No one knows where the $65M came from
Over $65.5 million for special community and development grants, though removed from last year’s budget, are included as part of Pennsylvania’s 2010-2011 appropriations bill, passed Wednesday.
The line items, all for the state Department of Community and Economic Development (DCED), are marked as funding for local economic development and assistance, but are also WAMs, or “Walking Around Money”, which were ruled unconstitutional by the Commonwealth Court in 1995.
“They’re unconstitutional because once the legislature appropriates money to an executive agency, the legislature may not directly or indirectly determine what happens to those funds,” said Tim Potts, co-founder and president of Democracy Rising PA. “That is, of course, the heart of the WAM process. This would be evidence in court if they documented this, so they keep it secret and they violate the law.”
Despite the passage of the budget appropriations bill in both the Senate and House Wednesday, it was unclear who sponsored the insertion of the grants back into the budget, or why it happened at all when the legislature is gambling on revenue sources of $850 million from the federal government and an as yet unknown amount of natural gas severance tax revenue.
Gov. Ed Rendell was in Washington, D.C. Wednesday, hat in hand, with other governors pleading for Congress to approve all $850 million for FMAP, or supplemental Medicaid funding.
“The [state] constitution requires that we pass a balanced budget, and no one can assure us that this $28 billion budget will actually balance. That’s the biggest piece of it,” said state Sen. David Argall (R – Berks), who voted against the passage of the bill both in the Senate Appropriations Committee and when it was passed on the floor. But as to why the legislature approved the addition of $65.6 million in extra funding for local community development, Mr. Argall could only say “that was raised in caucus. We went over it, but not in any great detail.”
Motivations for the funding may have more to do with political positioning than concern over community or economic development, said Rick Dreyfuss, senior fellow at the Commonwealth Foundation, especially given this is an election year.
“It is a basically money that is used solely for political purposes and to earn a political rate of return, rather than an economic rate of return,” Mr. Dreyfuss said. “What it does is incentivize people to make political deals and to create subsidies where they didn’t exist. This is an election year. They’re trying to create incentives for people to vote for them.”
Senate Appropriations Chairman Jake Corman (R – Centre) said the re-insertion of the line item grants was from negotiations between the governor and the legislature, and said “sometimes you give things, sometimes you take things.”
“Someone in the legislative process had a desire to put those funds back in the budget and got to be part of the negotiating process,” said Mr. Corman. “Every year’s a different year and so some things get taken out some get put back in from time to time. To put things back in was difficult. Ultimately that’s how it works out.”
Mr. Corman voted for the passage of the budget appropriations bill.
The governor’s office had no comment on why these grants were added back into the budget, after they were not included last year.
“It’s not entirely clear where all this happens,” Mr. Potts said. “There are three times a year when rank and file members can apply to their caucus leaders for WAMs and start their internal paperwork and you would think that paperwork would be public documents, but they’re not. But that’s what’s known as pre-decisional documents, which is excluded from the open records law. In other words we’re allowed to know what they’ve done but we’re not allowed to know why they’ve done it.”
Mr. Potts said before the money in the WAMs is actually spent, the contracts between the state and the recipient of the grant must be signed off by the state treasurer, the attorney general and the governor’s Office of General Counsel.
Democracy Rising has been writing to the agencies since September 2009, urging the agencies not to authorize the WAMs, but has received no response.
In addition to the reinserted grants, state Rep. Greg Vitali (D – Delaware) said the special funds which Mr. Rendell had suggested could be raided to balance the General Fund were still undecided, or if any would lose funding at all.
“The one issue we’ve been following with this budget is the proposal of transferring money out of the state’s environmental programs, the Growing Greener 2, the Key 93, and the Environmental Stewardship fund,” said Mr. Vitali. “We are now hearing there was some displeasure that this was being considered for some reason and we’ve now been told those transfers will not be made and these programs will remain intact.”
And state Rep. Paul Clymer (R-Bucks) said “We’re not even sure where that money is going to go or who is going to benefit. We’re going to cut the state parks by 11 percent, but somehow we can find $60 million for DCED and we don’t know who they are going to benefit or how the money is going to be spent.”
Other programs, which received no money last year but were added back into this year’s budget include funding for: Heritage and Other Parks ($350,000); School Entity Demonstration Projects ($600,000); The University of Pennsylvania Center for Infectious Disease ($248,000); the state Department of Environmental Protection’s Safe Water program ($682,000); Health Research and Services ($2.86 million); and Employment Services ($1.1 million).
