The final budget agreement reflects the Ridge Administration's preference to fund direct grant programs, while divesting in longer term loan programs traditionally used to compete for jobs and business expansion here in the commonwealth. The Department of Community and Economic Development (DCED) budget includes Opportunity Grant, Customized Job Training, and Community Revitalization and Conservation appropriations that total nearly $100 million in the 1997-98 budget, while new discretionary Community Development Bank and Family Savings Account initiatives are funded to provide additional grants of $16.75 million.

Major Incentive Programs

      Opportunity Grants are increased to $35 million in the new budget. Customized Job Training will receive an $18.05 million appropriation. Funding for Infrastructure Development is increased to $20 million. The department will also have $15 million to award in Job Creation Tax Credits along with $15 million in Research and Development Tax Credits to be awarded annually by the Department of Revenue.

      The transfer to the Pennsylvania Industrial Development Authority (PIDA) is maintained at $15 million. The financial position of PIDA could be strained by the Administration's desire to eliminate the Machinery and Equipment Loan Fund (MELF) and fund these needs from existing PIDA reserves. It is unclear, however, if the Administration will pursue the consolidation proposal this year. Without any change, loan repayments to MELF would provide about $10 million annually for new loans.

New Initiatives

      The largest new DCED initiative provides $15 million through the Pennsylvania Economic Development Financing Authority to establish the Pennsylvania Community Development Bank. The "bank" would provide funds for community development lending and technical assistance in distressed communities. The budget provides $1.25 million for Family Savings Accounts to fund small $300 savings grants to 2,000 commonwealth residents with incomes below 200 percent of poverty level. The grants would be matched by individual savings for purchasing a home, paying for education and training, or starting a new business.

International Development

      Export promotion will again receive new financial support. The budget includes $565,000 to further expand foreign office operations, $4 million to fund a new export financing program through the Small Business First Fund, and $300,000 to Local Development Districts to assume operation of the Pennsylvania Match program, facilitating joint ventures between Pennsylvania and Canadian firms. The budget also includes $1.2 million to increase international marketing of Pennsylvania business.

Other Programs

      Other spending increases above current-year funding include $360,000 for local tourist promotion agencies, $500,000 for Small Business Development Centers, $1.615 for Business Marketing, $600,000 for Tourist Marketing, and $300,000 for Shared Municipal Services.

      The budget funds several technology initiatives. These include restoration of a $2 million appropriation for the Super Computer Center, $2.5 million for an Engineering Research Center, and two initiatives funded through the Ben Franklin/IRC Partnership Fund to provide $2 million for semi-conductor technology initiatives and $2.5 million for technology business incubators.

      Housing and Redevelopment Assistance was reduced by $3.5 million in the final budget. The budget provides no funds for the Minority Business Development Authority and Community Facilities Programs.

      Enacted tax changes do increase the maximum allowable tax credits under the Neighborhood Assistance Act to $18 million. Specific changes to the Neighborhood Assistance Program are explained in detail in the tax bill section of this report.