PRINTER'S NO. 3368
No. 2390 Session of 2004
INTRODUCED BY SOLOBAY, BARRAR, BEBKO-JONES, BENNINGHOFF, CORRIGAN, COY, CRAHALLA, CURRY, DALEY, FABRIZIO, FREEMAN, GOOD, GRUCELA, HENNESSEY, KIRKLAND, LEACH, MANN, PALLONE, ROEBUCK, SATHER, E. Z. TAYLOR, TIGUE, WILT, MILLARD, HARHART, JOSEPHS, KOTIK, LEVDANSKY, MARKOSEK, READSHAW, SAINATO, SURRA, THOMAS, WANSACZ AND YOUNGBLOOD, MARCH 8, 2004
REFERRED TO COMMITTEE ON COMMERCE, MARCH 8, 2004
AN ACT 1 Requiring the Department of Community and Economic Development 2 to submit a unified economic development budget; providing 3 for unified reporting of property tax reductions and 4 abatements, for application for economic development 5 subsidies, for reports, for subsidy limit and job quality 6 standards and for recapture; establishing a private 7 enforcement action; and providing for public record 8 disclosure. 9 The General Assembly finds and declares as follows: 10 (1) Although the Commonwealth and its local government 11 units have granted numerous economic development subsidies in 12 the last 25 years, the real wage levels and health care 13 coverage of working families have declined. 14 (2) When workers receive low wages and poor benefits, 15 there are often hidden taxpayer costs imposed on citizens, in 16 the form of Medicaid, food stamps, earned income tax credits 17 and other forms of public assistance to the working poor and 18 their families. 19 (3) Citizen participation in economic development has
1 been impeded by a lack of readily accessible information 2 regarding expenditures and outcomes. 3 (4) When employers promise job creation and fail to 4 deliver, the consequences of their broken promises are borne 5 by local workers. When employers receive tax benefits in 6 anticipation of creating jobs, they should be answerable for 7 their failures. 8 (5) Therefore, in order to improve the effectiveness of 9 expenditures for economic development and to ensure that they 10 achieve the goal of raising living standards for working 11 families, it is necessary to collect, analyze and make 12 publicly available information regarding those expenditures 13 and to enact certain safeguards for their use. 14 The General Assembly of the Commonwealth of Pennsylvania 15 hereby enacts as follows: 16 Section 1. Short title. 17 This act shall be known and may be cited as the Economic 18 Development and Fiscal Accountability Act. 19 Section 2. Definitions. 20 The following words and phrases when used in this act shall 21 have the meanings given to them in this section unless the 22 context clearly indicates otherwise: 23 "Affiliate" or "affiliated company." A person that directly 24 or indirectly, through one or more intermediaries, controls, is 25 controlled by or is under common control with a specified 26 person. 27 "Association." A corporation, partnership, limited liability 28 company, business trust or two or more persons associated in a 29 common enterprise or undertaking. The term does not include a 30 testamentary trust or an inter vivos trust as defined in 20 20040H2390B3368 - 2 -
1 Pa.C.S. § 711(3) (relating to mandatory exercise of jurisdiction 2 through orphans' court division in general). 3 "Banking institution." A federally chartered or State- 4 chartered banking institution. 5 "Corporate parent." A person, association, corporation, 6 joint venture, partnership or other entity that owns or controls 7 at least 50% of a recipient corporation. 8 "Corporation." A for-profit corporation as defined in 15 9 Pa.C.S. § 102 (relating to definitions). 10 "Credit union." A credit union as defined in 17 Pa.C.S. § 11 102 (relating to application of title). 12 "Date of subsidy." Any of the following: 13 (1) Except as otherwise provided in paragraph (2) or 14 (3), the date that a granting body provides the initial 15 monetary value of a development subsidy to a recipient 16 corporation. 17 (2) Where a development subsidy is for the installation 18 of new equipment, the date a recipient corporation puts the 19 equipment into service. 20 (3) Where a development subsidy is for improvements to 21 property, the date the improvements are finished or, if the 22 improvements consist of new construction, the date the 23 recipient corporation or other business entity occupies the 24 property. 25 "Department." The Department of Community and Economic 26 Development of the Commonwealth. 27 "Development subsidy." An expenditure of public funds with a 28 value of at least $25,000 for the purpose of stimulating 29 economic development within this Commonwealth, including, but 30 not limited to a bond, grant, loan, loan guarantee, enterprise 20040H2390B3368 - 3 -
