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July 13, 2012 | By | Posted in General News

Week in Review: Scranton going bust, PSU slammed over Sandusky scandal

This is an outdoor view of Scranton City Hall, the city where hundreds of millions of dollars in debt is causing a payroll crisis. Photo by Christopher Seliga

By PA Independent Staff

HARRISBURG — The summer heat and a legislative lull may have set upon the Capitol, but it’s a different story in Scranton or State College.

Scranton, the commonwealth’s sixth largest city, joined the small but growing list of U.S. cities taking drastic measures to avoid entering bankruptcy. One of those measures includes the mayor’s self-imposed minimum wage of $7.25 an hour.

Penn State University dominated the news cycle late this week after the release of an extensive investigative report that looked into what high-ranking officials knew about the Jerry Sandusky scandal, highlighting a lack of transparency at the highest levels of the taxpayer-assisted school.

Meanwhile at the Capitol, job creation continues to be a priority of the Corbett administration, with recent private acquisitions of southeastern Pennsylvania refineries receiving state assistance.

In midst of cash crisis, Scranton mayor slashing wages

Scranton Mayor Chris Doherty last week reduced all city employees’ salaries, including his own, to $7.25 an hour minimum wage.

But for the city with more than $300 million of debt, measures like this simply won’t be enough.

The City Council blocked Doherty’s state-endorsed plan to raise taxes by 29 percent this year and 78 percent over the next three years. The council opted instead to play the bond market.

But there’s one big problem.

No one wants to lend Scranton money.

Gary Lewis, a freelance financial consultant with experience in managing distressed debt, said Scranton’s problems require a long-term fix.

“This is a matter of resolving the underlying issues, including grossly underfunded pension systems unsustainable debt and excessive collective-bargaining contracts,” said the Scranton native.

Scranton city workers’ unions recently sued Doherty’s decision to defer city paychecks until the financial crisis is resolved. A judge ruled in favor of the unions Thursday.

But Doherty repeatedly has said on national television that regardless of what courts order, the city doesn’t have the cash to pay its workers.

Freeh report blasts Penn State as Sandusky’s state pension adds insult to injury

A 267-page investigative report from Louis Freeh into Penn State’s failure to protect children from former football coach Jerry Sandusky had several recommendations for Penn State moving forward.

One of those is the board and the university must be more transparent and accountable. State Rep. Eugene DePasquale, D-York, said he hopes to bring Penn State under further compliance with the Right-to-Know Law.

“This is the no-brainer of no-brainers,” DePasquale said.

Although the university will receive $228 million in taxpayer support this year, it is independently managed and mostly privately funded, meaning its internal documents, including e-mails, are not publicly accessible.

To add insult to injury, taxpayers likely will be paying Sandusky $5,000 per month, while he sits in prison.

Fraud, corruption and perjury are crimes that can automatically terminate a state employee’s pension. Sexual assault, though, is not one of the crimes listed under Act 140 of 1978, which says when the state can strip employees of their pensions.

After filing a right-to-know request with the State Employees Retirement System, PA Independent learned that the state in fact keeps no records on convicted state employees who receive government pensions while in jail.

“Those records do not exist,” read the SERS response letter.

Supreme Court ruling on juvenile life sentences affects PA statute

The Legislature has two major decisions following the U.S. Supreme Court ruling that nullified mandatory life sentences for juveniles.

Lawmakers must determine whether the court ruling applies retroactively and whether the state should draft new sentencing guidelines for juveniles.

Because the U.S. Supreme Court’s ruling applies only to mandatory life sentencing guidelines, not to life sentences in general, Pennsylvania judges can still sentence a juvenile convicted of murder to life in prison.

The state Senate Judiciary Committee listened Thursday to testimony on the court decision from about 20 people, including lawyers, victims’ rights advocates and juvenile inmate advocates.

“We have to look at the case law and see what the court meant,” said Committee Chairman Sen. Stewart Greenleaf, R-Bucks, the only elected official conducting the hearing.

“Did they mean it to be retroactive, or did they not mean it to be retroactive? Did they mean the courts to make that decision, or the Legislature should make that decision?”

In Pennsylvania, people convicted of first- or second-degree murder when younger than 18 are given mandatory life sentences. Some research suggests this sentencing guideline explains why Pennsylvania ranks as the highest in the nation for incarcerating juveniles without the chance of parole.

Some PA business owners concerned about costs in health-care law

As state businesses absorb the effects of the Patient Protection and Affordable Care Act, a Lehigh Valley hotel owner is one of many anticipating new costs.

“To now have to pay for everyone’s health care, that is going to put us at a competitive disadvantage,” said Hotel Bethlehem owner Dennis Costello.

The law states that companies employing at least 50 workers must provide them with a certain level of health insurance or else pay a penalty of $2,000 per number of full-time employees, minus 30. Businessmen like Costello are combing through the law to determine all new costs.

But tax credits in the law may help businesses offset some new costs. Those credits would apply to businesses with fewer than 25 employees and an average company wage of up to $50,000, said Antoinette Kraus, project director at the Pennsylvania Health Access Network.

“Small businesses have always struggled with rising health-care costs,” Kraus said.

Oil refinery acquisition means jobs staying in Pennsylvania

Thanks to a partial acquisition by Braskem America of Sunoco’s former refinery in Marcus Hook, more than 100 jobs will remain in the Philadelphia area.

Braskem America will acquire assets at the plant that will allow it to make a material called polypropylene, which is found in automotive, housewares, and packing goods. The thermoplastics operator previously used the facility for that purpose while it was still owned by Sunoco.

Along with a $15 million state grant, Braskem plans to invest at least $56 million in the expansion project.

Gov. Tom Corbett attended the announcement of the deal on Wednesday.

“Braskem could have left Marcus Hook and consolidated its operations to one of the company’s existing plants in Texas or West Virginia,” Corbett said. “Braskem will continue to be a job creating fixture in Pennsylvania for years to come.

Earlier this year, Delta Air Lines announced the purchase of the ConocoPhillips refinery as a fuel subsidiary, and Sunoco partnered with the Carlyle Group to keep a southern Philadelphia refinery open.

Democrats question constitutionality of revised redistricting maps

By Monday’s deadline, at least 10 appeals were filed challenging the constitutionality of Pennsylvania’s revised legislative maps.

After the state Supreme Court rejected the maps drawn earlier in the year, the Legislative Reapportionment Commission approved new maps June 8.

Amanda Holt, a piano teacher by trade, but a cartographer on the side, filed a petition challenging the constitutionality of the new maps.

“The commission seems to be unable or unwilling to put the constitution first in this process,” Holt said.

The Pennsylvania Constitution says that “unless absolutely necessary,” counties, cities, towns, boroughs and townships can not be divided for election purposes.

Nevertheless, the revised maps contain 68 municipal splits for the House map and 37 in the Senate map.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, said the state Supreme Court’s majority opinion gave no specific benchmarks for how many subdivision splits were appropriate.

“In developing its Revised Final Plan, the Commission very much responded to the direction from the Supreme Court to reduce the number of splits,” Arneson said in an email.

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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