Budget: DCED to tighten job-creation rules, add apprenticeship grants

Companies that receive state funding for job creation would face stricter oversight under Gov. Tom Wolf's 2017-18 budget proposal, with revenue collected from companies that fall short helping fund a new apprenticeship program.

That effort is one of several that would affect manufacturers and other employers under Wolf's ongoing "Jobs that Pay" initiative, which also includes a proposal to hike the state's minimum wage from $7.25 to $12 an hour.

Last year, the Pennsylvania Department of Community and Economic Development approved nearly $1.1 billion in low-interest loans, tax credits, and grants for projects across the commonwealth, state statistics show, and secured private-sector commitments for the creation and retention of more than 245,000 full-time jobs.

Wolf wants to make sure those who receive state assistance are living up to their end of the bargain.

Pennsylvania’s economic development projects "provide tremendous value to the state. But it is critical that they are monitored scrupulously to ensure that every taxpayer dollar is being spent wisely to provide maximum return on investment," the governor's budget presentation states.

DCED "already collects millions of dollars annually" from companies that fail to meet their commitments after receiving state aid, according to the budget document. Wolf wants to strengthen those policies, particularly for companies that relocate out of state after getting state money.

Proposed changes to DCED job-creation grant programs would include:

• Companies receiving state economic development grants will be required to maintain any job created through receipt of a state grant for no less than five years, and to maintain operations in the state for no less than eight years.

• Where a company commits to create jobs, and fails to make progress towards its obligations, the state will require full repayment of the grant amount.

• If a company receives a grant from the state and subsequently moves operations out of Pennsylvania, DCED will require full repayment of the grant, as well as a 10 percent penalty.

• DCED will revise the formula by which it pursues recovery in the event a company does not achieve its full commitment to prioritize job creation.

• Finally, DCED will strengthen its contract language to implement the requirements above and ensure that all parties understand their responsibilities up front.

"Businesses that receive state funding to expand economic opportunity must be held accountable for the use of those dollars," the proposal adds.

Revenue recovered by DCED would fund a new apprenticeship grant program for workers — those entering the workforce from K-12 education as well as those transitioning into new sectors — to receive training aligned to workforce needs.

Under the program, businesses would be able to seek grant funding of up to $2,000 for each apprentice employed pursuant to an apprenticeship agreement registered with the Office of Apprenticeship in the U.S. Department of Labor.

Source: Central Penn Business Journal