1 zone, empowerment zone, Keystone Opportunity Zone, tax increment 2 financing, fee waiver, land price subsidy, matching fund, tax 3 abatement, tax exemption and tax credits. 4 "Full-time job." A job in which an individual is employed by 5 a recipient corporation for at least 35 hours per week. 6 "Granting body." An agency, board, commission, office, 7 public benefit corporation or authority of the Commonwealth or a 8 local government unit that provides a developmental subsidy. 9 "Limited liability company." A domestic or foreign limited 10 liability company as defined in 15 Pa.C.S. § 102 (relating to 11 definitions). 12 "Local government unit." An agency, board, commission, 13 office, public benefit corporation or public authority of a 14 political subdivision of the Commonwealth. 15 "Other business entity." A banking institution, credit 16 union, insurance corporation, savings association, person, sole 17 proprietorship, association, joint venture, partnership, limited 18 liability company, public utility corporation or similar 19 business entity. 20 "Part-time job." A job in which an individual is employed by 21 a recipient corporation for fewer than 35 hours per week. 22 "Project site." The site of a project for which a 23 development subsidy is provided. 24 "Property-taxing entity." An entity that levies taxes upon 25 real or personal property. 26 "Public utility corporation." A domestic or foreign 27 corporation for profit that is subject to regulation as a public 28 utility by the Pennsylvania Public Utility Commission or an 29 office or agency of the United States. 30 "Recipient corporation." A person, association, corporation, 20040H2390B3368 - 4 -
1 joint venture, partnership or other business entity that 2 receives a development subsidy. 3 "Savings association." A domestic corporation for profit 4 that is an association as defined in the act of December 14, 5 1967 (P.L.746, No.345), known as the Savings Association Code of 6 1967. 7 "Small business." A corporation or other business entity 8 that employed fewer than 20 full-time employees or had total 9 gross receipts of less than $1,000,000 during the calendar year. 10 For the purposes of determining full-time employees and total 11 gross receipts, if a business is a corporation, the full-time 12 employees and gross receipts of the corporate parent and all 13 subsidiaries thereof shall be included. 14 "State agency." An agency, board, commission, office, public 15 corporation or public authority of the Commonwealth. 16 "Subsidy value." The face value of any and all development 17 subsidies provided to a recipient corporation. 18 "Temporary job." A job in which an individual is hired for a 19 season or for a limited period of time. 20 Section 3. Unified economic development budget report. 21 The department shall submit an annual unified economic 22 development budget report to the General Assembly no later than 23 three months after the end of the Commonwealth's fiscal year. 24 The report shall present all types of expenditures for economic 25 development during the prior fiscal year, including, but not 26 limited to: 27 (1) The amount of uncollected State tax revenues 28 resulting from every tax credit, abatement, exemption and 29 reduction provided by the State government or a local 30 governmental unit, including, but not limited to, gross 20040H2390B3368 - 5 -
1 receipts, corporate net income, personal income, sales, use, 2 excise, property, utility, public utility realty, insurance 3 premium, bank shares, mutual thrift institution, and capital 4 stock and franchise taxes. 5 (2) The name of each taxpayer which claimed any tax 6 credit, abatement, exemption or reduction under paragraph (1) 7 of any value equal to or greater than $5,000, together with 8 the dollar amount received by each such taxpayer. 9 (3) Any tax credit, abatement, exemption or reduction 10 received by a business entity of less than $5,000 each shall 11 not be itemized. The Department of Revenue shall report an 12 aggregate dollar amount of such expenditures and the number 13 of business entities so aggregated for each tax expenditure. 14 (4) All State-related expenditures for economic 15 development, including line-item budgets for every State- 16 funded entity concerned with economic development, including, 17 but not limited to, the Department of Community and Economic 18 Development, the Department of Labor and Industry, vocational 19 education programs, State university research programs, 20 manufacturing extension service, work force investment 21 boards, industrial development authorities, regional 22 development authorities and finance authorities. 23 Section 4. Unified reporting of property tax reductions and 24 abatements. 25 (a) Property report.--Each local government unit shall 26 annually submit a report to the department regarding any real 27 property in the local government unit's jurisdiction that has 28 received a property tax abatement, reduction or exemption during 29 the fiscal year. The report shall contain information, 30 including, but not limited to: 20040H2390B3368 - 6 -
