HARRISBURG — There is little evidence to back up the worth of more than a billion dollars in economic development grants given out by a state agency, according to a new audit.
An audit report of Redevelopment Assistance Capital Program, RACP, was released by Auditor General Jack Wagner in June. The RACP program reimburses construction costs for projects from hospitals to universities, from community centers to downtown development in blighted areas.
Auditors said the RACP handed out $1 billion of $1.5 billion in grants between July 2005 and June 2010 with little to show in the way of job creation. The auditor also slapped the program for poor record-keeping and a lack of transparency during the selection process.
“With money scarce in these difficult budgetary times, state leaders must invest tax dollars prudently and be able to provide concrete data assuring taxpayers that these economic development dollars are being well-spent,” Wagner said in the audit release.
Criticisms of the program kicked off with RACP’s closed-door approval process. RACP grants are announced and distributed by the Office of the Budget, after an approval process it did not conduct.
“The Office of the Budget was not privy to criteria used in the selection process, and did not know how or why projects were chosen for funding since the selection process was completed solely by the governor and select members of the General Assembly,” according an audit summary.
But change is coming, and with it the shadowy, decades-old political process may head in a new, transparent direction. Specifically, a scoring system for plans will form the basis on which proposals are funded.
Darrell Auterson, president and chief executive officer of York County Economic Alliance, a business and community development organization, said multiple RACP projects have been a boon to the county. He pointed to a Harley-Davidson manufacturing site and a downtown sports complex that have saved or grown jobs, he said.
Despite that, he said, reforms come as a welcome change.
“I think most everyone is aware that the whole RACP program has been a very political process historically,” Auterson said, “and if it can be perhaps improved and take some of the political aspects of it and have projects be judging on their merits and impacts, I think that’s certainly a good thing.”
Just before the audit’s release, Gov. Tom Corbett’s administration announced efforts to reform the program . The administration said it’s shifting RACP’s focus to projects that will provide immediate economic benefits.
And, RACP is getting a new name – the Pennsylvania Economic Growth Initiative.
Erik Shirk, spokesman for the governor’s office, said the efforts are aimed at increasing transparency, and providing maximum economic benefit.
“What is very different with the manner in which the Corbett Administration is running RACP is that we are stating how we will evaluate RACP requests,” Shirk said in an email. “We are providing an actual scoring system for the first time. We are telling potential applicants what information they need to provide in order to achieve a high score. Further, we are being transparent with all of this by posting this information for the first time on the OB website.”
Whether that information will appear online in a timely fashion remains to be seen.
Of the 24 quarterly reports the Office of the Budget was supposed to issue from 2005 through 2011 detailing RACP payouts and debt:
- Fifteen were file a month to 16 months late.
- One was never issued at all.
- Nine were considered timely or almost timely.
The six most recent quarters were summed up in one report issued in February while the audit was nearing completion.