Rendell Awarded $516M in Grants During Campaign

March 11, 2007
By Debra Erdley
Pittsburg Tribune-Review

If it seemed as though Gov. Ed Rendell was in the news almost every day last year distributing state money, it's because he was.

During his 2006 re-election effort, Rendell awarded 265 grants totalling $516 million from a special fund he controls. That was more than four times what he distributed from the fund in 2005, state records analyzed by the Pittsburgh Tribune-Review show.

"You saw a picture of (Rendell) practically every day carrying a big check as he went from community to community across the state," said Jerry Shuster, who teaches political communication at the University of Pittsburgh.

"It allowed him to make stops for official business, hand out a big check and walk away looking like Santa Claus," Shuster said.

The Capital Budget Redevelopment Assistance grants are financed with money borrowed by issuing bonds. Pennsylvania taxpayers will foot the bill for 20 years as the state pays off the bonds.

Rendell's GOP challenger, Hall of Fame Steeler Lynn Swann, said the timing of the grants and the state's borrowing raise questions.

"Ed Rendell spent $516 million of taxpayer money, and in many people's minds that will be $516 million for his campaign," Swann said.

Grant recipients last year included a new medical school in Scranton, two minor league baseball parks, convention centers in Erie and Lancaster, seven parking garages, a dozen playgrounds and rec centers, more than a dozen buildings for private colleges and a controversial project to relocate the storied Barnes Foundation art collection.

"I've always had trouble with Gov. Rendell handing out big checks," said Dennis Baylor, 57, an accountant from Hamburg, Berks County, who founded the PA Accountability Project last year. "The practice is outrageous. The debt the state is carrying already is too high."

Not so, said Rendell spokesman Chuck Ardo.

Ardo said the grants leverage investment, create jobs and catapult Pennsylvania to national attention in development circles. He said the flow of cash has nothing to do with politics.

"These are reimbursements. The timing is controlled by the pace of the projects," Ardo said.

Pollster and political scientist Chris Borick, of Muhlenburg College, is skeptical.

"It's asking a lot to believe that there is no connection between where and when money is spent. ... It's a classic case of 'to the victors go the spoils of office.' And you'd expect someone as politically astute as Rendell to realize that," Borick said.

Others say the grant program, which dates to the mid-1980s, has been little more than a political slush fund that Republican and Democratic governors controlled with a wink and nod to the General Assembly and no outside oversight.

Since 1999, the state has borrowed roughly $2.1 billion to finance redevelopment assistance grants. State records show Rendell's $1.1 billion four-year grant tab was 10 percent more than what Govs. Tom Ridge and Mark Schweiker handed out between 1999 and 2002.

This grantmaking built on borrowed money is out of control, said attorney Mark Schwartz, a former investment banker and top aide to the late House Speaker K. Leroy Irvis.

"This is a just a giant slush fund that future generations will be paying for. This state can't afford its turnpike. Its schools are a mess. Property taxes are high. Infrastructure is crumbling. But we can afford to move the Barnes collection?" Schwartz said.

The projects are pulled from an unfunded wish list, called the capital budget bill, that the Legislature sends to the governor each year. The governor and his advisors in the Budget Office borrow money by issuing bonds and select which projects to fund.

The Pennsylvania Economy League writes that the mysterious process "can result in a project which has been authorized never being completed, or for seemingly miraculous check presentations whenever a key administration official is in town."

Budget Office press secretary Susan Hooper said the grants were linked to several factors, including Rendell's decision to identify state and local priorities before making awards in 2004, and later to the General Assembly allowing the program to borrow $640 million more in 2004 and $500 million more in 2005.

House Republicans said they were caught off guard by the onslaught of projects last year.

"But what really needs to be looked at is the governor's planned borrowing for this year," said Stephen Miskin, spokesman for the House Republican caucus. "There's $1 billion in new borrowed funding this year for his energy proposal alone."

State Auditor General Jack Wagner, a Pittsburgh Democrat, said the redevelopment assistance program has never been audited and might merit a second look.

Wagner is concerned about a soon-to-be released audit that scrutinized the Mountain Laurel Center for the Performing Arts. The $35 million Poconos amphitheater was financed with $15 million Ridge approved days before leaving office and $17 million in Pike County Industrial Development Corp. bonds.

State records show the Rendell administration approved $500,000 to help keep the financially-troubled facility afloat until a $23 million buyout could be arranged.

Redevelopment assistance grants, begun under former Gov. Richard Thornburgh, were intended to aid massive projects of regional economic significance.

Initial grants included $185 million for the Philadelphia Convention Center and $85 million for the Midfield Terminal at Pittsburgh International Airport. Later, during the second Ridge administration, the program pumped $320 million into four baseball and football stadiums in Pittsburgh and Philadelphia.

Some say it could be tapped to pay for a new hockey arena in Pittsburgh.

Hooper said the Rendell administration requires applicants to document the economic impact of all projects.Applicants must produce matching money to qualify. Funds are distributed in phases as work is completed.