HARRISBURG — Judges in Pennsylvania typically have no problems securing their offices in retention races.

In 45 years, only Supreme Court Justice Russell Nigro lost his seat in 2005, after an infamous pay raise lawmakers gave themselves in the middle of the night inflamed state voters.

Eric Epstein with the government reform group Rock the Capital thinks the ease with which judges are retained should give voters pause as Supreme Court Chief Justice Ron Castille campaigns for 10 more years this fall.

“Why should people automatically vote yes?” he asked. “And what does it takes before somebody calls into question the ability of someone to serve on the bench?”

CASTILLE: Pennsylvania Supreme Court Chief Justice Ron Castille is running for retention this fall, after serving two terms on the court.

A new Rock the Capital voter guide urges voters to “Put the ‘No!’ in November.” Epstein said Pennsylvania courts face “a crisis of confidence,” and he’s asking voters to consider Castille’s record before keeping him.

“I think there’s an aggregate inventory of behaviors and decisions and inactions that make a case that he should not be retained,” Epstein said. “What we’re saying is if you think you should be retained, let’s have a discussion.”

The report skewers Castille’s leadership and ethical record in a 10-point case, coupled with about 80 pages of news reports from his tenure and a 10-part video series. One such point is Castille’s decision on the “pay raise” case, which found that the salary increases the Generally Assembly passed in the middle of the night on July 7, 2005, were unconstitutional for lawmakers, but not the judicial branch.

Tim Potts, a Harrisburg-area government watchdog who authored the report, said Castille could’ve put an end to stealthy legislative actions, the kind that allowed such a law to be passed.

“He could have stood up and said ‘No, this is not the way we’re supposed to pass laws,’” Potts said. “Instead, he decided to be the poster boy of doing things to be, what I consider, in an unconstitutional fashion.”

Also cited in the report are ticket-fixing scandals at the Philadelphia Traffic Court, legislative district redistricting decisions, and the “kids for cash” case in the Luzerne County juvenile justice system.

As one might expect, Castille disagrees with the report.

He called the findings “slanted,” as they don’t address the 400 majority opinions and 220 dissenting opinions he’s authored in his tenure.

“A body of work, I think, is what a Supreme Court Justice is,” Castille said. “It’s going to affect this state for a long time, in a positive way, even if I don’t get retained.”

The report also doesn’t address the financial decisions he’s made as the administrative head of the state’s court system, he added, including keeping all courtrooms open in the face of budget cuts and “the worst economic times we’ve faced since the Great Depression.”

And, he added, the report makes no mention of his Bronze Star or two Purple Hearts he received out of his U.S. Marine Corps service in the Vietnam War, which left him a disabled veteran.

Epstein and Potts question why Castille, at age 69, would run for a 10-year retention term when Pennsylvania judges must retire at age 70, per state law. But the law is getting challenged and could end up before Castille himself, while lawmakers are weighing changes to the Pennsylvania State Constitution.

“I don’t think it’s a good idea for people to run for a term of office they cannot possibly fulfill,” Potts said.

ORIE MELVIN: The arrest, trial, conviction and sentencing of former Supreme Court Justice Joan Orie Melvin has brought the judiciary branch into the limelight.

Castille said his bench experience makes him well-suited to continue his service, even if only for a year. The court is at a “critical time,” as it’s already down a justice after the felony conviction of former Justice Joan Orie Melvin earlier this year.

Castille said, as a senior member, he’s able to author an average of 20 opinions a year, while a first-time justice might author three. New justices are also barred from participating in decisions where they have not heard oral arguments, which could be a concern if cases on controversial topics like voter ID and the state’s Marcellus Shale drilling regulations laws were still undecided.

“The Supreme Court has a learning curve that’s long, and it’s steep,” Castille said.

Potts has asked groups like Pennsylvania Bar Association, Pennsylvania Newspaper Association and Pennsylvania Cable Network to consider holding a “discussion” between Castille and himself to talk about the issues facing the judiciary before the retention election.

Castille said he’s open to the idea.

Potts and Epstein said they recognize mid-term elections and judicial races do not get very much attention and such a discussion is rather unprecedented. But their efforts, they said, may better inform the electorate.

Epstein also urged voters to ask lawmakers to read the report and say whether they would retain Castille — a charge to which at least one lawmaker has already responded.

Senate Minority Leader Jay Costa, D-Allegheny, said Monday at the Pennsylvania Press Club that he thinks Castille is doing a good job.

“I’ve got no interest in trying not to retain him,” Costa said.

Contact Melissa Daniels at melissa@paindependent.com

PENNSYLVANIA STATE CAPITOL

HARRISBURG — About a month and a half out from Pennsylvania’s constitutional deadline to get a state budget completed, the state’s lawmakers are still grappling with high-profile debates on an assortment of matters.

This week saw multiple hearings dig deep into long-term issues like public school curriculums, liquor privatization and open records law reform.

But now lawmakers will be out of session for the next two weeks, until June 3.

