Bill will lower debt ceiling on economic development

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HARRISBURG -- The state will soon have less room to borrow for a grant program that supports economic development projects.

Legislation lowering the debt limit for the Redevelopment Assistance Capital Program, which has paid for projects at hospitals, universities and industrial parks, was headed for Gov. Tom Corbett's desk after unanimously passing the state House and Senate on Wednesday. The governor's press secretary, Jay Pagni, said Mr. Corbett is expected to sign it into law.

Pennsylvania as of this summer had approximately $2.75 billion in debt associated with the program, but state law allows borrowing up to $4.05 billion. The legislation shaves off $600 million, leaving the debt ceiling at $3.45 billion. By comparison, the state's total outstanding debt stands at $10.4 billion, Mr. Pagni said.

Recipients of the grants are proposed by the Legislature and then selected by the governor. The proposal headed to his desk will put into law an evaluation system that considers such factors as the potential for job creation and how soon construction can begin.

House Majority Leader Mike Turzai, R-Bradford Woods, said the main focus is limiting how much money the state could borrow for the program. That ceiling has been raised repeatedly in recent years, jumping from $1.2 billion in 1999 to $2.65 billion in 2005 and $4.05 billion in 2010, according to House Republicans.

"This is the first reduction in the debt ceiling for the redevelopment capital assistance program in its history," Mr. Turzai said.

Concerns that rural projects could have trouble competing under the evaluation system led the Senate to add language requiring the criteria to reflect differences in population and geography across the state, said Erik Arneson, a spokesman for Senate Republicans.

Rep. Joe Markosek of Monroeville, the ranking Democrat on the House Appropriations Committee, noted that borrowing still can increase significantly before it approaches the new debt limit.

"We've always had a cap. We're way below it now anyway," he said. "I think we're managing our borrowing very well at this point in time, and both Democrats and Republicans deserve some credit for the management of our current debt."

The legislation also makes projects ineligible for funding unless they are listed in a budget bill within 10 years of being approved.

"Instead of having a project that can just be in the ether for eternity, it actually allows those projects to expire," said Rep. Matt Gabler, R-Clearfield, the bill's prime sponsor. "So that way we can ensure that we're approving projects that are relevant and timely."

region - state

Karen Langley: klangley@post-gazette.com or 1-717-787-2141. First Published October 17, 2013 7:25 PM


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