Pennsylvania’s Economic Development in Fiscal Crisis for 2014 - 2015
In prior administrations; the Governor Action Team (GAT) had the ability to work with over 100 million dollars for projects expanding in the Commonwealth from existing firms and relocating companies as well as Bucks County companies were able to utilize these funds. Over the past four years that number has plummeted by 75% as a way to balance the Commonwealth’s general budget. It was viewed by the economic development community as a prudent way to assist in reducing the Commonwealth’s debt. But now as indicated in the Pennsylvania Economic Development Association (PEDA) newsletter the approved 2014 -2015 DCED budget is $204,016,000 that is a 69.25 % decrease from 2006-2007 budget numbers $663,496,000.
In balancing the 2014-2015 General Fund for Pennsylvania, the Machinery and Equipment Loan Fund (MELF) and Small Business First Loan fund (SBF) saw a reduction in their available cash accounts for business and industry; the administration withdrew 180 million dollars.
The MELF program was reduced by 85 million dollars and SBF was reduced by 95 million dollars. Was Bucks County affected; YES! Bucks County had three projects submitted for review by DCED for a total of $1,523,500 over 200 jobs being created and retained and were told that their applications were dismissed. Further more BCEDC was representing six other companies who wanted to submit applications totaling over 4.5 million dollars with over 150 jobs being created or retained. The remaining funds of the program can now only serve GAT approved projects state-wide for the 2014-2015 fiscal year. Without injection of new funds the program can only support 12 million dollars per year.
At this time no new projects for SBF were submitted to DCED in Bucks County. The SBF program has a funding limit and can fund up to $200,000 per project or 50% of the project cost.
It should also be noted that other economic development funds saw a reduction in funding. The PA First Program (PFP) has been cut nearly in half and Keystone Communities was reduced to $5M; 41% for marketing; 45% to the Keystone Communities Program; 49% to Discovered in PA, Developed in PA; and 21% to the World Trade Center.
Is this a crisis, yes it is! These funding cuts and transfers of funds place the Commonwealth at a competitive disadvantage in the economic development market. In utilizing Pennsylvania’s incentive programs this allows businesses to stay competitive within their industry sector while expanding or relocating in the Commonwealth. With the decreased dollars in these programs our neighboring states have more of a competitive edge than Pennsylvania to attract or relocate businesses within their states. The bottom line is the potential loss of new or retained jobs for Bucks County ... crisis YES!
DCED Interest Rate Changes for the Third Quarter
July 1, 2014 -September 30, 2014
- SBF – 3.5%
- First Industries SBF / MELF – 3.5%
- MELF – 3.5%
- PIDA 7 year reset – 2.5%
- PIDA 15 year fixed – 4%