On the bright side, that means plenty of closed-door negotiating could happen before they return. On the other hand, it could mean no conclusion on pressing issues as the budget deadline inches closer.

House will move budget bill in early June

The state House will prepare a budget bill during the first week in June, setting it up for a full vote by June 10, according to House Appropriations Committee chairman Bill Adolph.

Adolph said this week that the House views Gov. Tom Corbett’s proposed $28.4-billion spending plan as a “ceiling” for expenditures during the upcoming 2013-14 budget year. The governor’s plan was pegged to higher levels of revenue, but those have not materialized.

Corbett also planned to use $175 million in pension savings to balance the budget, but since no pension overhaul bill has been passed by either chamber so far, Adolph said those possible savings will not factor into the House’s budget.

“You can’t put together a budget that is based on proposed legislation, so I have to deal with the figures that are in front of me,” he said.

The deadline to pass a new budget is June 30.

Liquor debate will spill into June

The liquor privatization debate continues to unroll in the General Assembly, where Corbett’s original proposal to sell off the state liquor stores may evolve to include different forms of alcohol law reform.

CENTER OF THE STORM: State Sen. Charles McIlhinney, R-Bucks, is at the center of the liquor privatization fight.

A Senate Law and Justice Committee on Tuesday focused on testimony by those who sell alcohol in the private sector – grocers, restaurateurs and beer distributors.

Sen. Chuck McIlhinney, R-Bucks, who is chairman of the committee, said he plans to work some type of package reform for beer sales into his proposal, which he plans to draft in early to mid-June, following a third committee hearing.

“What I’ve seen evolve now in the private beer industry there needs to be some package reform between what types of packages you can sell at the beer distributors and the bars,” McIlhinney said. “The beer distributors always wanted to sell six packs, but didn’t want the taverns to sell cases and vice versa. I think at this point they’re talking a little bit more freely about it.”

Meanwhile, proponents of eliminating the Pennsylvania Liquor Control Board continue to push for closure of the state store system, though it’s unclear what McIlhinney’s proposal will include to that end.

Democrats may push Medicaid expansion vote

For months, Corbett has said expanding Medicaid under the Affordable Care Act is too expensive for the state to take on. But those in favor of the expansion may try to force the state to act despite the chief executive’s concerns.

HUGHES: The Senate Appropriations Minority Chairman wants to force the Senate to take a vote on expanding Medicaid in Pennsylvania.

Sen. Vincent Hughes, D-Philadelphia, filed a resolution to force the state Senate to vote on Medicaid expansion. If a majority of senators support the resolution, a proposal to force the state to accept the expansion would be busted out of committee and brought to the full Senate for a vote.

While the administration voices concerns about the cost and what would happen to children enrolled in Pennsylvania’s CHIP program, which provides health coverage for children in poor families, numerous reports have come out citing economic benefits that would help the state.

An analysis by the state Independent Fiscal Office, a number-crunching agency that plays a role similar to the federal Congressional Budget Office, concluded that the state would see $180 million in savings during the 2012-13 fiscal year by expanding Medicaid.

But opponents point out that most of these savings are the result of moving patients from state-level programs to the federally funded Medicaid.

Political nonprofit skirts campaign finance rules in the name of accountability

The Pittsburgh-based nonprofit called Pennsylvanians for Accountability, is running television ads attacking the governor, but the group itself comes up a little short on accountability.

The ads blast Corbett for playing a “shell game” that cuts money from education and forcing districts to lay-off teachers while “bankrolling big tax cuts for his corporate backers.” The same group paid for mailers in four state House races last fall.

Though the ads that ran last fall — and the ones running now against Corbett, who seeks re-election next year — appear to be intended to influence the outcome of elections, the group is registered as a nonprofit “social welfare” organization with the state Department of State, and therefore it does not have to file campaign finance disclosures.

The only clues available about the organization come from its nonprofit incorporation documents with the Department of State.

The three individuals listed as “incorporators” are Linda J. Cook, Kevin Kantz and Georgeanne Koehler.

Cook and Kantz have ties to the Pennsylvania State Education Association, or PSEA, the state’s largest teachers’ union. Koehler is a union activist for the SEIU in Pittsburgh.

Common Core draws bipartisan critics

The implementation of the so-called Common Core standards in Pennsylvania public schools is facing united opposition from teachers unions and tea party groups – two political factions that rarely, if ever, play on the same team.

The Common Core is set to become the new state standards on July 1, unless there is legislative or executive action to delay it.

Sen. Andrew Dinniman, D-Chester, minority chairman of the Senate Education Committee, called the Common Core an unfunded mandate with a $300 million price tag that will threaten graduation for Pennsylvanian students.

Those on the right who oppose the Common Core also see it as a set of federally written rules that will quash local control of what is taught in schools.

Carolyn Dumaresq, deputy secretary of education in PA, said the new standards set different goal lines for public education in the state, but individual school districts will still have to determine how to reach those goals.

“We cannot, and we do not, say what that curriculum should be,” she said. “The textbooks and materials that are used, the teaching strategies and the curriculum will all be determined by the school districts.”

