THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BROWNE, BOSCOLA, ORIE, TOMLINSON, WAUGH, ERICKSON, WOZNIAK, D. WHITE, VANCE, EARLL, PIPPY, FERLO, FOLMER, RAFFERTY AND WONDERLING, MARCH 2, 2009

REFERRED TO FINANCE, MARCH 2, 2009  

AN ACT

Requiring the Department of Revenue to submit a unified economic

development budget; providing for unified reporting of

property tax reductions and abatements, for application for

economic development subsidies, for reports, for subsidy

limit and job quality standards and for recapture;

establishing a private enforcement action; and providing for

public record disclosure.

The General Assembly finds and declares as follows:

(1)  Although the Commonwealth and its local government

units have granted numerous economic development subsidies in

the last 25 years, the real wage levels and health care

coverage of working families have stagnated or declined.

(2)  When workers receive low wages and poor benefits,

such jobs often impose hidden taxpayer costs on citizens, in

the form of Medicaid, food stamps, earned income tax credits

and other forms of public assistance to the working poor and

their families.

(3)  Citizen participation in economic development has

been impeded by a lack of readily accessible information

regarding expenditures and outcomes.

(4)  That subsidies may result in the relocation of

companies and the displacement of their former employees.

(5)  Therefore, in order to improve the effectiveness of

expenditures for economic development and to ensure that they

achieve the goal of raising living standards for working

families, it is necessary to collect, analyze and make

publicly available information regarding those expenditures

and to enact certain safeguards for their use.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Economic

Development and Fiscal Accountability Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Applicant."  Any person, association, corporation, joint

venture, partnership, public authority, public benefit

corporation, local government unit or other entity that applies

for a development subsidy.

"Brownfield."  A distressed, blighted, underutilized or

abandoned property that has been previously developed for

industrial, commercial or related uses and that meets the

requirements set forth in the act of October 18, 1988 (P.L.756,

No.108), known as the Hazardous Sites Cleanup Act.

"Corporate parent."  A person, association, corporation,

joint venture, partnership or other entity that owns or controls

50% or more of a recipient corporation.

"Date of subsidy."  Any of the following:

(1)  Except as otherwise provided in paragraph (2) or

(3), the date that a granting body provides the initial

monetary value of a development subsidy to a recipient

corporation.

(2)  Where a development subsidy is for the installation

of new equipment, the date a recipient corporation puts the

equipment into service.

(3)  Where a development subsidy is for improvements to

property, the date the improvements are finished or the date

the business occupies the property, whichever is earlier.

"Department."  The Department of Revenue of the Commonwealth.

"Development subsidy."  An expenditure of public funds with a

value of at least $25,000 for the purpose of stimulating

economic development within this Commonwealth, including, but

not limited to a bond, grant, loan, loan guarantee, enterprise

zone, empowerment zone, tax increment financing, fee waiver,

infrastructure improvements, land price subsidy, matching fund,

tax abatement, tax exemption and tax credits.

"Development tax subsidy."  A tax credit, abatement,

exemption or reduction of any kind, including, but not limited

to, those provided as a part of a Keystone Opportunity Zone or

tax increment financing, provided for the purpose of stimulating

economic development within this Commonwealth.

"Employee."  An employee other than a manager or supervisor.

"Full-time job."  A job in which an individual is employed by

a recipient corporation for at least 35 hours per week.

"Granting body."  An agency, board, office, public benefit

corporation or authority of the Commonwealth or a local

government unit that provides a developmental subsidy.

"Greenfield."  Land that has not been previously developed.

"Infrastructure improvements."  The term shall have the same

meaning as given to it in section 2 of the act of July 11, 1996

(P.L.677, No.116), known as the Infrastructure Development Act.

"Local government unit."  An agency, board, commission,

office, public benefit corporation or public authority of a

political subdivision of the Commonwealth.

"Multiproject site."  An industrial park or an area that

includes more than one industrial, commercial or retail business

and that benefits from a development subsidy.

"New employee."  A full-time employee who represents a net

increase in the number of individuals employed by the recipient

corporation in this Commonwealth. The term does not include an

employee who performs a job that was previously performed by

another employee of the recipient corporation if that job

existed for at least six months before hiring the employee.

"Part-time job."  A job in which an individual is employed by

a business for fewer than 35 hours per week.

"Project site."  The site of a project for which a

development subsidy is provided or, in the case of

infrastructure improvements that directly benefit a particular

business, the location of the benefited business.

"Property-taxing entity."  An entity that levies taxes upon

real or personal property.

"Recipient."  A person, association, corporation, joint

venture, partnership, public authority, public benefit

corporation, local government unit or other entity that receives

a development subsidy.