1 (1) the name of the property owner; 2 (2) the address of the property; 3 (3) the start and end dates of the property tax 4 abatement, reduction or exemption; 5 (4) the schedule of the tax reduction; 6 (5) each tax abatement, reduction or exemption for the 7 property; and 8 (6) the amount of property tax revenue not paid to the 9 local government unit as a result of the abatement, reduction 10 or exemption. 11 (b) Unpaid tax revenue report.--Each local government unit 12 shall submit a report to the department setting forth the total 13 property tax revenue not paid to the local government unit 14 during the fiscal year as a result of all property tax 15 abatements, reductions and exemptions in the local government 16 unit's jurisdiction. 17 (c) Time period for filing.--The reports required under 18 subsections (a) and (b) shall be prepared on two forms prepared 19 by the Department of Revenue and shall be submitted to the 20 department by the local government unit no later than three 21 months after the end of the fiscal year. 22 (d) Publication.--The department shall annually compile and 23 publish all of the data contained in the reports required under 24 subsections (a) and (b) in both written and electronic form, 25 including the department's Internet site. 26 (e) Penalty for failure to report.--If the local government 27 unit fails to submit its reports to the department within the 28 prescribed time, the department shall notify the State 29 Treasurer, whereupon the State Treasurer shall withhold further 30 payments of any development subsidy to the delinquent local 20040H2390B3368 - 7 -
1 government unit until the local government unit files its 2 reports with the department. 3 Section 5. Application for economic development subsidies. 4 (a) Contents of application.--Each granting body, together 5 with the applicant for a development subsidy, shall complete an 6 application for the subsidy on a form prepared by the 7 department. The information required on the application shall 8 include the following: 9 (1) An application tracking number for the granting 10 agency and the project. 11 (2) The name, street and mailing address and telephone 12 number of the chief officer of the granting body. 13 (3) The name, street and mailing addresses and telephone 14 number of the chief officer of the applicant's corporate 15 parent, if any. 16 (4) The name, street and mailing address and telephone 17 number of the owner or chief officer of the applicant. 18 (5) The street address of the project site. 19 (6) The three-digit North American Industry 20 Classification System number of the project site. 21 (7) The total number of individuals employed by the 22 applicant at the project site on the date of the application, 23 itemized by full-time, part-time and temporary positions. 24 (8) The total number of individuals employed in this 25 Commonwealth by the applicant's corporate parent, if any, and 26 all subsidiaries thereof as of December 31 of the prior 27 fiscal year, itemized by full-time, part-time and temporary 28 positions. 29 (9) The development subsidy being applied for with the 30 granting body and the value of such subsidy. 20040H2390B3368 - 8 -
1 (10) The number of new jobs to be created by the 2 applicant at the project site, itemized by full-time, part- 3 time and temporary positions. 4 (11) The average hourly wage to be paid to all current 5 and new employees at the project site, itemized by the full- 6 time, part-time and temporary positions, and further itemized 7 by wage groups as follows: $6 or less per hour, $6.01 to $7 8 per hour, $7.01 to $8 per hour, $8.01 to $9 per hour, $9.01 9 to $10 per hour, $10.01 to $11 per hour, $11.01 to $12 per 10 hour, $12.01 to $13 per hour, $13.01 to $14 per hour and 11 $14.01 or more per hour. 12 (12) For project sites located in a Metropolitan 13 Statistical Area, as defined by the Federal Office of 14 Management and Budget, the average hourly wage paid to 15 nonmanagerial employees in this Commonwealth for the 16 industries involved at the project, as established by the 17 United States Bureau of Labor Statistics. 18 (13) For project sites located outside of Metropolitan 19 Statistical Areas, the average weekly wage paid to 20 nonmanagerial employees in the county for industries involved 21 at the project, as established by the Department of Commerce. 22 (14) The type or amount of health care coverage to be 23 provided by the applicant within 90 days of commencement of 24 employment at the project site, including any costs to be 25 borne by the employees. 26 (15) A list of all development subsidies that the 27 applicant is requesting and the name of any other granting 28 body from which subsidies are sought. 29 (16) A statement as to whether the development subsidy 30 may reduce employment at any other site controlled by the 20040H2390B3368 - 9 -
