Legislature doubles tax credit incentive program

Over the past six years, businesses donated more than $300 million to projects statewide aimed at building affordable housing, eliminating blight, teaching job skills, preventing crime and otherwise improving neighborhoods. In return, they reaped more than $100 million in tax credits — money that otherwise would have gone into state coffers.

Now, those numbers are likely to swell. Despite concerns about the lack of evidence of whether tax credit incentives revitalize neighborhoods, state legislators and Gov. Tom Wolf have agreed to expand the program. Last month, they approved a measure doubling the cap on annual tax credits to $36 million.

Supporters, including a group of about 100 community organizations and businesses, lobbied to expand the Pennsylvania’s Neighborhood Assistance Program after seeing overall state funding for neighborhood projects decline over the years while requests for the credit shot upward.

The $18 million cap hadn’t changed since it was introduced almost five decades ago and was “peanuts compared to what it was in 1971,” said state Rep. Bernie O’Neill, R-Bucks, who cosponsored the measure to increase it.

“The value of this program is what it does for the neighborhoods and what these neighborhoods bring back to the commonwealth and to local governments,” Mr. O’Neill said.

More than a dozen other states, including New Jersey, Delaware, and Virginia, also give tax credits to businesses through similar initiatives, although amounts vary. New Jersey awards up to $12 million in credits through its Neighborhood Revitalization Tax Credit Program, while Virginia’s annual cap is $17 million.

Rick Vilello, deputy secretary for community affairs at the Pennsylvania Department of Economic and Community Development, which administers the Neighborhood Assistance Program, lauded the program’s ability to attract donations from businesses.

“It checks all the boxes of community development when you have those in need and people in the business community partnering on working on plans and envisioning how to solve problems,” he said.

But there have been questions about whether tax credit programs are the best way offset lost state revenue. Pennsylvania and other states historically have fallen short in evaluating the effectiveness of such tax incentives, according to a report by the Pew Charitable Trusts.