keystone Opportunity Zone (KOZ) Program are examples of old, unfocused, and outmoded approaches that have generated their share of controversy. Pennsylvania has been known to aggressively pursue very large deals, such as the $1.65 billion in tax credits it gave to Royal Dutch Shell in 2012 for an ethane cracker facility that is expected to hire just 400-600 workers. 

Although Pennsylvania’s subsidy disclosure practices are above average, the state has a long way to go to achieve true transparency. Pennsylvania employs a glitchy database of economic development program recipients known as Investment Tracker.  The state uses this database for three of the five major programs we examined (Opportunity Grant Program, Tax Credit for New Jobs, and the Film Production Tax Credit).  Recipients of R&D tax credits are disclosed in a different location. There is no online disclosure of KOZ participants. Recipient information for the programs covered in Investment Tracker can also be found in the contract database of the state Treasury Department.

Good Jobs First has published a number of studies on economic development incentives in Pennsylvania. Be sure to check out “Related Publications” to the right of this page.

 

Click on the links below for the latest data on Pennsylvania

 

    Corporate Misconduct in Pennsylvania:

            Results page for Pennsylvania in Violation Tracker

    Subsidy Deals in Pennsylvania:

            Results page for Pennsylvania in Subsidy Tracker

    Tax Revenue Lost by Pennsylvania Governments to Subsidy Programs:

            Results page for Pennsylvania in Tax-Break Tracker (available soon)

    Mega-deals in Pennsylvania:

            Spreadsheet of subsidy deals over $50 million (can be filtered by state)

    Institutional Schematic for Enforcing Disclosure in Pennsylvania:

            Pennsylvania GASB-77 Roadmap

    Exemplary Journalism on Economic Development Incentives in Pennsylvania:

            (available soon)

 

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Key Subsidy Programs

Subsidy Program Recent Annual
Cost
Online Recipient
Disclosure
Recipient Disclosure
Score
Job-Creation/
Job-Quality Score**
Monitoring/
Enforcement Score***

FILM PRODUCTION TAX CREDIT

This program is designed to encourage production of films, television commercials, and television shows. Credits are awarded to be used against Corporate Net Income, Personal Income, Insurance Premiums, Bank and Trust Company Shares, Mutual Thrift Institutions, and Title Insurance Company Shares Taxes.

$160 million in total value of subsidy awards (2016)

$60 million reduction in state tax revenue (2018)
33/100
10/100
35/100

TAX CREDIT FOR NEW JOBS (formerly JOB CREATION TAX CREDIT)

This program is designed to promote job creation. Credits are awarded to be used against Corporate Net Income, Personal Income, Bank and Trust Company Shares, Mutual Thrift Institutions, Gross Receipts, Gross Premiums, and Title Insurance Company Shares Taxes.

$21 million in total value of subsidy awards (2016)

$10 million reduction in state tax revenue (2018)
35/100
60/100
63/100

KEYSTONE INNOVATION ZONE (KIZ) PROGRAM

This program is designed to foster entrepreneurial opportunities for young companies to grow in designated geographic areas. Credits are awarded to be used against Corporate Net Income and Personal Income Taxes. 

$15 million in total value of subsidy award (2016)

$16 million reduction in state tax revenue (2018)
26/100
not included
not included

KEYSTONE OPPORTUNITY ZONE (KOZ) PROGRAM

Businesses located in KOZs are entitled to a bundle of subsidies, including property tax abatements, hiring credits, and sales and use tax exemptions.

$20 million in total value of subsidy awards (2015)

$92 million reduction in state tax revenue (2018)
0/100
0/100
23/100

PENNSYLVANIA FIRST GRANT

This program gives flexible grants, loans, and loan guarantees to businesses to encourage job creation.

$39 million in total value of subsidy awards (2016)
33/100
not included
not included

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Kvaerner Philadelphia Shipyard (1997)

When the Pentagon closed the 195-year-old Philadelphia Naval Shipyard in 1996, the city thought that it had permanently lost a key element of its industrial infrastructure. But a year later the Norwegian engineering company Kvaerner ASA negotiated a deal with state and local officials under which it would reopen the facility and eventually hire about 1,000 shipbuilding workers. The plan called for subsidies from the city, state and federal governments and the Delaware River Port Authority of about $400 million, including some $200 million for reconstruction of the yard and the rest for workforce training. Kvaerner said it would invest $165 million over the first 12 years, but its costs were defrayed by a $30 million low-interest loan. Unions in the AFL-CIO’s Metal Trades Council agreed to work-rule concessions at the facility.

In 1999, before the new shipyard opened, the Kvaerner Group announced plans to sell its shipbuilding division but said it would move ahead with the Philadelphia project. To further assist the company, city and state officials allowed Kvaerner to shift $50 million of the money slated for training to construction costs and to redesign the shipyard in a way that cut those construction costs by $25 million. A 2000 audit by the state auditor’s office accused Kvaerner of using taxpayer funds for executive perks and living allowances. In 2001 the Kvaerner Group was taken over by Norwegian industrialist Kjell Inge Roekke. In 2003 the new shipyard completed its first vessel. In June 2010 the operation, which had been renamed Aker Philadelphia Shipyard, announced that it would lay off an unspecified number of workers because of a slump in new orders. Things improved in 2011after the shipyard received $42 million in new public assistance and then received several major orders. (Key sources)

Westinghouse Electric (2006)

In November 2006 the state legislature created a new subsidy program designed to persuade the nuclear engineering company Westinghouse Electric to stay in Pennsylvania as it underwent a major expansion. The legislation provided for the creation of up to four “Strategic Development Areas” in which state and local tax breaks found in Keystone Opportunity Zones would be made available for longer periods for companies that maintained at least 500 jobs and made capital investments of at least $45 million. Westinghouse, which had recently been acquired by Japan’s Toshiba, responded by choosing western Pennsylvania as the site for a $160 million headquarters and technical complex. But rather than automatically remaining in Monroeville, the company created a competition between that Pittsburgh suburb and another, Cranberry Township.

However, the administration of Gov. Ed Rendell moderated the process to avoid a ruinous race to the bottom. In March 2008 Westinghouse chose Cranberry, which offered a local-state subsidy package worth about $45 million over 15 years to capture the projected 3,000 jobs. The state offered several million more in other benefits. It later came to light that Westinghouse would not own the new complex but rather lease it from a real estate investment trust. The facility formally opened in October 2010 with projections that it would eventually house 5,000 employees. (Key sources)

Walmart in Pennsylvania

  • At least 7 Wal-Mart locations have received subsidies worth about $25.9 million in Pennsylvania.
  • At least 17 Wal-Mart locations in Pennsylvania have challenged their property tax assessment, recouping about $763,000.
  • Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.
  • Wal-Mart receives about $3.2 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.

For more information, see the Pennsylvania page of Wal-Mart Subsidy Watch.