Good timing for 'sweeping reform' of Pennsylvania pet project program

Auditor General Jack Wagner
Auditor General Jack Wagner
Posted: July 03, 2012

WITH LOTS of focus on a new state budget, and the fact that it passed "on time," a revamp of a huge state program and an audit showing that it needs revamping is getting scant notice.

It's worth mention.

The Redevelopment Assistance Capital Program (RACP), a colossal and controversial spender, is used by governors and legislative leaders to fund community projects selected largely in secret.

It's one of those things that underscores taxpayers' distrust of politicians.

It's been used to favor friends, contributors and fellow pols, such as Arlen Specter and the late western Pennsylvania congressman Jack Murtha.

It's been around for 25 years, operates out of the governor's budget office and grows exponentially, awarding matching grants ostensibly to create jobs.

A new, five-year review says that there's no real data suggesting that promised jobs are generated. In fact, findings say that the program's pretty loosey-goosey.

An audit released last week by Democratic Auditor General Jack Wagner says that RACP is "plagued with administrative shortfalls, including inadequate monitoring and a lack of transparency."

The audit cites vague project descriptions with no indication as to how projects are picked, except "solely by the governor and select members" of the Legislature.

The timing is interesting.

The audit comes just weeks after the Corbett administration announced "sweeping reforms" to RACP, which it's renaming the Pennsylvania Economic Growth Initiative.

And reforms include stuff that the audit calls for: transparency, monitoring, specific guidelines, merit-based selection and limits on spending.

And that announcement came just after news that the administration was working a massive state-aid-for-jobs deal with Shell — $1.7 billion in incentives for a chemical plant in western Pennsylvania and "tens of thousands" of jobs.

All coincidence?

Budget Secretary Charles Zogby says yes.

"We were already looking at RACP before the auditor general," he said, "We spent all last year working on it."

Zogby notes that RACP debt borrowing, which went from $400 million in the mid-1980s to $4 billion in 2010, is "unsustainable," and says that funding will now be capped at $125 million a year.

Wagner's audit says that from 2005 to 2010 $1 billion in RACP grants was disbursed by Democratic Gov. Ed Rendell and legislative leaders.

Philly got $213 million for hospitals, museums, neighborhoods and, notably, the Comcast Center ($28 million). Comcast owns MSNBC, where Rendell is a political analyst, one of his several jobs.

Other controversial projects include $1.9 million for a library and office for former Sen. Specter at Philadelphia University ( which Gov. Corbett signed off on earlier this year, saying that he was legally obligated to), a public-policy center named for the late Congressman Murtha in Johnstown, and $20 million for a luxury spa, hotel and golf course in Chester County developed by a Rendell friend and donor.

Corbett's office says that money for that project was not released.

Many projects are for good causes. Borrowed money to pay for them doesn't come from the general-fund budget.

But the program invites conflict and cronyism. And its annual debt service and fees are paid from the general fund, including $250 million in 2010.

Wagner commends Corbett for moving to improve RACP.

Zogby says that while RACP was "entirely discretionary in the past," it now has accountability through a defined application process and posting applicants and projects on the budget office's website.

There's also pending GOP-sponsored legislation to dramatically cut RACP's borrowing power and require public hearings before project approval.

Now, it's possible that some needed and worthwhile projects will need to look elsewhere for money. It's possible that past RACP abuse ends up leading to reactive, too-tight restrictions.

But this is a program in need of reform, so any reform is a good thing — little noticed but worthy of note.

For recent columns, go to philly.com/JohnBaer. Read his blog at philly.com/BaerGrowls.

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