Debt Relief Bill Passes the House, 194-2
2/14/2013
HARRISBURG – Legislation to reform a much-abused state funding program now heads to the Senate for consideration, House Majority Leader Mike Turzai (R-Allegheny County) announced today.

Passed by a vote of 194-2, the legislation would put new controls in place to curtail mounting levels of public debt for projects funded by the Redevelopment Assistance Capital Program (RACP). RACP uses borrowed money to fund economic development projects selected by the governor.

"Not all debt is bad, but funding political pet projects through borrowed money is," Turzai said. "All state funded projects deserve public scrutiny and careful evaluation, and this legislation will make it happen."

According to Turzai, decreasing the Commonwealth’s debt load and reforming RACP is an important keystone in the agenda to restore integrity and transparency in the way Pennsylvania does business. Created in 1999 with an initial debt ceiling of $1.2 billion, the RACP debt ceiling has been raised six times since then, pushing it up to $4.05 billion. There are approximately 8,000 RACP projects that have been added to the program’s list since 1999.

RACP provides a list of private or public economic development or infrastructure projects, funded by borrowed money, from which the governor can select recipients of that borrowed money.

The legislation (House Bill 493, Rep. Matt Gabler, R- Clearfield/Elk counties) would reduce the RACP debt ceiling to $3.45 billion from the current $4.05 billion. The bill does not eliminate the economic development grant program, but redefines it and makes it financially viable.

The legislation redefines the program to finance buildings and related infrastructure projects. No RACP project may receive funds unless the project was itemized in a capital budget project itemization bill, a capital budget bill or a capital project itemization bill enacted within 10 years of the date the project is approved, or the project has been approved by the secretary of the budget on or before Dec. 31.

Eligible projects will be required to meet the following criteria:

  • Generate substantial increases in, or maintain current levels of, economic activity (e.g., substantial increases in employment or tax revenues). As in current law, this includes projects with cultural, historical or civic significance.
  • Have substantial regional economic impact.
  • Include at least 50 percent non-state funding participation.
  • Have a total project cost of at least $1 million.

According to Turzai, the new process is objective and ensures projects are chosen based upon merit, impact on economic development and level of public-private partnership, geographic disbursement, and shovel readiness. The perception of favoritism would be removed if this legislation becomes law.

Projects on the current itemization list that have not been authorized as of Dec. 31, 2011, would expire. To be awarded from any future itemization acts, a project must comply with all new RACP requirements.

Finally, the legislation would create a new stringent review and approval process within the Office of the Budget. The Budget Office would develop eligibility criteria and establish guidelines for the process.

“Pennsylvanians expect us to fulfill our commitments – for government to live within its means and to change the way we do business in Harrisburg. House Bill 493 continues our efforts to deliver on that commitment,” Turzai said.

Representative Mike Turzai
Majority Leader
28th District
Pennsylvania House of Representatives

Media Contact: Stephen Miskin
717.772.9943 (office), 717.756.3936 (cell)
smiskin@pahousegop.com
www.RepTurzai.com / www.facebook.com/RepTurzai
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