PA senators outraged by IRS target of conservative groups

Both of Pennsylvanians U.S. senators said they want to see the IRS investigated for its targeted campaign against conservative groups.

“The IRS’s actions are akin to an enemies list and further contribute to the deep cynicism that many Americans have about the government,” said Sen. Pat Toomey, R-Pa.

In a similar fashion, Sen. Bob Casey, D-Pa., said he was “outraged” by the allegations, and those responsible for a breach of taxpayer trust should be held accountable.

On Tuesday, U.S. Attorney General Eric Holder announced the FBI will investigate the situation to determine if the IRS broke any laws.

Also Tuesday, the U.S. Treasury Department’s Inspector General released a 54-page audit of the IRS that concluded the agency used “inappropriate criteria” to single out organizations that would be referred to a special team to handle potential political cases.

Contact Eric Boehm at eric@paindependent.com and Melissa Daniels at melissa@paindependent.com, or follow @PAIndependent on Twitter for more.

WEB WORK: The Office of Administration says server outages may be a thing of the past once its new contract for web services with NIC is up and running.

HARRISBURG — A state lawmaker continues to raise red flags about a website redesign and management contract.

Rep. Rob Matzie, D-Beaver, said this week he’s concerned the administration of Gov. Tom Corbett knew it would pay millions to NIC USA, a government website design and management firm, even though the contract was entered as a “self-funded” agreement.

NIC provides “eGovernment” services in 28 other states, all of which operate on a self-funded model, relying on fees added to transactions business and individuals may make online.

Pennsylvania is the only state to authorize a sole-source contract.

Matzie said three work orders totaling about $2.6 million are proof the administration knew this contract would cost the commonwealth, and that it was not self-funded, as the contract originally described.

“They knew there was going to be payments ahead of time, based on the dates,” he said.

The first fee under NIC is a $2 charge on driver and vehicle records insurance companies obtain from the Pennsylvania Department of Transportation. A work order, dated Dec. 20, authorizes the state to pay NIC those fees on a monthly basis, though PennDOT was not yet operating on a platform run by NIC. That overhaul wasn’t authorized until mid-January.

“That work order should’ve been the first work order, not the work order that went in for the payment,” Matzie said. “It’s all over the board.”

The $2.6 million in scheduled work-order payments are under review by the office of Treasurer Rob McCord. Matzie earlier this year asked to freeze the payments, but he has yet to hear whether Treasury would sign off.

Matzie said if this contract were competitively bid, the state would have had a better opportunity to see what services are available. He believes the General Assembly should have the ability to approve adding fees to online transactions, instead of the administration approving them as part of the contract.

Dan Egan, press secretary for the Office of Administration, said the state had no intention to pay NIC anything other than what it would receive through the self-funded process.

But the state decided to hold off charging its first convenience fee until July 1 this year, out of deference to the insurance agencies that would be paying the fee. Additionally, the state wanted NIC to continue working on its websites. The service on the state’s current web portal, which runs all the websites the state control, will expire in 2015.

“Originally we wanted it to be self-funded and out of the gate, but with the timing on the horizon and wanting to wait with the insurance industry, we soon found ourselves in this position,” Egan said. “We needed to get them working and moving websites over.”

Pennsylvania Interactive will handle virtually all of the websites and their needs, including hardware, web design, program management and real-time online services. Part of the upgrade will include an additional back-up server for main web pages, which would prevent hours-long outages like those experienced on Tax Day that disrupted the filing deadline and led to a one-day extension.

All of that takes several months to develop and implement, Egan said.

“It’s not going to be one of those things where you wake up one day and all the websites are new,” he said. “It’s going to be one at a time, a gradual process.”

Egan said web users can expect to start seeing changes in the state’s website by the end of June, starting with PA.gov and executive branch sites.

Contact Melissa Daniels at melissa@paindependent.com

COURTS IN PA: The Washington County court house, seen here, is one of the 60 judicial districts in Pennsylvania.

HARRISBURG — In Pennsylvania, the judicial system isn’t much different than the other two branches of government when it comes to worrying about money.

A 2013 State of the Commonwealth’s Courts report released this week shows the court system is working to cut its costs as it prepares for a slight decrease in funding next year.

“At one-half of one percent of the state budget, the judiciary’s lean budget has never had deep pockets for easy savings,” Supreme Court Chief Justice Ron Castille said in the report.

Gov. Tom Corbett’s proposed budget for the 2013-2014 year provides $308.1 million for the judiciary, down from $309.2 million this year, as the court requests $324 million.

The report shows a few areas in which the judiciary has saved to counter the effects of a stagnant budget.

The court system saved $10 million over three years by freezing interim judicial appointments in the event of a vacancy. Instead, the court uses senior judges, those who have left full-time duty, to fill in until the judge is elected. In 2012, senior judges worked 962 days without compensation, according to the report.

