By Eric Boehm | PA Independent

HARRISBURG — Pennsylvania taxpayers could pay less for private development projects, but the bill spearheading the cost savings does not prevent the types of projects that have drawn scorn.

“It’s time that state government pays down its debt and reins in this much maligned grant program,” Turzai said. “This legislation offers responsible reforms while ensuring these grants stimulate regional economic growth in an open, transparent process.”

In the past, RACP — usually pronounced “R-Cap” — has financed hundreds of projects, including sports stadiums, shopping malls, convention centers, hotels, the new TastyKake factory in Philadelphia and the now-infamous Arlen Specter Library at Philadelphia University.

Though the RACP grants are debt-funded by the state and contained within the capital budget bill, they are different from the typical state capital projects that might pay for construction, like new government buildings, highways and dams.

Through RACP, private developers can have projects listed on an itemization bill passed by the General Assembly. After the Legislature approves projects, the governor authorizes the borrowing necessary to finance each one. An itemization can remain unfunded for up to 10 years before it expires.

To fund RACP projects, the state borrows money with bonds, and uses taxpayer dollars in the general fund to pay off the debt.

The program initially was capped at $1.5 billion in 1999, but that limit has been increased six times and currently sits at more than $4 billion.

Turzai’s plan would reduce the limit to $3.5 billion immediately and impose an annual cut of between $50 million and $150 million for the next 20 years to bring the ceiling to its original level. It also would eliminate any projects waiting for funding and require them to be relisted by the General Assembly, and cap annual RACP spending at $125 million.

Pennsylvania is spending $277 million each year to fund the $4 billion of RACP obligations.

The proposal incorporates another bill from state Rep. Rosita Youngblood, D-Philadelphia, which would allow approval of RACP projects only after a public hearing at the local level.

“The process of how the taxpayer dollars are doled out through this program needs significant reform,” Youngblood said. “It’s time that we provide accountability and transparency to the RACP process.”

During his 2010 gubernatorial campaign, Gov. Tom Corbett took a stance against such economic development projects — one campaign ad specifically called out former Gov. Ed Rendell’s authorization of $10 million in RACP funding for the Arlen Specter Library, built in honor of the longtime U.S. senator, a close friend of Rendell’s.

For legal reasons, Corbett could not pull funding from any projects authorized under the Rendell administration, but he has not authorized additional RACP spending since taking office.

Turzai said the disclosure requirements would make it unlikely that a project like the Specter Library would be approved in the future, and a new point system would give preference to projects that create the most jobs.

But the RACP program was defended by local agencies that administer those grants and other public-private development projects.

Darrell Auterson, president and CEO of the York County Economic Alliance, which promotes economic development in the county, said York’s new baseball stadium and performing arts center would not have been built without assistance from the RACP. He also said the county’s Harley Davidson factory would have shut down without $14 million in taxpayer funds given in 2010.

“There probably have been some abuses and it is a political program, but there have been numerous extremely important economic development projects funded out of that program,” Auterson said.

He encouraged the General Assembly and governor to continue funding it.

Gary Smith, president and CEO of the Chester County Economic Development Council, which administers more than 20 RACP-funded projects, said the program has been beneficial, but reforms that value merit selection over political favoritism would be welcomed.

“Has it been abused, stretched and manipulated? Absolutely. It’s a political process, first and foremost,” Smith said. “You can’t fund everyone, so the people who get funded are the ones who hire lobbyists and have the influence to get their project on the list.”

Nate Benefield, research director for the Commonwealth Foundation, a fiscally conservative think tank here, said the proposal was a step in the right direction, but the state should completely do away with taxpayer-funded private development.

“Take this idea to its logical conclusion and end all future RACP projects,” Benefield said. “The question is: could all that money have been used for better things if it was not spent on these types of pet projects?”

In the state Senate, Majority Leader Dominic Pileggi, R-Chester, said he wants the reductions to occur more quickly than in the Turzai proposal.

“In lean economic times such as those we face today, the state must re-examine every government program,” Pileggi said. “Working with a governor who is interested in reducing the commonwealth’s debt load, we may be able to make greater reductions more quickly. That’s a discussion we should have.”

Turzai said Corbett supported the effort, but the administration did not return requests for comment on Thursday.