PRINTER'S NO. 216
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
154
Session of
2015
INTRODUCED BY TEPLITZ, FONTANA, BOSCOLA, HUGHES, SMITH, COSTA,
TARTAGLIONE, BREWSTER, FARNESE, WOZNIAK, BROWNE AND RAFFERTY,
JANUARY 26, 2015
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
JANUARY 26, 2015
AN ACT
Requiring the Department of Community and Economic Development
to submit a unified economic development budget report;
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, for recapture, for establishing a private
enforcement action and for public record disclosure.
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. Legislative findings.
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 declined.
(2) When workers receive low wages and poor benefits,
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there are often hidden taxpayer costs imposed 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) When employers promise job creation and fail to
deliver, the consequences of their broken promises are borne
by local workers. When employers receive tax benefits in
anticipation of creating jobs, they should be answerable for
their failures.
(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.
Section 3. 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:
"Affiliate" or "affiliated company." A person who directly
or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with a specified
person.
"Association." A corporation, partnership, limited liability
company, business trust or two or more persons associated in a
common enterprise or undertaking. The term does not include a
testamentary trust or an inter vivos trust as defined in 20
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Pa.C.S. § 711(3) (relating to mandatory exercise of jurisdiction
through orphans' court division in general).
"Banking institution." A federally chartered or State-
chartered banking institution.
"Corporate parent." A person, association, corporation,
joint venture, partnership or other entity that owns or controls
at least 50% of a recipient corporation.
"Corporation." A corporation for profit as defined in 15
Pa.C.S. § 102 (relating to definitions).
"Credit union." A credit union as defined in 17 Pa.C.S. §
102 (relating to application of title).
"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, if the
improvements consist of new construction, the date the
recipient corporation or other business entity occupies the
property.
"Department." The Department of Community and Economic
Development 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
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zone, empowerment zone, Keystone Opportunity Zone, tax increment
financing, fee waiver, land price subsidy, matching fund, tax
abatement, tax exemption and tax credits.
"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, commission, office,
public benefit corporation or authority of the Commonwealth or a
local government unit that provides a developmental subsidy.
"Limited liability company." A domestic or foreign limited
liability company as defined in 15 Pa.C.S. § 102 (relating to
definitions).
"Local government unit." An agency, board, commission,
office, public benefit corporation or public authority of a
political subdivision of the Commonwealth.
"Other business entity." A banking institution, credit
union, insurance corporation, savings association, person, sole
proprietorship, association, joint venture, partnership, limited
liability company, public utility corporation or similar
business entity.
"Part-time job." A job in which an individual is employed by
a recipient corporation for fewer than 35 hours per week.
"Project site." The site of a project for which a
development subsidy is provided.
"Property-taxing entity." An entity that levies taxes on
real or personal property.
"Public utility corporation." A domestic or foreign
corporation for profit that is subject to regulation as a public
utility by the Pennsylvania Public Utility Commission or an
office or agency of the United States.
"Recipient corporation." A person, association, corporation,
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joint venture, partnership or other business entity that
receives a development subsidy.
"Savings association." A domestic corporation for profit
that is an association as defined in the act of December 14,
1967 (P.L.746, No.345), known as the Savings Association Code of
1967.
"Small business." A corporation or other business entity
that employs fewer than 20 full-time employees or has total
gross receipts of less than $1,000,000 during a 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 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 4. 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 tax revenues
resulting from every tax credit, abatement, exemption and
reduction provided by the State government or a local
governmental unit, including, but not limited to, gross
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receipts, corporate net income, personal income, sales, use,
excise, property, utility, public utility realty, insurance
premium, bank shares, mutual thrift institution, and capital
stock and franchise taxes.
(2) The name of each taxpayer that 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 taxpayer.
(3) Any tax credit, abatement, exemption or reduction
received by a business entity of less than $5,000, which
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, vocational
education programs, State university research programs,
manufacturing extension service, work force investment
boards, industrial development authorities, regional
development authorities and finance authorities.