CASTILLE: Pennsylvania Supreme Court Chief Justice Ron Castille says the prime concerns for the judiciary branch are financial, and widespread understanding of the purpose of the courts.

The judiciary also trimmed $4.5 million by eliminating 30 magisterial district judge seats.

The report also notes savings stemming from specialized “problem-solving courts,” like drug, mental illness, driving under the influence and veterans courts. Such systems are tailored to reduce recidivism and provide intensive treatment, but they also can save tax dollars – drug courts save more than $3 for every $1 spent, according to the report.

Lynn Marks, executive director for statewide court reform organization Pennsylvanians for Modern Courts, said these strategic savings make sense.

“We support the Supreme Court’s freezing of vacancies until they are replaced by election, yet hope that a president judge can try to make a case that there will be a drastic impact without one,” Marks said in a statement.

ORIE MELVIN: Former Supreme Court Justice Joan Orie Melvin was sentenced on public corruption charges this week.

Beyond the cost of running the judiciary system, the report also addresses what change the court system has made in reaction to the “kids for cash” scandal in Luzerne County. Two judges, President Judge Mark Ciavarella and Senior Judge Michael Conahan, were convicted of accepting money from a for-profit juvenile detention center builder in exchange for imposing sentences that would fill the facilities with juveniles.

Since then, the court system has implemented 57 rule changes, and expunged the criminal records of 2,401 juveniles who appeared before the two judges charged in the scandal.

The report does not mention by name former Supreme Court Justice Joan Orie Melvin, who was sentenced on corruption charges this week. But it does note that “actions of a few can taint the many.”

“It is a sad day when a judge is accused of wrong doing and even sadder still when those misdeeds are affirmed within the very system to which the judge has sworn fidelity … Pennsylvania’s more than 1,000 judges are ‘right-minded’ men and women dedicated to service. But the actions of a few can taint the many,” Castille wrote.

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG — In a capital city teetering on the brink of bankruptcy, and the first city in the nation to be charged by the federal Securities and Exchange Commission with misleading investors, the Pennsylvania state government is beginning the process of putting together a budget.

Pension costs and transportation spending will loom large in the new budget, which will get its first legislative vetting next week.

Corbett: Get ready to write checks to pay for pension debt

Gov. Tom Corbett has talked about the looming danger that Pennsylvania’s $47 billion public pension debt poses to the state budget.

This week, he made it clear how that would affect the household budget as well.

At the current level, the unfunded pension liability would cost each household in Pennsylvania more than $9,000, the governor said.  If there are no reforms and the debt continues to grow to an expected $65 million by 2018, the average cost will be $13,000 per family.

“That’s the cost of doing nothing,” Corbett said. “Are you ready to write your checks?”

Corbett’s proposed pension reforms would create a new, cheaper pension system for new state and school district employees.  Current employees would retain their already-earned benefits, but would see future benefits reduced, and retirees would not see any changes.

The legislation was introduced this week in the state House and state Senate, but so far there is little appetite to pass the bills in either chamber.

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SEC announces charges against city of Harrisburg

The city of Harrisburg made history as the first municipality charged by the SEC with securities fraud, accused of misleading investors with inaccurate financial statements made to the public.

BAD CITY: Harrisburg was told to stop lying to the public about its finances, and promised not to do it again.

The SEC, which announced the charges Monday, said the misinformation meant investors risked dealing in securities based on incomplete or outdated knowledge. The SEC found financial reports from 2009 through 2011 were either missing or inaccurate.

“These public officials’ statements were the principal source of significant, current information about the issuer of the security and thus could reasonably be expected to influence investors and the secondary market,” the SEC said in a report detailing the charges.

The city has reached a settlement with the federal agency and will implement new policies to prevent such inaccurate information from being made public in the future, according to the court order.

The SEC didn’t levy any fines against the city, or name individuals involved in the case.

Still, some are calling for further investigation into Harrisburg’s financial situation, weighing whether fraud in the city’s financial dealings merit criminal charges. At a news conference earlier this week, Sen. Rob Teplitz, D-Dauphin, who represents Harrisburg, said the case is under consideration by Dauphin County District Attorney Ed Marsico.

Senate Transportation Committee votes out $2.5B plan

The Senate Transportation Committee, headed by Sen. John Rafferty, R-Montgomery, approved a plan to spend $2.5 billion in new transportation funding over five years with a 13-1 vote this week.

PAYING MORE: It’s going to take $2.5 billion to adequately fund Pennsylvania’s transportation infrastructure, according to the Senate Transportation Committee. One guess where that money is coming from.

The legislation would generate $1.6 billion of its spending plan by uncapping the oil franchise tax applied to the wholesale price of gasoline. Other motor vehicle fees would increase, including a $100 surcharge for moving traffic violations. License fees would increase from $29.50 every four years to $50.50 every six years. Registration fees would rise from $36 annually to $102 every two years.

Rafferty’s proposal would spend about $1.9 billion on highway and bridge repairs. About $510 million would be budgeted for the state’s 36 public transit systems, and the remainder would go to funding for railroads, ports, airports and bicycle and pedestrian programs.