"Recipient corporation."  Any recipient that is a

corporation.

"Small business."  A corporation or other business entity

that employed fewer than 20 full-time employees or had total

gross receipts of less than $1,000,000 during the calendar year.

For the purposes of determining full-time employees and total

gross receipts, if a business is a corporation, the full-time

employees and gross receipts of the corporate parent and all

subsidiaries thereof shall be included.

"State agency."  An agency, board, commission, office, public

corporation or public authority of the Commonwealth.

"Subsidy value."  The face value of any and all development

subsidies provided to a recipient corporation.

"Temporary job."  A job in which an individual is hired for a

season or for a limited period of time.

Section 3.  Unified economic development budget report.

The department shall submit an annual unified economic

development budget report to the General Assembly no later than

three months after the end of the Commonwealth's fiscal year.

The report shall present all types of expenditures for economic

development during the prior fiscal year, including, but not

limited to:

(1)  The amount of uncollected State and local government

tax revenues resulting from every tax credit, abatement and

exemption provided by the State government or a local

governmental unit, including, but not limited to, gross

receipts, income, sales, use, raw materials, excise,

property, utility, privilege and inventory taxes.

(2)  The name of each taxpayer which claimed any tax

credit, abatement, exemption or reduction under paragraph (1)

of any value equal to or greater than $5,000, together with

the dollar amount received by each such taxpayer.

(3)  Any tax credit, abatement, exemption or reduction

received by a business entity of less than $5,000 each shall

not be itemized. The Department of Revenue shall report an

aggregate dollar amount of such expenditures and the number

of business entities so aggregated for each tax expenditure.

(4)  All State-related expenditures for economic

development, including line-item budgets for every State-

funded entity concerned with economic development, including,

but not limited to, the Department of Community and Economic

Development, the Department of Labor and Industry, the

Department of Education, vocational education programs, State

university research programs, industrial resource centers,

Pennsylvania Infrastructure Investment Authority, work force

investment boards, economic development commissions,

industrial development authorities, regional development

authorities, finance authorities and economic stimulus

programs.

Section 4.  Unified reporting of property tax reductions and

abatements.

(a)  Property report.--Each property-taxing entity shall

annually submit a report to the department regarding any real

property in the property-taxing entity's jurisdiction that has

received a property tax abatement, reduction or exemption during

the fiscal year. The report shall contain information which

includes all of the following:

(1)  the name of the property owner;

(2)  the address of the property;

(3)  the start and end dates of the property tax

abatement, reduction or exemption;

(4)  the schedule of the tax reduction;

(5)  each tax abatement, reduction or exemption for the

property; and

(6)  the amount of property tax revenue not paid to the

local government unit as a result of the abatement, reduction

or exemption.

(b)  Unpaid tax revenue report.--Each property-taxing entity

shall submit a report to the department setting forth the total

property tax revenue not paid to the property-taxing entity

during the fiscal year as a result of all property tax

abatements, reductions and exemptions in the property-taxing

entity's jurisdiction.

(c)  Time period for filing.--The reports required under

subsections (a) and (b) shall be prepared on two forms prepared

by the department and shall be submitted to the department by

the property-taxing entity no later than three months after the

end of the fiscal year.

(d)  Publication.--The department shall annually compile and

publish all of the data contained in the reports required under

subsections (a) and (b) in both written and electronic form,

including the department's Internet website.

(e)  Penalty for failure to report.--If the property-taxing

entity fails to submit its reports to the department within the

prescribed time, the department shall notify the State

Treasurer, whereupon the State Treasurer shall withhold further

payments of any development subsidy to the delinquent property-

taxing entity until the property-taxing entity files its reports

with the department.

Section 5.  Application for economic development subsidies.

(a)  Contents of application.--Each granting body, together

with the applicant for a development subsidy, shall complete an

application for the subsidy on a form prepared by the Department

of Community and Economic Development. The information required

on the application shall include the following:

(1)  An application tracking number for the granting

agency and the project.

(2)  The name, street and mailing address and telephone

number of the chief officer of the granting body.

(3)  The name, street and mailing addresses and telephone

number of the chief officer of the applicant's corporate

parent, if any.

(4)  The name, street and mailing address and telephone

number of the chief officer of the applicant.

(5)  The name, street and mailing address and telephone

number of the chief officer of the corporate parent of each

business operating on the project site, if different from the

applicant's corporate parent.

(6)  The name, street and mailing address and telephone

number of the chief officer of each business operating on the

project site, if different from the applicant.

(7)  The street address of the project site.

(8)  The land-use classification of the project site,

including indication of whether it is greenfield or

brownfield, based on a uniform code to be established by the

Department of Community and Economic Development.

(9)  The three-digit North American Industry

Classification System number of the project site.

