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Database details Pa. business grants, incentives

By , - Last modified: December 4, 2012 at 10:19 AM

Companies with operations in the midstate have received more than $100 million in state incentives in the past few years, according to a Business Journal analysis of data compiled by The New York Times.

Among them are well-known local companies as well as multinationals with local facilities. Schaedler Yesco Distribution Inc., a privately held company based in Dauphin County, received $2 million in Pennsylvania Industrial Development Authority loans, according to the list.

The Jay Group Inc., based in Lancaster, received $2 million in opportunity grants and job-creation tax credits, the Times said.

The Times compiled data on all 50 states for an investigative report on business subsidies that it began publishing this weekend.

The largest midstate-related incentive reported by the Times was $6.64 million in R&D tax credits, job-creation tax credits, opportunity grants and customized job training received by pharmaceutical giant GlaxoSmithKline. The British company has operations in Montgomery and York counties.

British firm BAE Systems, which has a plant in York County, received $5.9 million from state opportunity grants, job-creation tax credits and customized job-training programs, the Times reported. BAE also has operations in Franklin, Fayette and Montgomery counties, the Times said.

In all, Pennsylvania spends at least $4.84 billion a year on corporate incentives, the third highest spending among U.S. states, the Times reported.

In all, the state gave incentives totaling $108.4 million to companies with midstate operations, according to the Times’ data, the Business Journal found.

Nationwide, companies receive $80 billion a year in incentives, the Times reported. Critics say they come at the expense of state services, that companies play localities against each other to get good deals, and that states don’t adequately track the incentives’ effectiveness.

Nathan Benefield of the Harrisburg-based free-market think tank the Commonwealth Foundation said the programs tend to benefit large, politically connected companies at the expense of the state as a whole. Instead of picking winners and losers, Pennsylvania should focus on improving its business climate as a whole, he said.

Spokesman Steve Kratz of the state Department of Community and Economic Development, which administers many of the programs listed in the Times’ data, questioned the paper’s numbers. He pointed out the database lists a $1.65 billion in tax credits for Royal Dutch Shell that it cannot begin receiving until 2017 at the earliest, and then only if it builds the ethane cracker it has proposed in western Pennsylvania.

“I would caution you to take this report with a grain of salt,” he said.

The Corbett administration has reviewed its economic development programs for effectiveness and has mechanisms in place to hold award recipients accountable for making good on promised jobs and growth, he said.

If incentive programs went away, and the state improved its overall business climate, “I think everyone would be happy,” Pennsylvania Chamber of Business and Industry President Gene Barr said.

However, other states use them, and “you can’t unilaterally disarm,” he said.

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