HARRISBURG Governor's plan unfolds to improve state businesses

The hope is to create jobs to keep young residents in Pennsylvania.
HARRISBURG (AP) -- An ambitious $2 billion plan proposed last year by Gov. Ed Rendell to expand businesses or attract them to Pennsylvania is evolving in negotiations with lawmakers as a series of different pieces of legislation that could be ready within two months.
Already, some pieces have passed the Legislature and Rendell is making the rest a top priority in hopes that the investments of taxpayer dollars will leverage much more cash from the private sector, perhaps $5 billion within four years or so.
The hope is to invigorate small- and medium-size businesses and lure others to the state to create jobs and new tax revenue and reverse the exodus of Pennsylvania's young college-educated residents to more economically vibrant places.
All told, there are about 10 programs, and most of the money would be used to prepare contaminated sites for commercial or industrial reuse and give small businesses cash to expand or buy equipment.
Other aspects include improving water and sewage systems in small towns, helping businesses bring university research to the market, and providing funds specifically for hospitals, manufacturers, agribusiness and the tourism industry.
The funding involves low-interest loans, grants, loan guarantees and tax credits, although negotiators say that many parts of the package have yet to be assigned a final price.
Debt
Because those aspects are unfinished, officials were unable to say how much taxpayers would be required to pay in debt service payments. At least some of the $2 billion would be repaid by the businesses that benefit from loans, and Dennis Yablonsky, the secretary for community and economic development, said that the rest would essentially pay for itself.
"We're very committed that the job creation that will result will generate enough incremental revenue for the state to cover the debt service on the bonds," Yablonsky said. "That's what this is all about."
He noted that it is possible that the actual amount of money borrowed could be lower, depending on the demand for grants or loans. But, he said, such a scenario is unlikely, given the kind of response the administration has received from county and municipal officials across Pennsylvania.
The money would come from several types of borrowing.
About $1 billion in bonding would be issued by an independent state agency -- negotiators say that one will likely be set up to handle it. The borrowing is not subject to voter approval, although taxpayers would bear the cost of any debt that is not paid back, such as the grants and revolving loans, negotiators said.
Other sources
Rendell also wants to boost the borrowing ceiling on the state's bricks-and-mortar redevelopment grants by $700 million to about $2.3 billion. The state uses the bond money to distribute grants for the projects, and in return requires the project applicant, such as a municipality or public agency, to put up the same amount of money.
Voters will have a say in the third aspect of the bonding, which involves $250 million in borrowing for water and sewage treatment projects in communities where businesses want to locate or expand. Paying off the sewer and water bonds and interest would cost taxpayers roughly $500 million over the 20-year life of the bonds, officials said.
Identical bills authorizing a referendum on it passed the House and Senate. The proposed bond issue would appear on the April 27 primary ballot if, as expected, one of the bills is sent to Rendell before the Legislature breaks for budget hearings, officials said.