Tourism, training and tax incentives: DCED’s 2017 budget

The Department of Community and Economic Development is facing cuts — and growth. 

The Department of Community and Economic Development oversees a wide array of state programs, from business and workforce development to tourism to Main Street improvements. DCED is also responsible for Act 47, the state’s distressed cities program. 

DCED Secretary Dennis Davin testified in front of the Senate Appropriations Committee on Monday, answering questions from legislators about the department’s $491.6 million allocation under Governor Tom Wolf’s proposed budget. 

Here are the winners and losers in the department’s budget. 

Winner: Tourism

DCED’s budget is down 9 percent overall, but the department would get a major increase in tourism funding. The governor has proposed spending  $10 million on tourism — significantly increasing the current funding level of $3.9 million. 

“We’re outspent by everyone of our neighboring states [by] at least two to one,” said Davin. He said studies have shown that $1 of tourism investment yields between $4 and $5 of benefit to the state, calling an investment in tourism “a win-win.” 

Most of that money will be spent on online advertising that will “help us tell Pennsylvania’s story,” says Davin. 

Loser: Tax credit programs

DCED has been directed by the governor to find a way to cut $100 million from the state’s tax credit programs. These programs, like the Keystone Opportunity Zone, the City Revitalization and Improvement Zone, the Neighborhood Assistance Program and the Film Production Tax Credit program, have shown mixed results. 

Wolf has proposed the cuts as a way to “focus these initiatives on those credits that have demonstrated the greatest return in new business investment, educational access and community development,” according to the budget.

The funding will likely be re-released as block grants directly to the communities, rather than tax credits to businesses.

Many legislators who represent districts that have benefited from these tax credit programs spoke out in favor of them during the hearing.

Winner: Workforce development programs

DCED has two new workforce development programs included in the budget. 

“I’ve met with a few hundred companies over the last couple of years and this is the single most critical need,” said Davin. “That is to get these manufacturers a well-trained workforce and to get them people.”

The apprenticeship grant program will give businesses $2,000 for employing and training an apprentice. The program is paid for through “clawbacks,” funding recovered from companies that fail to fulfill state grant requirements. The state is also proposing tightening the requirements on companies that accept state funding, which could increase the clawback pool beyond the typical $3 to $4 million. 

The manufacturing training-to-career program will require a $5 million allocation from the state to encourage manufacturing businesses to partner with community and technical colleges to develop curriculum that meets their needs. This will make graduates more attractive to local businesses. 

Winner: Small and local businesses

People who want to start a small business are soon going to find it’s much easier — if the plan to create a one-stop-shop for small business owners does what it’s supposed to. DCED will be joining forces with the Department of Revenue and Department of Licenses and Inspections, among others, to cut back on bureaucracy for small business owners.  

This year’s budget allocates $2.5 million to start a business calling program, which will check in periodically with businesses in Pennsylvania. DCED wants to keep closer tabs on businesses and their needs, with the goal of retaining companies.