Reducing Pennsylvania's Debt
PAHouse Majority Leader Mike Turzai has led the fight to reduce Pennsylvania's debt and reform the capital debt funding process. This has been done primarily through necessary changes to the Redevelopment Assistance Capital Program (RACP).

>> Read Turzai's release on House Bill 493 Concurrence VoteNo Gridlock in PA as Debt Reduction Bill Heads to Governor
>> Read House Bill 493

Leader Turzai has worked with the Governor’s Office of Budget and legislative leaders in the House to develop this milestone piece of legislation; in fact, the governor put many of these reforms in place already by executive authority, but we believe it needs the strength of law.

News Reports on Debt Reform

Lawmakers approve redevelopment overhaul

PA Debt Reduction Bill Moves to Governor’s Office

Harrisburg Leads the Way

Bill will lower debt ceiling on economic development

Pa. legislature votes to reduce RACP debt ceiling

A Brief Explanation of RACP

•    In 1999, the Capital Facilities Act was passed into law and included a grant program for “redevelopment assistance capital projects,” also known as RACP (called “RCAP”) projects.  In 1999, the RACP debt ceiling increased to $1.2 billion.  How does the program work? Think of a “revolving credit” account.  The RACP grant program operates much like a credit card for the Commonwealth.  

•    During the last decade (and mostly the prior administration), the RCAP debt ceiling was raised an astonishing six times.
     •     In 2002, $1.45 billion (Schweiker)
     •     In 2003, $1.51 billion (Rendell)
     •     In 2004, $2.15 billion (Rendell)
     •     In 2005, $2.65 billion (Rendell)
     •     In 2008, $3.45 billion (Rendell)
     •     In 2010, $4.05 billion (Rendell)

•    Not only has the debt ceiling been increased, but the annual spending for RACP projects has also gone sky-high. 

•    The previous governor, over his term in office, averaged about $547 million in project funding each year – and in his last year, he released more than $1 billion in funding RACP projects.  In comparison, the Ridge/Schweiker administration released an average of $260 million in RACP projects per year.

•    The debt service for these projects has increased to an unmanageable level, placing an extraordinary burden on every taxpayer in the Commonwealth.  

•    The Administration selects a project from a legislatively approved list and borrows up to 50 percent of the total cost of the project.  Taxpayer dollars, paid into the General Fund, are then used to service the debt.  And, as the debt is paid down, new projects may be approved using the “available credit.”

•    The Commonwealth borrows an astonishing $277 million every year toward payment of this outstanding RACP obligation.

What the RACP Reform Legislation Does

This legislation responsibly and effectively reforms the RACP grant program to return this program to more rational and reasonable spending levels.  It will also provide a level of transparency and objective standards to the awarding of RACP grants in the future.  

Debt Reduction

Immediately reduces the debt ceiling for RACP projects from the current $4.05 billion to $3.45 billion.

Capital Budget Itemization

There are approximately 8,000 RACP projects itemized in the nine (9) Itemization Acts that have been passed into law since 1999.  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.

Redefining RACP
An eligible project will be required to meet certain criteria:
 • An eligible project will be required to meet certain criteria: be a project, including infrastructure (i.e., roads, bridges, tunnels, storm water, sewage or water infrastructure when part of an economic development project) associated with the project; or a hospital and capital improvement for a hospital, or a newly created “community asset project” as a type of project that falls within the meaning of a “redevelopment assistance capital project” which means:  A project which provides significant benefit or improvement to a community.  The term includes a cultural, recreational and historical project and any other project of civic significance.
 •  Generate substantial increases in, or maintain current levels of, economic activity (e.g., substantial increases in employment or tax revenues).
 •  Have substantial regional or multijurisdictional economic impact.
 •  Include at least 50 percent non-State funding participation.
 •  Have a total project cost of at least $1 million.

Reforming the Process
The new process is objective, with standardized scoring methodology.  It ensures projects are chosen based upon merit, impact to economic development and level of public-private partnership, geographic disbursement, and "shovel readiness".
It eliminates the perception of favoritism and emphasizes job creation.