NFIB

Performance audit leads Pennsylvania lawmakers to seek broad-based tax cuts to grow economy instead of risky "corporate welfare" programs

A performance audit of the state's economic development programs has revealed that millions of tax dollars were delivered to large companies that failed to meet promised job-creation goals while many companies shut their doors and left without re-paying their commitments to the state. The report by the state Auditor General on Pennsylvania's Opportunity Grant Program also noted little accountability in regards to how grants were distributed. The critical findings have led to calls by some lawmakers to scrap the "corporate welfare" program and support broad-based business tax cuts as away to spur economic growth.

"In order to really help Pennsylvania employers, we need to eliminate these Opportunity Grants and focus on business tax cuts," said state Rep. Mike Turzai (Allegheny).

Between 2000-03, the state awarded more than $117 million in grants to 360 companies that promised to create a certain number of jobs in return for the state funds. The auditor general's report revealed 60 percent of the firms failed to meet their job creation goals. From 2000-05, state officials waived more than $49 million in repayments they could have pursued against 187 companies that had received grants dating to 1996, when the program began. They collected only $3.4 million.

Rep. Turzai said legislation will be introduced to eliminate the Opportunity Grant Program and redirect the funds to proven job-creation methods such as tax cuts.

The advocacy office in the U.S. Small Business Administration reported last February the most important thing state governments can do to influence economic growth is to increase the number of small business establishments. The report suggested states should focus on grooming new and existing entrepreneurs and small businesses instead of chasing larger companies -- a practice know as "economic hunting."

"Economic hunting forces the state to pick economic winners and losers," said NFIB/Pennsylvania State Director Kevin Shivers. "Essentially these programs take hard-earned tax dollars from tried-and-true existing Pennsylvania companies and uses them to finance projects and take on risks the private sector isn't willing to assume. There is a much better way to grow Pennsylvania's economy."

View the Auditor General's report
Visit Rep. Mike Turzai's Web site