1 applicant or its corporate parent, if any, within or without 2 this Commonwealth, resulting from automation, merger, 3 acquisition, corporate restructuring or other business 4 activity. 5 (17) A statement as to whether the project involves the 6 relocation of work from another address and if so, the number 7 of jobs to be relocated and the address from which they are 8 to be relocated. 9 (18) A certification by the owner or chief officer of 10 the applicant as to the accuracy of the application. 11 (b) Copy of approved application to the department.--If the 12 granting body approves the application, it shall send a copy to 13 the department within 15 days of such approval. If the 14 application is not approved, the granting body shall retain the 15 application in its records. 16 Section 6. Reports. 17 (a) Annual reports.--Each granting body shall file a 18 progress report with the department for each project for which a 19 development subsidy has been granted no later than February 1 20 each year and shall file annual progress reports for the 21 duration of the subsidy or not less than five years, whichever 22 period is greater. The report shall include the following 23 information: 24 (1) The application tracking number. 25 (2) The name, street and mailing address, telephone 26 number and chief officer of the granting body. 27 (3) The name, street and mailing addresses, telephone 28 number and the owner or chief officer of the recipient 29 corporation or other business entity. 30 (4) A summary of the number of jobs required, created 20040H2390B3368 - 10 -
1 and lost, itemized by full-time, part-time and temporary 2 positions and by wage groups. 3 (5) The type and amount of health care coverage provided 4 to the employees at the project site, including any costs 5 borne by the employees. 6 (6) A comparison of the total employment in this 7 Commonwealth by the recipient's corporate parent, if any, on 8 the date of the application and the date of the report, 9 itemized by full-time, part-time and a temporary positions. 10 (7) A statement as to whether the use of the development 11 subsidy during the previous fiscal year has reduced 12 employment at any other site controlled by the recipient 13 corporation or other business entity or its corporate parent, 14 if any, within or without this Commonwealth as a result of 15 automation, merger, acquisition, relocation, corporate 16 restructuring or other business activity. 17 (8) A signed certification by the owner or chief officer 18 of the recipient corporation or other business entity as to 19 the accuracy of the progress report. 20 (9) On all subsequent annual progress reports, the 21 granting body shall indicate whether the recipient 22 corporation is still in compliance with its job creation, 23 wage and benefit goals and whether the corporate parent, if 24 any, is still in compliance with its Commonwealth employment 25 requirement. 26 (b) Biennial report.-- 27 (1) No later than 15 days after the second anniversary 28 of the date of subsidy, the granting body shall file with the 29 department a two-year progress report including the same 30 information as required under subsection (a). The recipient 20040H2390B3368 - 11 -
1 corporation or other business entity shall certify as to the 2 accuracy of the report. 3 (2) The granting body shall state in the two-year report 4 whether the recipient corporation or other business entity 5 has achieved its job creation, wage and benefit goals and 6 whether the corporate parent, if any, has maintained its 7 level of employment in this Commonwealth at no less than 90% 8 of its level of employment in this Commonwealth on the date 9 of the subsidy. 10 (c) Compilation and publication of data.--The department 11 shall compile and publish all data from the progress reports in 12 both written and electronic form, including the department's 13 Internet site. 14 (d) Access to project site and records.--The granting body 15 and the department shall have access at all reasonable times to 16 the project site and the records of the recipient corporation or 17 other business entity in order to monitor the project and to 18 prepare progress reports. 19 (e) Effect of noncompliance.--A recipient corporation or 20 other business entity that fails to provide the granting body 21 with the information or access required under this section shall 22 be subject to a fine of not less than $500 per day to commence 23 within ten working days after the February 1 deadline and of not 24 less than $1,000 per day to commence 20 days after such 25 deadline. 26 Section 7. Subsidy limit and job quality standards. 27 A granting body may not award: 28 (1) A development subsidy if the cost per job is greater 29 than $35,000. The cost shall be determined by dividing the 30 amount of the subsidy by the number of full-time jobs 20040H2390B3368 - 12 -
