PA Governor’s Proposed Budget Cuts Millions from Economic Development Programs

Today in Harrisburg, Governor Corbett revealed his proposal for the 2012-2013 budget. We wanted to provide a quick summary and high-level observations to members of the economic development community. The bottom line is that there is little to be excited about if you work in the economic development or related communities in Pennsylvania.

First, this budget continues and in some cases adds to the cuts that have been faced by almost all of the Department of Community and Economic Development programs. The chart below illustrates the impact over the past 12 budget cycles on the economic development initiatives in the Commonwealth.

 

Commonwealth of PA Economic Development Funding

Source: Fourth Economy Consulting

 

This year’s budget further reduces economic development spending by $3.6 million from 2012-2013 figures.

This is a total of $60.9 million from the end of the previous administration with several programs consolidated or eliminated in the past two years. The chart provided also breaks out Commonwealth Financing Debt service as this funding is going to pay off previous commitments rather than being available for new investments.

The larger cuts are in the areas of Pennsylvania First (decreased by $2.5 million) and the Marketing to Attract Tourists (decreased by $1 million).

Programs such as the Ben Franklin Technology Development Authority which supports the Ben Franklin Technology Partners ($14.5 million), the Life Science Greenhouses ($3 million), and the newer Discovered and Developed in PA program ($9.9 million) are level funded in the Governor’s proposal. It remains to be seen if the Corbett administration will continue to support the Keystone Innovation Zone program. Previously those funds were provided as part of the BFTDA funding but in the past year the appropriation went to support the regional Ben Franklin Technology Partners.

One major blow to the state’s colleges and research universities that are performing health research is a redirection of all funding for the Health Research Priorities otherwise known as the Commonwealth Universal Research Enhancement program (CURE). Last year the CURE program supported $55.8 million in research funding and if the Governor’s proposal passes they will received no funding.

The budget negotiation process begins today and the Governor has made his recommendations. We will keep you posted about the conversations. If you have any questions or information to share please feel free to ask and comment.

 

 

 

Ideas Wanted

The other day I attended a Team Pennsylvania Foundation regional forum that focused on Pennsylvania’s new economic development budget.

Even if you are not a resident of Pennsylvania my guess is that your state is also looking at doing things differently with respect to their economic development programs. The economy and financial concern in most state capitals require a hard look at economic development delivery system and investment priorities.

What struck me by the presentation by staff from the Department of Community and Economic Development and conversation that followed was that more people need to be involved in the process. Governor Corbett in his 2011-2012 budget is calling for significant changes to the DCED budget. Foremost is the reduction of programs managed by the agency from 127 to 56. This reduction will come from program elimination and consolidation.

Of course such action is not without its critics who would prefer the status quo over the unknown. In the end though the action is necessary, as the agency has had to deal with the creation and implementation of new programs with each subsequent Governor and new Legislature for decades. The maze of funding opportunities, guideline and legal requirements has created a nightmare of doors to go through for any community or business seeking government funding support.

The Governor began the process by making his recommendations. It is now critical that we as tax payers and stakeholders in the economic development infrastructure of this state weigh in on those recommendations and offer our own suggestions.

The Team PA Foundation has developed a feedback tool for you to share you ideas and comment on others. I strongly encourage you to take advantage of this opportunity and if you can attend a future regional session do that as well.

New initiatives that have been recommended include:

  • The Liberty Loan Fund
  • PA First Fund
  • Discovered in PA, Developed in PA
  • PA Regional Economic Partnership

Each program significantly changes the current way the state conducts business and it’s relationship with partners throughout the state. As a result there is significant room for recommendations and adjustment while the budget is debated. The time is now for you to add your voice to the discussion.