by Anthony Hennen
The use of tax credits and state subsidies has grown significantly in recent years, and the trend is expected to intensify in the near future.
A report from the Independent Fiscal Office noted that Pennsylvania awarded $857 million in tax credits in fiscal year 2022-23, and the IFO projects that $1.23 billion will be given away in 2023-24.
Another $530 million was given away for economic development in 2022-23, a $125 million increase from the previous year, though the IFO expects these subsidies to drop off slightly in 2023-24.
Most of the tax credits (about 65%) went toward education, either as the Educational Improvement Tax Credit program or for the Opportunity Scholarship Tax Credit program that encourages businesses to donate to scholarship funds or other educational programs.
Another $113 million was for the Keystone Opportunity Zone program to direct capital into targeted neighborhoods for economic revitalization, while $71 million funded subsidies for film production, the lion’s share of which get sold off to out-of-state companies to claim.
For subsidies in the form of state spending and grants, the horse racing industry received the most — $198 million, a slight drop from the previous year. The IFO anticipates it will get a total of $221 million in 2023-24. In the last 20 years, the industry has received more than $3.5 billion in subsidies.
Pennsylvania state policy has seen tax credits grow by $200 million from 2021-2022, as The Center Square previously reported. The IFO’s estimate last year overestimated tax credit growth by $100 million for 2022-23 — but underestimated state spending and grants by $110 million.
Though tax credits tend to focus on education, grants tend to focus on economic development projects. Those projects include horse racing, redevelopment projects, and tourism and marketing.
Job training programs, too, accounted for $44 million in 2022-23, which includes apprenticeship programs and other initiatives.
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Anthony Hennen is a reporter for The Center Square news wire service, covering Pennsylvania, and co-host of Pennsylvania in Focus, a weekly podcast on America’s Talking Network. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