Senate Transportation Minority Chairman John Wozniak, D-Cambria, said the Senate isn’t likely to pass a bill without an agreement from the House of Representatives, where there is more hesitation to raise gas prices and fees.

But, Wozniak said, the state is long overdue for collecting more money to fund its roads and bridges. The state last increased the gas tax in 1997.

New district maps finally get Supreme Court “OK”

Pennsylvania will have new legislative districts for the 2014 election cycle, after the state Supreme Court unanimously approved redrawn House and Senate district maps this week.

The decision, released Wednesday, caps off a 17-month saga that began after the Supreme Court rejected a pair of legislatively drawn maps in January 2012 after a challenge brought by a private citizen who argued the districts unnecessary fractured too many counties and municipalities, a violation of the state constitution.

GOOD ENOUGH: Chief Justice Ron Castille gave the reapportionment commission a passing grade, barely, on their second try at drawing a new electoral map.

The court agreed, and ordered the legislative leaders who drew the maps to go back to the drawing board.  Since revised maps could not be completed before then 2012 election, they were conducted on the lines drawn in 2001.

But the commission was given a second shot at drawing constitutional maps and produced what the court said was a “better,” but “not perfect,” plan, according to the decision penned by Chief Justice Ron Castille.

The new maps are likely to lock-in Republican majorities in the state House for the rest of the decade, and will shore up the GOP in the state Senate, where they hold a narrower 27-23 majority.

Corporate tax overhaul heads to state Senate

With bipartisan support, the state House passed a bill this week to begin a slow process of cutting Pennsylvania’s corporate income tax rate.

The proposal would lower the state rate to 6.99 percent by 2025 from the current level of 9.99 percent in a series of incremental steps that would begin in 2015. It also promises to close the so-called “Delaware loophole,” by which companies incorporate in Delaware to avoid paying corporate taxes in other state, by giving the state Department of Revenue more power to go after companies that transfer wealth out of Pennsylvania for tax purposes.

“It’s an opportunity to bring about changes to two components of our business tax structure that Republicans and Democrats have talked about for years with no results,” said state Rep. Dave Reed, R-Indiana, who sponsored the bill.

Democrats who spoke against the bill Monday on the House floor said it would cost the state money in the long-term by reducing the tax rate while not placing tough enough requirements on businesses and expanding tax credits for some corporations.

House will kick-off budget scramble next week

The state budget scramble will begin early next week as the state House gets ready to tee-up its own budget proposal with revenue forecasts that are cloudy at best.

Republican lawmakers met with Gov. Tom Corbett this week to discuss the budget plan, and House Majority Leader Mike Turzai, R-Allegheny, said a House plan will be made  public next week.

“We established timetables and process,” Turzai said. “We intend to move in due diligence to make sure we have the budget done in a timely fashion, and a responsible fashion.”

In February, Corbett proposed a $28.4 billion spending plan for fiscal 2013-14.

But that was dependent on the state collecting about $232 million in excess revenue during the current fiscal year, which ends on June 30.

Last week, both the Independent Fiscal Office and the Department of Revenue acknowledged the state was likely to fall short of that mark.

The state budget deadline is June 30.

Follow @PAIndependent on Twitter for more.

The state’s unemployment rate is stubbornly high (and Corbett did a poor job explaining why on a radio program), while tax revenue is well below where Corbett needs it to be to make his budget proposal balance.  One of Corbett’s top priorities for the spring — the privatization of the state liquor stores — took several hits this week.  And to top it all off, a new poll confirmed previous ones showing the governor falling behind several potential Democratic nominees in 2014.

Liquor privatization gets slowed, questioned and attacked

The state House passed a liquor privatization bill during the final week of March, but it will be at least mid-June before the state Senate considers doing the same, according to state Sen. Charles McIllhinney, R-Bucks, who largely controls the future of the liquor bill from his post as chairman of the Senate Law and Justice Committee.

READY FOR A FIGHT: Liquor privatization in the state Senate is going to be long, slow battle, if this week was any indication.

“If I feel I need more time, I’ll take more time,” McIllhinney said, following a hearing on Tuesday stocked with opponents of privatization.

The senator said two more scheduled hearings would have a more balanced list of testifiers.

Senate President Joseph Scarnati, R-Jefferson, meanwhile, seemed only lukewarm on the idea of liquor privatization during an appearance at the Pennsylvania Press Club on Monday. Instead of an intense focus on privatization, the budget should be getting more attention, he said.

Corbett said he wants to have a liquor bill on his desk before June 30, which also happens to be the deadline for completing the budget.

Finally, the union representing 3,000 or so of the state employees in the liquor stores announced Thursday they would begin running statewide radio and TV ads to attack the privatization plan.

Corbett got fancy pen, robe, and more during 2012 travels

Back in March 2012 when Corbett traveled Europe on a trade mission, he received a suave souvenir – a $275 fountain pen gifted by a public official at an event in Oyonnax, France.

