Revitalization and Government Budgets

Many remember the days when main street projects were plentiful and many boroughs in the region were participants in the state sponsored Main Street Program. In the past couple of years there have been issues with governmental budgets and there has been considerable belt tightening. Many of the programs were terminated as cities and boroughs tried to balance their budgets and still keep essential services.

It would seem to me that, since increasing assessed value has to be one of the revitalization results in a borough, economic development would be a priority. You can only cut so much from a budget before you will have to cut essential services. Increased assessed value and growth has to be part of any budget solution.

I know of a couple of towns have discontinued their main street effort during the latest budget crunch. Some boroughs laid off long-term economic development personnel  because things got tight. I know Ruth Shaw got laid off in Cheltenham Township, and Phoenixville did not renew their program.

Many times governments think that the existing staff can work on economic development and somehow fill the bill. I have seen that work and not work, and it really depends on the people. It is important that the private sector be involved in the economic development and perhaps pick up some of the slack. Existing organizations could look to pick up some of the slack by picking up some programs and following through with a public private partnership to help carry through on the effort.

Just as the local governments are finding it hard to justify economic development personnel, it may be equally hard for the state to fund some of the public partnerships they have funded in the past. A new executive administration usually means a new way of looking at things. On the state level, things can change pretty quickly and many times programs get re-named and combined or eliminated. 

The state has been making changes in the Main Street program for the past few years. They have eliminated the so-called “exit” year (6th year) from the Main Street programs exiting the funding cycle. They have not added any new communities to the program in a few years, preferring to fund the existing programs and not take on too much more of a burden to the Department of Community and Economic Development (DCED) budget.

When the state added the Elm Street program to the economic development mix, there was a strain on resources as the community groups worked independently from the Main Street Program, and thus there was a drain on political subdivisions seeking to provide the match on both programs. The Elm Street program carried a 10 percent match requirement, whereas the Main Street program carried at 50 percent match, making the Elm Street program a more favorable program of which to apply.

There are different grants that logically go with the Elm Street and Main Street Program. The Elm Street program has a residential reinvestment grant attached with it for project-related items, and the Main Street program has commercial reinvestment dollars associated with the program that is used for main street kinds of projects.  Two years ago when there were state budget difficulties, all of the programs were on the chopping block. I worked with my fellow Main Street managers to lobby the legislators to keep the administrative programs without cuts, and to cut back on the “bricks and sticks money.” This was done to enable the communities to maintain current staffing levels.

There is now talk about cutting back some of the programs on the state level… whether or not these programs are phased out will be an issue for the legislature, and I am sure there will be a lot of debate on program cuts. The United States Congress has briefly talked about stopping community development block grant dollars (CDBG), which is what municipalities use for low to moderate income projects. Usually the CDBG dollars do not require a match, and are the most desirable dollars to get, because you can do an entire project from one funding source and you do not have to match the dollars.

A squeeze from the federal level concerning programs would certainly put the state in an awkward position when it came to further reducing programs to help economic development. An elimination of the Main Street program administrative funding would cause problems for many of the small communities throughout the state that do not have a mechanism to fund commercial development programs centering on the downtown. The problem with cutting administrative funding is that all of the projects will come to a halt and many times there is no picking up the pieces that remain.

In these days of tight budgets, underperforming investment portfolios and the calls for smaller government, many governments are looking at significantly curbing or ending economic development funding. Many of the programs can be curtailed and under-funded but programs that place economic development personnel in the small towns and boroughs across the commonwealth need to be maintained. If you stop them now there will not be adequate staff to carry through on programs that are not cut. Sometimes you will be able to add administrative dollars as part of a grant… program delivery, administration, whatever you want to call it, needs to be performed in order to do the projects. Without the personnel, there would be no one charged with doing those things necessary for a small town to compete with the larger retailers for a portion of the regional market share.

The tax base is grown is by creating ratables (tax producing entities), which is economic development. It should be a blend of creating new ratables and budget cuts that balance the budget. Can you create ratables without economic development? I suppose so, but it will be a much more encumbered process because the people working to make it happen have other jobs.  

I think it is going to be interesting how the cuts come down when the budget is looked at again on the state level. In California Jerry Brown has asked that taxes be raised, in order to handle the budget shortfalls. I am not sure that there is a will to raise taxes in Pennsylvania based on the recent outcomes of the elections. I would hope that there is not a significant cut in economic development. Who knows, there could be a switch to growth-based tax relief in the form of Tax Increment Financing (TIF) or some other kind of innovative program, which will save the day. You never know… after all it is just politics.