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CPBJ Extra Blog

A closer look at economic development money offered to companies

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This week we published an interview I conducted with C. Alan Walker, the secretary of the state Department of Economic Development, but there's more to the story of what Pennsylvania spends on companies for economic development assistance.

I enjoyed the discussion with Walker about the state's economy.

But there is a little more to add to this story: the full tabulation of economic development spending through the Governor's Action Team, the single contact point for companies that are expanding or considering locating in Pennsylvania. Essentially, it's the para-executive group that offers financial assistance to companies that could generate new jobs.

First, you have to consider what the state offers companies to help them expand, add jobs or move here. Then you have to consider what companies are accepting, because some of them decide they don't want to or can't make the commitment to create those jobs.

See the chart below for a look at what kind of money is flowing through these deals.

Pennsylvania spends a lot on economic development, but considering our state budget is worth $28 billion, these numbers are just a fraction of state spending in any one year. Also, keep in mind Pennsylvania's total economy is worth about $600 billion, according to the U.S. Bureau of Economic Analysis. (Scroll down to the "Tables 1-4" link in the release to get detailed numbers.) This means the roughly $100 million we spend a year on economic development packages is just a tenth of a percent of the total state economy.

Some offers made in one year are not necessarily accepted in the same year, according to DCED. However, it's still worth looking at the accepted offers as a percent of those made. Just 65 percent of companies so far in 2013 accepted offers from the state.

Not enough numbers yet? Here's a few more: the Corbett administration has made seven tax-exempt offers to companies in the past three years. Five, or 71 percent, have accepted the offers. There are no dollar values assigned to tax exempt offers, according to DCED.

It's a lot of money and the year isn't finished yet, so it's likely more companies will see offers from the administration. What happens with Armstrong World Industries Inc.'s plans to bring a factory to the U.S. will be watched closely in this context. Armstrong and the state have been talking about that, but neither entity offered a substantive update on the process this week.

With Armstrong having so many factories around the U.S., Pennsylvania will be competing with other states for those jobs, something Secretary Walker said the administration is keenly aware of in economic development.


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