THE PEN IS MIGHTIER: And in this case, pretty expensive, too. Corbett got a $250 stylo while in France during 2012.

That was while Corbett was touting Pennsylvania as part of trade mission paid for by the Team Pennsylvania Foundation, a trip that cost nearly $11,000.

Pennsylvania lawmakers, Corbett included, reported the extent of gifts and travels as part of financial disclosure forms due this week with the State Ethics Commission. According to state law, public officials must disclose gifts valued at $250 or higher, unless given by family or friends.  They also must report any transportation, lodging and hospitality paid for worth at least $650.

The reports give a glimpse into what public officials receive from special interests in their district, across the state or even internationally. But some government watchdogs say gifts for lawmakers should be banned altogether to erase any shadow of buying-off a public official.

In addition to the fountain pen, Corbett also reported receiving two Turkish robes and towels, along with a vase and plate, valued at $275. The gifts were presented during an appearance with the Turkish Cultural Center Pennsylvania.

Top legislative leaders on both sides of the aisle disclosed no gifts.

Unemployment rate drops, but concerns rise

Pennsylvania’s unemployment rate fell to 7.9 percent in March from 8.1 percent in February, but economic analysts said there were worrying signs beneath that optimistic top line.

STAYING HIGH: Pennsylvania’s unemployment rate (the blue line) is now higher than the nation average (red). Corbett suggested this week that employers have a hard time finding drug-free employees.

According to the federal Bureau of Labor Statistics, the number of people working in Pennsylvania tumbled by about 14,000 in March, following a drop of 6,000 in February. Those reductions in employment were accompanied by a 33,000 reduction in the state’s labor force — the measure of people working or actively seeking work — during March.

The decline in the labor force effectively disguised the drop in employment and gave Pennsylvania a two-notch reduction in the unemployment rate.

“If you look at it right now, there doesn’t appear to be a whole lot of strength in any sector,” said Jake Haulk, a former economist with the Federal Reserve who now serves as president of the Allegheny Institute, a free market think tank in Pittsburgh. “The negative incentives out there are just overwhelming.”

In a graceless moment, Corbett this week suggested that unemployment in the state was so high because employers were having a hard time finding potential employees who could pass a drug test. Democrats had a field day.

Even at 7.9 percent, the state’s rate remains three ticks above the national average of 7.6 percent.

When government gets hacked, now they’ll have to tell you

The state Senate passed a bill this week requiring state agencies to give swift notice to residents when a data breach occurs, potentially allowing hackers to access sensitive personal information from governmental computers.

THEY KNOW EVERYTHING ABOUT YOU: And when hackers break into government computers, they do too.

The legislation, sponsored by Senate Majority Leader Dominic Pileggi, R-Delaware, comes after several data breaches at state agencies jeopardized the information of thousands of residents. In those cases, thefts of state-owned computers exposed the personal information of as many as 400,000 people, including 17,800 Social Security numbers.

Affected residents were not told about the problems for several weeks.

“There’s no good reason to delay public notification after a data breach,” Pileggi said. “Potentially affected residents should know what happened as soon as possible when personal information is stolen so they can take steps to protect themselves from identity theft.”

House leadership expressed an interest in the bill.

Budget gap could mean more fiscal belt-tightening

With two months left in the fiscal year, Pennsylvania seems unlikely to collect enough revenue to meet the Corbett administration’s expectations.

In February, the governor’s budget office raised their revenue projection for the year by $232 million, but after the April revenue report was released this week, the administration backed off those higher figures.  For now, Pennsylvania is about $60 million above the original baseline for the year, leaving a $160 million gap in next year’s spending plan.

“It’s pretty clear that we won’t end the fiscal year with that extra $232 million,” said Elizabeth Brassell, spokeswoman for the Department of Revenue. “It’s unlikely that we will experience any significant gains in the next two months.”

The budget office said the result would probably mean more “fiscal discipline” in the coming budget.

The state also is contending with about $700 million in mandatory cost increases, mostly the result of higher pension payments coming due and debt service.

Follow @PAIndependent on Twitter for more.

HARRISBURG – Pennsylvania taxpayers could pay more for updates to state online services than a recent contract would otherwise suggest.

MCCORD: The state treasurer’s office is holding off payments to NIC until it hears back from the administration.

But first, state treasury officials must decide if the payments are even legal.

The Corbett administration entered a no-bid contract with eGovernment services firm NIC USA, in late 2012. The company provides all website design, hardware, implementation and management – and the state pays nothing up front.

Yet the administration is now asking the state Treasury for $2.6 million dollars to give to NIC. Those payments are on hold until state Treasurer Rob McCord and his office decide whether the payments are legal and appropriate.

Like 28 other states who use NIC, website design and development is meant to be self-funded, meaning the state’s ability to maintain its websites is contingent upon certain fees paid by website users. The company offers a broad variety of functions for businesses and residents to use online, like license renewals and records requests, some of which carry fees that fund website development.

But the administration won’t wait for those funds to roll in before it starts paying NIC.

