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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | January 25, 2023 04:38 PM |
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| From: | Senator Katie J. Muth |
| To: | All Senate members |
| Subject: | Stop Shady Deals: Prohibit NDAs in Economic Development Deals and Require Local Government Approval of Corporate Subsidies |
| In the near future, I will be introducing a package of bills that seeks to reduce the influence and special treatment of corporate monopolies in Pennsylvania. The first bill would prohibit the use of non-disclosure agreements (NDAs) in economic development deals throughout the Commonwealth, and the second bill would require impacted local governments to approve corporate subsidies for projects located in their jurisdiction. Recently, large corporations, most notably Amazon, have pitted state and local government officials against each other in a corporate subsidies race-to-the-bottom when locating new business ventures. Possibly even more troubling, these corporations often force the government officials involved to sign NDAs. These agreements prevent elected leaders and public servants from sharing many relevant details with the public, which even includes basic information like the corporation’s identity. Some government officials defend these secret offers as a way to maintain their competitive advantage, but this lack of transparency and catering to corporate interests is what erodes people’s trust in our public institutions and their leaders. For example, in 2017, as part of an effort to attract Amazon’s second headquarters to Pennsylvania, the state Department of Community and Economic Development (DCED) signed an NDA before a bid was even submitted to the company. This agreement included a clause that reserved the right to keep information about the state’s bid hidden from the public for up to five years. Following litigation over the records’ release and Amazon’s ultimate selection of its sites in New York and Virginia, it was revealed that the department’s offer included $4.5 billion for a state-funded grant program to offset the corporation’s personal income taxes for up to 25 years. Incentives offered by Allegheny County, the City of Pittsburgh, and Pittsburgh Public Schools totaled $2.1 billion on top of these state funds, and on the other side of the state, the City of Philadelphia offered up to $1.1 billion in tax incentives over 20 years. Additionally, officials from Harrisburg, Delaware County, and the Lehigh Valley also signed NDAs. Many of these public entities fought in court to keep the details of these corporate subsidies from the public until after Amazon made its decision. These secret deals are unacceptable and should be prohibited in Pennsylvania, which is why I will be introducing legislation to prevent all public officials from signing NDAs when negotiating corporate subsidies for economic development projects. The goal of this legislation is to ensure that the vital information related to these economic development deals, such as the who, when, why, and how much of corporate subsidies, happens out in the open. Government officials should not be allowed to hide the details of a deal before taxpayers can meaningfully express their support or opposition. This common sense transparency measure provides the opportunity for significant community organizing, engagement, and feedback prior to a deal being closed. Similar legislation has been introduced in several other states, including Florida, Illinois, Indiana, Michigan, and New York. In 2022, a bill like this unanimously passed the New York State Senate. The second piece of legislation in this package would require local governments to formally approve of any corporate subsidy that impacts their budget. In 2016, a similar provision was enacted in Louisiana that gave local government bodies, like county councils and school boards, the ability to reject the portion of a property tax exemption that would affect their own budgets. This change required corporate representatives to appear before local government bodies and the public to make their case for why they deserve a handout. According to a study by the Institute for Energy Economics and Financial Analysis, since this reform went into effect, Louisiana communities received more than $280 million in annual revenue increases, and applications for new corporate tax handouts decreased from an annual average of 590 to 65. At the same time, business investment increased and nearly every project rejected by local governments moved forward anyway, just without tax breaks. As elected representatives, we must be faithful stewards of taxpayer money. In Pennsylvania, deals to provide corporate subsidies should not be secretly negotiated behind closed doors, and local governments should have a say in the approval of any corporate tax giveaway that affects their local budget. Co-sponsor these two bills to stand up for taxpayers and promote government transparency and accountability. |
Document #1
| Description: | This legislation would prohibit all public officials in Pennsylvania from signing a non-disclosure agreement (NDA) when negotiating corporate subsidies for an economic development deal. | |
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Document #2
| Description: | This legislation would require local governments to formally approve of any corporate subsidy that impacts their budget. | |
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Memo Updated: January 25, 2023 04:39 PM