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House of Representatives
Session of 2013 - 2014 Regular Session


Posted: January 25, 2013 01:36 PM
From: Representative Matt Gabler
To: All House members
Subject: Redevelopment Assistance Capital Project Debt Reduction and Reform
*NOTE: This bill will be introduced no later than Wednesday, January 30, 2013
For many years, a great number of members of the House have advocated for less spending, less borrowing and a reformed RACP review and authorization process.
As you know, the Governor’s Office of Budget, based largely on House Bill 2175 which was passed by the House last session, administratively implemented a redesigned RACP selection process. The four parts of the redesigned process define the application process with published guidelines and procedures; implement a scoring system for merit-based evaluation and selection; promote transparency; and, maintain rigorous monitoring, measurement and reporting.
The Corbett Administration has committed to operating a scaled-down, transparent grant process to ensure that every tax dollar spent on economic development creates real opportunity in Pennsylvania. RACP Spending is capped at $125 million to allow the state to “pay down” the spending binge of the prior Administration and allow more tax dollars to be used on the core functions of government (roads, bridges, social safety nets and education) instead of additional debt service.
The scoring system, the projects under consideration and the entire application process – virtually everything RACP – has been placed on the Office of Budget’s website.
With the Governor’s reforms in place, one might ask, “Why is legislation still necessary?” While this administration is doing almost everything proposed in House Bill 2175 from last session – paying down debt, decreasing spending, focusing on projects with transformative regional economic impacts, and establishing a transparent and objective application and review process – another governor may just brush these reforms aside.
Amending the law ensures that Pennsylvania will stay on a path of reform and never return to the fiscal mismanagement and abuse of the RCAP program that took place during the prior Administration. We must statutorily redefine this program to ensure that future administrations are required to operate with the understanding that, while debt financing may have appropriate uses, “borrow and spend” ideology has seen its end in the Commonwealth. The more we spend on debt obligations, the less we have available to fund core governmental functions.
In the near future, I will introduce a modified RACP reform and debt reduction bill. This legislation will contain many of the component parts of House Bill 2175 of 2012 (which passed the House by an overwhelming vote of 184-9). The major difference in this session’s proposal is the reduction in the RACP debt ceiling.
Under the prior proposal, the debt ceiling for RACP was reduced immediately by $500 million and then reduced over time until the ceiling reached $1.5 billion (effectively a $2.5 billion reduction over the span of 20 years). This legislation simply decreases the Commonwealth’s RACP debt ceiling from its current $4.05 billion to $3.45 billion on July 1, 2013 (an immediate reduction of $600 million).
Decreasing the debt ceiling in this manner arrests the growth of RACP debt service while maintaining the program as a viable economic development tool that is administered in a purposeful, objective and transparent manner.

Introduced as HB493