The state wants to pay NIC what it already would have collected if the first fee, on obtaining driver history records, was already in place. The $2 fee, charged on insurance companies who request the records, is set to kick in on July 1, 2013.

If that fee was already in place, the total windfall would be $2.6 million, according to three invoices received by the treasury. The amount was calculated using a $2 fee on actual sales figures for January, February and March.

Dan Egan, press secretary for the Office of Administration, said the state is requesting payments because it faces a deadline of 2015 to get off its current platform, due in part to server and software issues. Because it takes 18 to 24 months to build a new software platform and redesign websites, the state didn’t want to delay the process, Egan said.

“The last time we redesigned the websites and moved to a new technology platform, it took about two years and still came down to the wire for some websites,” Egan said in an email to PA Independent.

Egan said the decision also allows the state time to notify companies who purchase these particular driver’s records about the fee before it kicks in.

MATZIE: The Beaver County lawmaker sees more than one red flag within the state’s new eGovernment services contract.

Rep. Rob Matzie, D-Beaver, said the administration doesn’t have the right to assess fees on residents or businesses without permission from the General Assembly – and he’s also concerned the state entered the contract without a competitive bid.

Matzie reached out to the state’s row officers, calling attention to the deal. And he asked McCord to halt payments. Matzie said there’s no language in the contract allowing these extra payments outside of transaction fees.

“If they wanted a transition to occur sooner and they put it out to bid, that could’ve been part of the RFP (request for proposals),” Matzie said.

In addition to enlisting McCord’s review, Matzie is also working on legislation that would require the General Assembly to sign off on any fees added to commonwealth web transactions.

Treasury press secretary Gary Tuma said the department is still waiting to receive answers from the administration about the payments before it decides whether they’ll be issued.

“Some of our questions revolve around some of the amounts contained in the contract, and the approval process for the contract,” he said.

But Tuma said this review process is fairly standard, as other payments are similarly screened. Tuma said the department receives millions of requests for payments each year, and several hundred a month or more require a review before the office signs the check.

To Matzie the review is a welcome opportunity to look into what’s going on with the administration and NIC.

“There’s a lot of questions that still need to be answered.”

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG — Beneath an optimistic top line, several bothersome facts lurk inside Pennsylvania’s jobs report for March.

The unemployment rate in the Keystone State fell to 7.9 percent, from 8.1 percent in February. While that reduction leaves the state three ticks above the federal mark of 7.6 percent last month, the more worrying aspects of the report are the decline in people working and those looking for work.

STUBBORN RECOVERY: Pennsylvania made it through the national recession in better shape than other states, but now it is showing signs of weakness.

According to the federal Bureau of Labor Statistics, the number of people working in Pennsylvania tumbled by about 14,000 in March, following a drop of 6,000 in February. Those reductions in employment were accompanied by a 33,000 reduction in the state’s labor force — the measure of people working or actively seeking work — during March.

The decline in the labor force effectively disguised the drop in employment and gave Pennsylvania a two-notch reduction in the unemployment rate.

Jake Haulk, a former economist with the Federal Reserve who now serves as president of the Allegheny Institute, a free market think tank in Pittsburgh, said Pennsylvania took its share of a national economic slowdown during the first quarter of the year that caused 500,000 Americans to leave the labor force.

“If you look at it right now, there doesn’t appear to be a whole lot of strength in any sector,” Haulk said. “The negative incentives out there are just overwhelming.”

He pointed to the increase in payroll taxes that took effect in January and general uncertainty in the business community about higher taxes that may be necessary to pay for the new federal health care law and the nation’s ballooning debt.

The weakness in Pennsylvania’s economy is of particular interest since the state seemed to avoid the worst of the recession since it began in 2008.

After months of losses, Pennsylvania’s job count bottomed out in February 2010 at 4.8 million.  By a year later, the state had gained 110,000 jobs and Pennsylvania added another 85,000 jobs by February 2012.

The state maintained an unemployment rate better than the national average for that entire period.

But the numbers of have flat-lined in the 13 months since, with private employment growing by a mere 1,000 jobs, according to the March report.

Matt Knittel, director of the Independent Fiscal Office, which plays a number-crunching role similar to the federal Congressional Budget Office, said the slowdown in recovery during February and March follows a pattern that has occurred in each of the past two years.

But he said it is hard to pin-down a single cause for this year’s problems, though he agreed that federal issues like the payroll tax hike and the sequester were more likely to blame than anything at the state level.

He said the federal changes “were like flipping a switch” and were therefore more likely to disrupt a tenuous economic recovery, though job growth should return later in the year.

“We’re cautiously optimistic that once the economy absorbs those hits — and the payroll tax cut was not a small matter — we’re expecting it to pick up later this year,” Knittel said.

Though were not as bad as this year, the first quarters of 2011 and 2012 were also slow in the job growth department.  Knittle attributed those issues to a combination of the financial crisis in Europe and uncertainty in Congress over issues like the raising of the debt ceiling.

