Pennsylvania Governor’s “Liberty Loan Fund” Idea Gets Chilly Reception
May 17, 2011
As I note in a New York Times online piece today, targeted tax incentives “are politically popular because they enable officials to cut ribbons at a shiny new facility or take credit for a handful of new jobs created.” However, they only work if politicians are effective venture capitalists, picking winners and losers correctly. Existing businesses that pay their taxes year-in and year-out are usually not eligible, and the new facilities and jobs have a habit of disappearing as soon as the credits stop.
So some governors are pushing to pare back incentives out of a realization that they should be a low budget priority (like Michigan’s Rick Snyder (R) and Rhode Island’s Lincoln Chafee (I)) while other governors (like Virginia’s Bob McDonnell (R) and Washington’s Chris Gregoire (D)) seek to expand them to create jobs at a time of high unemployment. While targeted tax credits get less scrutiny than appropriated spending, at least most states have a process of some kind that involves meeting listed requirements with a somewhat neutral government agency.
Pennsylvania Gov. Tom Corbett (R) wants to loosen up those procedures:
My budget combines the Commonwealth Financing Authority with all other DCED loan funds. We call it the Liberty Loan Fund, and liberating it is. Where once a business owner needed a Sherpa guide to find his way through the mountains of financing rules, trying to figure out where his job creating business fit, this budget puts it under one roof. It’s a one-stop shop.
His plan to cut red tape in accessing tax incentives is to consolidate the money under his office. Needless to say, the idea has gotten a chilly reception from those who hold the pursestrings now:
“What he seems to want to do is collapse a whole lot of money into one pot for him to disburse as he sees fit. That gives himself a lot of control, the opposite of openness and reform and a step back,” Patton said. […]
“Pennsylvania has been a leader in the nation in ‘economic development investments,’ yet the results are abysmal,” said the Commonwealth Foundation’s Matt Brouillette.
“The politicians keep proclaiming that these programs will spur or leverage greater investment and job creation, but they never do and we only get told we have to keep pumping more taxpayer money into these corporate welfare programs,” he said.[…]
“Nothing’s ever dead, but this is one more thing that needs a lot more explanation,” said Steve Miskin, a House Republican spokesman.