(10)  The total number of individuals employed at the

project site by each employer on the date of the application,

itemized by full-time, part-time and temporary positions.

(11)  The total number of individuals employed in this

Commonwealth by the applicant's corporate parent of each

business operating on the project site, if any, and all

subsidiaries thereof as of December 31 of the prior fiscal

year, itemized by full-time, part-time and temporary

positions for each employer.

(12)  The development subsidy being applied for with the

granting body and the value of such subsidy.

(13)  The infrastructure improvements to be provided at

the project site.

(14)  The number of new jobs to be created by the

applicant and by each business at the project site, itemized

by full-time, part-time and temporary positions for each

employer.

(15)  The average hourly wage to be paid to all current

and new employees at the project site, itemized by job

classification, the full-time, part-time and temporary

positions, and further itemized by wage groups as follows: $6

or less per hour, $6.01 to $7 per hour, $7.01 to $8 per hour,

$8.01 to $9 per hour, $9.01 to $10 per hour, $10.01 to $11

per hour, $11.01 to $12 per hour, $12.01 to $13 per hour,

$13.01 to $14 per hour, $14.01 to $15 per hour and $15.01 or

more per hour.

(16)  The type or amount of health care coverage to be

provided by the applicant and each business operating at the

project site within 90 days of commencement of employment at

the project site, including any costs to be borne by the

employees.

(17)  A list of all development subsidies that the

applicant is requesting and the name of any other granting

body from which subsidies are sought.

(18)  A statement as to whether the development subsidy

may reduce employment at any other site controlled by the

applicant or its corporate parent, if any, within or without

this Commonwealth, resulting from automation, merger,

acquisition, corporate restructuring or other business

activity.

(19)  A certification by the chief officer of the

applicant as to the accuracy of the application.

(b)  Copy of approved application to the department.--If the

granting body approves the application, it shall send a copy to

the Department of Community and Economic Development within 15

days of such approval. If the application is not approved, the

granting body shall retain the application in its records.

Section 6.  Reports.

(a)  Annual reports.--Each granting body shall file a

progress report with the Department of Community and Economic

Development for each project for which a development subsidy has

been granted no later than February 1 of each year. The report

shall include the following information:

(1)  The application tracking number.

(2)  The name, street and mailing address, telephone

number and chief officer of the granting body.

(3)  The name, street and mailing addresses, telephone

number and the chief officer of the recipient and all

businesses operating at the project site.

(4)  A summary of the number of jobs required or expected

to be created by the recipient and all businesses at the

project site, itemized by full-time, part-time and temporary

positions and by wage groups.

(5)  The wages by job classification required or expected

to be paid by the recipient to new employees and by other

businesses at the project site and the amount of wages

actually paid.

(6)  The type and amount of health care coverage provided

to the employees at the project site, including any costs

borne by the employees.

(7)  A comparison of the total employment in this

Commonwealth by the recipient, each business operating on the

project site and the recipient's corporate parent, if any, on

the date of the application and the date of the report,

itemized by full-time, part-time and temporary positions.

(8)  A statement as to whether the use of the development

subsidy during the previous fiscal year has reduced

employment at any other site controlled by the recipient

corporation or other business or its corporate parent, if

any, within or without this Commonwealth, the extent of the

reduction and the name and address of the business facility

where the reduction took place.

(9)  The extent and value of the infrastructure

improvements that have been provided for the project site.

(10)  A signed certification by the chief officer of the

recipient as to the accuracy of the progress report.

(11)  On all subsequent annual progress reports which

shall be filed for the duration of the subsidy or five years,

whichever is greater, the granting body shall indicate

whether the recipient is still in compliance with its job

creation, wage and benefit goals and whether the corporate

parent, if any, is still in compliance with its Commonwealth

employment requirement.

(b)  Biennial report.--

(1)  No later than 15 days after the second anniversary

of the date of subsidy, the granting body shall file with the

Department of Community and Economic Development a two-year

progress report including the same information as required

under subsection (a). The recipient shall certify as to the

accuracy of the report.

(2)  The granting body shall state in the two-year report

whether the recipient and each business operating at the

project site has achieved its job creation, wage and benefit

goals and whether each corporate parent, if any, has

maintained its level of employment in this Commonwealth at no

less than 90% of its level of employment in this Commonwealth

on the date of the subsidy.

(c)  Annual report for industrial parks and multiproject

sites.--The recipient that has received a development subsidy

for an industrial park or any other site that houses more than

one business shall file a separate progress report with the

Department of Community and Economic Development, no later than

February 1 of each year. The Department of Community and

Economic Development shall provide a form for the report that

shall require the following information from all new businesses

that have located within the multiproject site during the

previous calendar year:

(1)  The name, street and mailing address and telephone

number of the chief officer.

