FY10 Budget Leads to Significant Cuts for PA Economic Development Efforts

The first third of the current fiscal year was over before Pennsylvania leaders could agree on a $27.8 billion FY10 budget that sharply reduces spending across many areas of community and economic development. It does boost funding for basic education to historic levels, however.

State spending in FY10 is $1.9 billion lower than in FY09 and $524 million less when federal stimulus dollars are taken into account, according to the governor’s press office. In addition to spending cuts across most agencies, the state will raise cigarette taxes by 25 cents per pack and institute a new tax on small cigars.

Funding is reduced for several programs within the Pennsylvania Department of Community and Economic Development (DCED), including funding for one of the nation’s largest state technology development programs, the Ben Franklin Technology Development Authority (BFTDA). The BFTDA will receive $20 million in FY10, down from $50.7 million. The BFTDA approved $16 million to be allocated equally this year among the four regional Ben Franklin Technology Partners - regional centers that provide seed capital and business assistance for early-stage and established companies in high-growth areas. Last year, the Partners received $27.6 million.

The Keystone Innovation Zone program, which promotes community and university partnerships to generate job growth through technology transfer and entrepreneurship, will continue to be funded under the BFTDA, and $1.5 million was approved by the BFTDA for university research grant funding to encourage and enable technology transfer. Additional DCED appropriations include:

• $20 million ($20 million decrease) for R&D tax credits, which assist the growth and development of technology-oriented businesses, particularly small start-up technology businesses by offsetting state tax liabilities;
• $18.3 million ($5 million increase) for the Opportunity Grant Program, which provides grants to create or preserve jobs in areas including manufacturing and R&D;
• $7.65 million ($6.45 million decrease) for Industrial Resource Centers, which help small- and medium-sized manufacturing enterprises remain competitive; and,
• PennTAP, which received $65,000 last year to provide technical and workforce solutions for Pennsylvania businesses, was zeroed out in this year’s budget cycle.

Spending for basic education will increase by $300 million in FY10, the largest increase in Pennsylvania history, according to a press release issued by the Pennsylvania Department of Education. To restore funding to public institutions of higher education, the enacted budget also includes $93 million from the State Fiscal Stabilization Fund, press materials note.

Level funding of $13.6 million is included for Science: It’s Elementary, a hands-on, inquiry based teaching program for science teachers in elementary schools.

No additional state funding was allocated for the state’s Classrooms for the Future Program, which received $44.7 million last year. The program was launched in 2006 as a three-year initiative designed to engage high-school students in learning through the use of laptops and instructional technology. The Department of Education reports that despite the loss in state funding, $25 million in federal stimulus funds is available to school districts seeking to provide students with laptops, help teachers use new technology to improve classroom instruction and make other technology upgrades.

The FY 2009-10 enacted budget, HB 1416, is available at: http://www.legis.state.pa.us/