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Economic Development Programs Consolidated in PA Budget

July 13, 2011

Lawmakers approved Gov. Tom Corbett's proposal to restructure the state's economic development efforts by consolidating several programs within the Department of Community and Economic Development (DCED). Total general fund spending for DCED in FY12 is $212.8 million, down from $327.5 million last year or a 35 percent reduction. Much of this is achieved through consolidating programs.

The Ben Franklin Technology Development Authority Fund will receive $14.5 million, down from $16.9 million in FY11. The authority funds the Ben Franklin Technology Partners, which provide access to capital and entrepreneurial support services to promising tech-based companies through its four regional networks. The budget funds a new line item of $9.9 million for the Discovered in PA, Developed in PA initiative to help entrepreneurs connect with state resources. The program seeks to develop and deploy regional experts to reach out to high-growth companies and provide them with access to services and financing to help grow their businesses.

An initiative to better coordinate the approach and delivery of economic development services was approved in the enacted budget. Under the Partnerships for Regional Economic Performance (PREP) initiative, the department will award grants on a competitive basis to a consortia of economic development service providers. This includes Industrial Development Assistance, Local Development Districts, Small Business Development Centers, and Industrial Resource Centers. The FY12 budget provides $11.9 million for the PREP initiative; together, the four programs received $15.5 million in general funds in FY11.

Lawmakers approved $25 million for Pennsylvania First, a closing fund providing grants for job creation and retention, infrastructure projects and workforce development. This program replaces the Opportunity Grant Program, Customized Job Training Program, and Infrastructure Development, which together received $41.3 million in state funds last fiscal year.

The enacted budget also increases the cap on the R&D tax credit from $40 million to $55 million. To support early stage life sciences risk capital, the budget appropriates $3 million from the Tobacco Settlement Fund to the Life Sciences Greenhouses, the same as last year.

Higher education will be reduced approximately $220 million or 20 percent, reports The Associated Press. The governor had recommended reducing state aid to higher education by 50 percent in his budget proposal (see the March 16, 2011 issue of the Digest). Tuition and fees at Pennsylvania's 14 state-owned universities will rise about 8 percent in the next school year to help absorb the cuts, reports the Pittsburgh Tribune-Review.

Gov. Corbett's proposal to create the Liberty Loan Fund was not included in the final bill, reports The Associated Press. By pooling existing economic development financing resources, including tobacco settlement money, the governor hoped to leverage additional private funds and create the Liberty Loan Fund from which economic development organizations, venture capitalists, and companies could apply for grants and loans.

The FY12 enacted budget (HB 1485) is available here.

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