(2)  The number of employees at the site, itemized by

full-time, part-time and temporary positions.

(3)  A statement as to whether the relocation into the

multiproject site has reduced the work force of the new

tenant within or without this Commonwealth, the extent of the

reduction in employment and the address of each business

facility where such a reduction took place.

(4)  A signed certification by the chief officer of each

new tenant as to the accuracy of the information filed.

(d)  Compilation and publication of data.--The department

shall compile and publish all data from the progress reports in

both written and electronic form, including the department's

Internet website.

(e)  Access to project site and records.--The granting body

and the Department of Community and Economic Development shall

have access at all reasonable times to the project site and the

records of the recipient corporation or other business entity in

order to monitor the project and to prepare progress reports.

(f)  Effect of noncompliance.--A recipient or business that

fails to provide the granting body with the information or

access required under this section shall be subject to a fine of

not less than $500 per day to commence within ten working days

after the February 1 deadline and of not less than $1,000 per

day to commence 20 days after such deadline.

Section 7.  Subsidy limit and job quality standards.

A granting body may not award:

(1)  A development subsidy if the cost per job is greater

than $35,000. The cost shall be determined by dividing the

amount of the subsidy by the number of full-time jobs

required under the application approved by the granting body.

(2)  A subsidy to an applicant unless the average of the

wages paid to employees at the project site are equal to or

exceed 85% of the average hourly wage paid to nonmanagerial

employees in this Commonwealth, except that for small

businesses, the average wage must equal or exceed 75% of the

wages established under this paragraph. The computation of

wages under this paragraph shall only apply to a recipient

that provides the health care coverage as approved in its

application by the granting body.

Section 8.  Recapture.

(a)  General rule.--Each business at the site shall fulfill

its job creation and wage requirements for the project site

within two years of the date of subsidy. The recipient shall

maintain its wage and benefit goals as long as the subsidy is in

effect or for five years, whichever is longer.

(b)  Corporate parent duties.--The corporate parent of a

recipient corporation must maintain at least 90% of its

employment in this Commonwealth as long as the development

subsidy is in effect or for not less than five years, whichever

is longer.

(c)  Procedure.--If the requirements under subsection (a) or

(b) are not fulfilled, the granting body shall recapture the

development subsidy from the recipient corporation as follows:

(1)  Upon a failure by the recipient corporation or other

business at the site benefiting from the subsidy to create

the required number of jobs or to pay the required wages or

benefits, the amount recaptured shall be based on the pro

rata amount by which the unfilled jobs, wages or benefits

bear to the total amount of the development subsidy.

(2)  Upon the failure of the corporate parent to maintain

at least 90% of its employment in this Commonwealth, the rate

of recapture shall equal twice the percentage by which the

employment is less than 90%.

(d)  Notice of intent to recapture.--The granting body shall

provide notice to the recipient corporation or business at the

site of its intent to recapture the development subsidy and

state the reasons and amount to be recaptured. The recipient

corporation or business at the site shall remit to the governing

body such amount within 60 calendar days of the date of the

notice.

(e)  Declaration of subsidy as null and void.--If a recipient

corporation or business at the site defaults on a development

subsidy in three consecutive calendar years, the granting body

shall declare the subsidy null and void, and shall so notify the

Department of Community and Economic Development and the

recipient corporation or business at the site. The recipient

corporation shall pay back to the granting body all remaining

value of the development subsidy it has not previously repaid

within 180 calendar days of the date of the notice of such

default.

Section 9.  Private enforcement action.

If a granting body fails to enforce any provision of this

act, any individual who paid personal income taxes to the

Commonwealth in the calendar year prior to the year in dispute,

or any organization representing such taxpayers, shall be

entitled to bring a civil action in an appropriate court to

compel enforcement under this act. The court shall award

reasonable attorney fees and costs to such prevailing taxpayer

or organization.

Section 10.  Public record disclosure.

All records required to be prepared or maintained under this

act, including, but not limited to, applications, progress

reports, recapture notices and any other records or proceedings

relating thereto, shall be subject to disclosure under the act

of February 14, 2008 (P.L.6, No.3), known as the Right-to-Know

Law.

Section 11.  Preemption.

Nothing in this chapter shall require or authorize any

recipient corporation to reduce wages or benefits established

under any collective bargaining agreement or Federal or State

prevailing wage laws.

Section 12.  Severability.

The provisions of this act are severable. If any provision of

this act or its application to any person or circumstance is

held invalid, the invalidity shall not affect other provisions

or applications of this act which can be given effect without

the invalid provision or application.

Section 40.  Effective date.

This act shall take effect in 60 days.