Friday, April 07, 2006
Economic Development Juggernaut Continues to Grow
Through the first quarter of 2006, Pennsylvania expended $363 million—an average of $4 million per day—on so-called economic development projects. At that pace, the state will spend $1.4 billion in 2006 in addition to the $1.2 billion it has expended from 2003 through the end of 2005.
As we pointed out in our 2006 report on economic development spending in the Commonwealth, the money comes from a lot of sources and goes to a lot of recipients. Unfortunately, we don’t see improved results in terms of job gains in the industries receiving the taxpayer-funded largesse. Then too, the metro areas that have received the most money showed no discernibly faster growth than metro areas receiving lesser amounts. Indeed, a large fraction of the job gains in the state and western Pennsylvania have occurred in eating and drinking establishments along with health care and education. Job gains that are driven by their own special demand factors and not Gubernatorial check writing.
From January through March of this year, Allegheny County received $26 million (7 percent). One-third of it came in the form of an allocation to Rockpointe Airport from an Aviation Capital Grant. There was also an allocation made to the African American Cultural Museum for $5 million from the Redevelopment Assistance Capital Program. The seven-county metro area reaped $103 million in total.
As campaign season heats up, look for the allocations to possibly become larger and more frequent. And that is very unfortunate. Imagine if the administration and the General Assembly committed to returning that expenditure to the taxpayers in the form of a tax cut instead of doling it out to the selected lucky recipients. But the reality is that the insanity of pursuing the handout growth strategy will persist because there is no political will to stop it.
As we pointed out in our 2006 report on economic development spending in the Commonwealth, the money comes from a lot of sources and goes to a lot of recipients. Unfortunately, we don’t see improved results in terms of job gains in the industries receiving the taxpayer-funded largesse. Then too, the metro areas that have received the most money showed no discernibly faster growth than metro areas receiving lesser amounts. Indeed, a large fraction of the job gains in the state and western Pennsylvania have occurred in eating and drinking establishments along with health care and education. Job gains that are driven by their own special demand factors and not Gubernatorial check writing.
From January through March of this year, Allegheny County received $26 million (7 percent). One-third of it came in the form of an allocation to Rockpointe Airport from an Aviation Capital Grant. There was also an allocation made to the African American Cultural Museum for $5 million from the Redevelopment Assistance Capital Program. The seven-county metro area reaped $103 million in total.
As campaign season heats up, look for the allocations to possibly become larger and more frequent. And that is very unfortunate. Imagine if the administration and the General Assembly committed to returning that expenditure to the taxpayers in the form of a tax cut instead of doling it out to the selected lucky recipients. But the reality is that the insanity of pursuing the handout growth strategy will persist because there is no political will to stop it.
