Word: shapp
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Outgoing Pennsylvania Governor Milton Shapp's administration Grasso victorious has been riddled by indictments and resignations. So when fellow Democrat and former Pittsburgh Mayor Pete Flaherty, 54, decided to run, he made a show of his independence of the Governor and of the entire state Democratic organization. That wasn't enough. A former U.S. attorney in Pittsburgh, Richard Thornburgh, 46, an underdog in the gubernatorial race, staged a comeback in the final weeks to defeat Flaherty by more than 200,000 votes...
THERE was great joy in Mudville when Pennsylvania Gov. Milton Shapp announced in August 1976 that Volkswagen would locate its first major U.S. assembly plant in his state. There was joy, first, because the VW decision bucked a trend of industrial exodus from pennsylvania and the whole Graybelt (the declining Northeast corridor), an exodus brought on by the antiquation of the area's facilities, physical constraints on expansion, the relatively high tax load and union wages. There was joy, second, because Pennsylvania had beaten out Ohio in the VW selection process...
Well, VW bought the pennsylvania package, the $135 million loan, $40 million for the buy up-lease back, $30 million for the transportation links, and untold millions in abated taxes. Milton Shapp looked like a financial wizard, and the Rabbits and Dashers came rolling off the line in New Stanton. No one picked up on the Cleveland Plain Dealer interview with the president of volkswagen America: He said that VW had never really considered the Ohio site, because the tank factory was simply too antiquated for their purposes, and that the company had always intended to go to New Stanton...
...moral of this story: Shapp's financial package was less of an inducement in VW's decosopm-making process than it was a bonanza once the decision was made. Nowhere was this more true than in tax abatements Shapp offered. Two years ago in Working Papers, MIT economist Bennett Harrison published a study of corporate decision-making on plant location. Harrison concluded that tax incentives were so far down the corporate priority list--much less important than factors such as site access and condition, workforce composition and education, union presence--that they served primarily as windfall profits. But meanwhile, states...
...MOST innovative part of the pennsylvania package was Shapp's use of state pension fund money to help finance the VW plant. By persuading the funds' directors to make the loan, Shapp recognized that states should use the vast capital pool of public employee pension funds to advance their own economic well-being, just as workers and communities should use their pension funds not only to asure future incomed but present income, jobs, growth as well. The problem with Shapp's package was that it only subsidized Volkswagen, and increased Pensylvania's dependence on the private sector. That $135 million...