An audit by Allegheny County Controller Corey O’Connor shows the county’s Department of Economic Development (ACED) must more actively monitor prevailing wage compliance on projects supported by tax incentive programs and should issue public reports demonstrating the benefits of these projects.
While Pennsylvania’s Prevailing Wage Act requires workers on public projects to receive a specified wage, ACED management stated to auditors they have not interpreted the Act to apply to TIF projects. However, the Urban Redevelopment Authority of Pittsburgh does conduct such monitoring on city-sponsored projects in which the county participates, and auditors confirmed with the Pennsylvania Department of Labor and Industry that it interprets the Act to apply to TIF projects, as well as to LERTA projects which receive government funding other than LERTA exceeding $25,000.
“The Prevailing Wage Act is an important measure to ensure that fair wages are being provided on taxpayer-funded projects. Moving forward, the obligations of developers on each project to their workers must be clearly established and monitored by the responsible agency,” Mr. O’Connor said. “My office would be pleased to participate in developing an improved monitoring system through our construction inspection section, which inspects and performs wage verification on County projects.”
The audit found that governing bodies of municipalities in the greatest need of economic development may not be aware of the process of applying for LERTA or understand that approval of LERTA projects does not result in an actual reduction in tax revenue for municipalities. “There’s no doubt that these benefits can be valuable, which is why developers and municipalities seek them. But we must ensure that this assistance is not only available to those ‘in the know.’ The ACED should be educating and providing assistance to many of our small municipalities that are truly struggling and in need of investment to ensure these tools are at their disposal as well,” Mr. O’Connor said.
The audit also found that evaluation reports previously issued by ACED assessing the economic benefits of TIF and LERTA projects have not been completed and made publicly available since 2016.
“The justification for tax benefits to private developers and how these benefit the County economically should be clearly established and publicly disclosed,” Mr. O’Connor said. “These reports need to be completed and issued imminently.”