1 required under the application approved by the granting body. 2 (2) A subsidy to an applicant unless the wages paid to 3 employees at the project site are equal to or exceed 85% of 4 the average wage as established under section 5(12) and (13), 5 provided, however, that for small businesses, the average 6 wage must equal or exceed 75% of the wages established 7 thereunder. The computation of wages under this paragraph 8 shall only apply to a recipient corporation or other business 9 entity that provides the health care coverage as approved in 10 its application by the granting body. A recipient corporation 11 or other business entity not providing such health care 12 coverage shall pay wages to employees at the project site 13 equal to or in excess of 100% of average wage as established 14 under this act. 15 Section 8. Recapture. 16 (a) General rule.--A recipient corporation or other business 17 entity shall fulfill its job creation, wage, health care and 18 other benefit requirements for the project site within two years 19 of the date of subsidy. The recipient corporation or other 20 business entity shall maintain its wage and benefit goals as 21 long as the subsidy is in effect or five years, whichever is 22 longer. 23 (b) Corporate parent duties.--The parent of a recipient 24 corporation or other business entity may lose no more than 10% 25 of its employment in this Commonwealth as long as the 26 development subsidy is in effect or not less than five years, 27 whichever is longer. 28 (c) Procedure.--If the requirements under subsection (a) or 29 (b) are not fulfilled, the granting body shall recapture the 30 development subsidy from the recipient corporation or other 20040H2390B3368 - 13 -
1 business entity, or corporate parent, if any, as follows: 2 (1) Upon a failure by the recipient corporation or other 3 business entity to create the required number of jobs or to 4 pay the required wages or benefits, the amount recaptured 5 shall be based on the pro rata amount by which the unfilled 6 jobs, wages or benefits bear to the total amount of the 7 development subsidy. 8 (2) Upon the loss by the recipient corporation or other 9 business entity or corporate parent, if any, of more than 10% 10 of its employment in this Commonwealth. 11 (d) Notice of intent to recapture.--The granting body shall 12 provide notice to the recipient corporation or other business 13 entity, and corporate parent, if any, as well as any affiliate 14 or subsidiary, of its intent to recapture the development 15 subsidy and state the reasons and amount to be recaptured. The 16 recipient corporation or other business entity shall remit to 17 the governing body such amount within 60 calendar days of the 18 date of the notice. 19 (e) Declaration of subsidy as null and void.--If a recipient 20 corporation or other business entity defaults on a development 21 subsidy in three consecutive calendar years, or in a shorter 22 period if provided in the development subsidy agreement, the 23 granting body shall declare the subsidy null and void, and shall 24 so notify the department and the recipient corporation or other 25 business entity. The recipient corporation or corporate parent, 26 if any, as well as any affiliate or subsidiary, shall pay back 27 to the granting body all remaining value of the development 28 subsidy it has not previously repaid within 180 calendar days of 29 the date of the notice of such default. 30 (f) Joint and severable liability.--For the purposes of this 20040H2390B3368 - 14 -
1 section, the recipient corporation or other business entity, 2 corporate parent, if any, or any affiliate or affiliated company 3 shall be jointly and severally liable for the recapture required 4 under subsection (c). 5 Section 9. Private enforcement action. 6 If a granting body fails to enforce any provision of this 7 act, any individual who paid personal income taxes to the 8 Commonwealth in the calendar year prior to the year in dispute, 9 or any organization representing such taxpayers, shall be 10 entitled to bring a civil action in an appropriate court to 11 compel enforcement under this act. The court shall award 12 reasonable attorney fees and costs to such prevailing taxpayer 13 or organization. 14 Section 10. Public record disclosure. 15 All records required to be prepared or maintained under this 16 act, including, but not limited to, applications, progress 17 reports, recapture notices and any other records or proceedings 18 relating thereto, shall be subject to disclosure under the act 19 of June 21, 1957 (P.L.390, No.212), referred to as the Right-to- 20 Know Law. 21 Section 11. Severability. 22 The provisions of this act are severable. If any provision of 23 this act or its application to any person or circumstance is 24 held invalid, the invalidity shall not affect other provisions 25 or applications of this act which can be given effect without 26 the invalid provision or application. 27 Section 12. Effective date. 28 This act shall take effect in 90 days. A27L71DMS/20040H2390B3368 - 15 -