Section 5. Unified reporting of property tax reductions and
abatements.
(a) Property report.--A local government unit shall annually
submit a report to the department regarding any real property in
the local government unit's jurisdiction that has received a
property tax abatement, reduction or exemption during the fiscal
year. The report shall contain information, including, but not
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limited to:
(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.
(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.--A local government unit
shall submit a report to the department stating the total
property tax revenue not paid to the local government unit
during the fiscal year as a result of all property tax
abatements, reductions and exemptions in the local government
unit's jurisdiction.
(c) Time period for filing.--The reports required under
subsections (a) and (b) shall be prepared on two forms provided
by the Department of Revenue and shall be submitted to the
department by the local government unit 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 on the department's Internet website.
(e) Penalty for failure to report.--If a local government
unit fails to submit its reports to the department within the
prescribed time, the department shall notify the State
Treasurer, and the State Treasurer shall withhold further
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payments of any development subsidy to the delinquent local
government unit until the local government unit files its
reports with the department and the department informs the State
Treasurer of compliance by the local government unit.
Section 6. Application for economic development subsidies.
(a) Contents of application.--A granting body, together with
the applicant for a development subsidy, shall complete an
application for the subsidy on a form prepared by the
department. 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 address 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 owner or chief officer of the applicant.
(5) The street address of the project site.
(6) The three-digit North American Industry
Classification System number of the project site.
(7) The total number of individuals employed by the
applicant at the project site on the date of the application,
itemized by full-time, part-time and temporary positions.
(8) The total number of individuals employed in this
Commonwealth by the applicant's corporate parent, if any, and
all subsidiaries thereof as of December 31 of the prior
fiscal year, itemized by full-time, part-time and temporary
positions.
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(9) The development subsidy being applied for with the
granting body and the value of such subsidy.
(10) The number of new jobs to be created by the
applicant at the project site, itemized by full-time, part-
time and temporary positions.
(11) The average hourly wage to be paid to all current
and new employees at the project site, itemized by 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 and
$14.01 or more per hour.
(12) For project sites located in a Metropolitan
Statistical Area, as defined by the Federal Office of
Management and Budget, the average hourly wage paid to
nonmanagerial employees in this Commonwealth for the
industries involved at the project, as established by the
United States Bureau of Labor Statistics.
(13) For project sites located outside of Metropolitan
Statistical Areas, the average weekly wage paid to
nonmanagerial employees in the county for industries involved
at the project, as established by the Department of Commerce.
(14) The type or amount of health care coverage to be
provided by the applicant within 90 days of commencement of
employment at the project site, including any costs to be
borne by the employees.
(15) A list of all development subsidies that the
applicant is requesting and the name of any other granting
body from which subsidies are sought.
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(16) 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.
(17) A statement as to whether the project involves the
relocation of work from another address and, if so, the
number of jobs to be relocated and the address from which
they are to be relocated.
(18) A certification by the owner or chief officer of
the applicant as to the accuracy of the application.
(b) Copy of approved application to the department.--
(1) If the granting body approves the application, the
granting body shall send a copy of the application to the
department within 15 days of approval.
(2) If the application is not approved, the granting
body shall retain the application in its records.
Section 7. Reports.
(a) Annual reports.--
(1) A granting body shall file a progress report with
the department for each project for which a development
subsidy has been granted no later than February 1 of each
year and shall file annual progress reports for the duration
of the subsidy or not less than five years, whichever period
is greater. The report shall include the following
information:
(i) The application tracking number.
(ii) The name, street and mailing address, telephone
number and chief officer of the granting body.
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(iii) The name, street and mailing address,
telephone number of the owner or chief officer of the
recipient corporation or other business entity.
(iv) A summary of the number of jobs required,
created and lost, itemized by full-time, part-time and
temporary positions and by wage groups.
(v) The type and amount of health care coverage
provided to the employees at the project site, including
any costs borne by the employees.
(vi) A comparison of the total employment in this
Commonwealth by 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.
(vii) 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 entity or its
corporate parent, if any, within or without this
Commonwealth as a result of automation, merger,
acquisition, relocation, corporate restructuring or other
business activity.
(viii) A signed certification by the owner or chief
officer of the recipient corporation or other business
entity as to the accuracy of the progress report.
(2) On all subsequent annual progress reports, the
granting body shall indicate whether the recipient
corporation 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
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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 a two-year progress report including the same
information as required under subsection (a). The recipient
corporation or other business entity shall certify the
accuracy of the report.
(2) The granting body shall state in the two-year report
whether the recipient corporation or other business entity
has achieved its job creation, wage and benefit goals and
whether the 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) 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.
(d) Access to project site and records.--The granting body
and the department 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.
(e) Effect of noncompliance.--A recipient corporation or
other business entity 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 10 working days after the February 1 deadline and of not
less than $1,000 per day to commence 20 days after such
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deadline.
Section 8. Subsidy limit and job quality standards.
A granting body may not award:
(1) (i) A development subsidy if the cost per job is
greater than $35,000.
(ii) 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) (i) A subsidy to an applicant unless the wages paid
to employees at the project site are equal to or exceed
85% of the average wage as established under section 6(a)
(12) and (13), except, that for small businesses, the
average wage must equal or exceed 75% of the wages
established thereunder.
(ii) The computation of wages under this paragraph
shall only apply to a recipient corporation or other
business entity that provides the health care coverage as
approved in its application by the granting body.
(iii) A recipient corporation or other business
entity not providing the health care coverage shall pay
wages to employees at the project site equal to or in
excess of 100% of average wage as established under this
act.
Section 9. Recapture.
(a) Recipient corporation duties.--A recipient corporation
or other business entity shall:
(1) Fulfill its job creation, wage, health care and
other benefit requirements for the project site within two
years of the date of subsidy.
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(2) Maintain its wage and benefit goals as long as the
subsidy is in effect or five years, whichever is longer.
(b) Corporate parent duties.--The parent of a recipient
corporation or other business entity may lose no more than 10%
of its employment in this Commonwealth as long as the
development subsidy is in effect or is 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 or other
business entity, or corporate parent, if any, as follows:
(1) Upon a failure by the recipient corporation or other
business entity 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 loss by the recipient corporation or other
business entity or corporate parent of more than 10% of its
employment in this Commonwealth.
(d) Notice of intent to recapture.--
(1) The granting body shall provide notice to the
recipient corporation or other business entity, and corporate
parent, if any, as well as any affiliate or subsidiary, of
its intent to recapture the development subsidy and state the
reasons and amount to be recaptured.
(2) The recipient corporation or other business entity
shall remit to the governing body the amount within 60
calendar days of the date of the notice.
(e) Declaration of subsidy as null and void.--
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(1) If a recipient corporation or other business entity
defaults on a development subsidy in three consecutive
calendar years, or in a shorter period if provided in the
development subsidy agreement, the granting body shall
declare the subsidy null and void and shall so notify the
department and the recipient corporation or other business
entity.
(2) The recipient corporation or corporate parent, if
any, as well as any affiliate or subsidiary, 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 the default.
(f) Joint and severable liability.--For the purposes of this
section, the recipient corporation or other business entity,
corporate parent, if any, or any affiliate or affiliated company
shall be jointly and severally liable for the recapture required
under subsection (c).
Section 10. Private enforcement action.
If a granting body fails to enforce any provision of this
act, an individual who paid personal income taxes to the
Commonwealth in the calendar year prior to the year in dispute,
or any organization representing those taxpayers, may bring a
civil action in an appropriate court to compel enforcement under
this act. The court shall award reasonable attorney fees and
costs to a prevailing taxpayer or organization in the civil
action.
Section 11. 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
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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 12. Effective date.
This act shall take effect in 90 days.
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