In a statement announcing the sobering jobs data for March, Labor and Industry Secretary Julia Hearthway said “Pennsylvania continues to see positive signs for our economy as we cautiously, but steadily, grow out of this recession.”

But Democrats continued to blast the Corbett administration on Monday over the job numbers, while pointing to figures that show Pennsylvania ranked 49th in the nation for job creation during March.  Only Wyoming did worse.

“The whole focus should be how do we get people back working, how do we improve the state’s economy,” said state Sen. Vincent Hughes, D-Philadelphia.

He suggested a temporary suspension of a planned phase-out of one corporate tax as a way to generate more revenue for the state that could be used to invest in job creation programs.

Haulk said Pennsylvania’s policymakers should try to improve the business climate in the state to grow jobs, rather than chasing tax revenue directly.

But anyone trying to pin the job losses on Pennsylvania-specific policies will have to contend with the fact that many other states experienced the same slowdown during the first few months of 2013.

Ohio, Pennsylvania’s neighbor to the west, lost more than 20,000 jobs during March, according to BLS.

Indiana’s employment fell by 12,600 during the month, while Kentucky lost 8,400 jobs. Michigan shed 6,600 jobs and the drop in Illinois was 17,800.

Contact Eric Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

HARRISBURG – The state House took the first step to closing a transparency loophole at Pennsylvania’s largest public universities, but at the same time a new audit report says the lawmakers themselves need better transparency and accountability over how they use special legislative expense accounts.

Meanwhile, Medicaid costs are projected to go up, and the unemployment rate and size of the labor force in the Keystone State are down.

Transparency loophole at state universities could be shut

OPENING UP OLD MAIN: Penn State and the other three state-related universities would have to comply with right-to-know requests under a bill approved by the House State Government Committee on Monday.

The House State Government Committee approved a bill Monday afternoon to end the right-to-know exceptions for Pennsylvania’s four so-called “state-related” universities – Penn State, Pittsburgh, Temple and Lincoln.  The bill moves to the full House for a vote that could come as soon as Wednesday.

Under current law, all state and local government agencies – including the 14 state-owned universities that are part of the State System of Higher Education – are required to respond to right-to-know requests.  Only the four state-related universities, which received more than $514 million in state taxpayer funds this year, are exempted.

The four schools get between 5 percent and 15 percent of their annual budgets from the state, which they have argued is not enough to qualify as a state agency.  They have also expressed concerns about how the right-to-know law would handle sensitive information like records on private donors and research data.

State Rep. John McGinnis, R-Blair, a professor of finance and economics at Penn State’s branch campus in Altoona, said the schools should either comply with the Open Records Law or become wholly private institutions.

“I think it is incumbent upon the state-related universities, if they want to accept state tax dollars, that they be accountable to the taxpayers,” McGinnis said.

Audit: Changes needed for lawmakers’ $140 million slush fund

The state legislature spent more than $300 million during the 2011-12 budget year, including more than $228 million for employees’ salaries and benefits, according to a new internal report.

EXPENSIVE EXPENSES: The state General Assembly has more than $140 million spread across 36 checking accounts.

The new audit report was released by the Legislative Audit Advisory Commission report on Wednesday.  It shows that the General Assembly’s spending increased by $8 million from the previous year and the amount the legislature keeps tucked away in a special slush fund dropped by $43 million.

Even so, the legislature still has more than $140 million in its special reserve account. Legislative leaders maintain that they need that stash of cash so they can continue to operate in the event of a budget impasse.  The last time such an impasse occurred, in 2009, the legislature spent $89 million from the fund.

The report also offered suggestions on how to streamline the 36 different checking accounts the legislature maintains. Auditors say those checkbooks are riddled with errors and lack proper oversight, but lawmakers seem disinterested in changing their expense procedures.

New sales tax break for private jets

The state General Assembly appears to be on the way to passing a new sales tax exemption for airplane parts and maintenance, meaning private plane sales and repair expenses would go untaxed. The change would mean a loss of $12 million dollars in tax revenue for the state General Fund.

TAX BREAKS TAKING OFF: Private jet parts and repairs could soon be tax free in Pennsylvania.

Proponents of the new exemption say it would generate more jobs in Pennsylvania by attracting companies that make and repair airplanes.

An independent analysis suggests more than 2,000 direct jobs and 2,600 indirect jobs would need to be created – bringing in a total of about $265 million in income – in order to neutralize those losses with other taxes.

Opponents of the proposal say it is little more than a giveaway to those who own and use private jets and will further complicate the state’s sales tax code that is already riddled with dozens of irrational exemptions.

Conservatives launch media blitz against key state senator in liquor privatization battle

A conservative campaign organization that has made a name for itself by going after left-leaning Republicans made a splash this week with a new television ad attacking state Sen. Chuck McIllhinney, R-Bucks.

McIllhinney is the chairman of the Senate Law and Justice Committee, which will have the first say on a House-passed liquor privatization bill.  The committee has a hearing scheduled for Tuesday.

TARGETED: State Sen. Chuck McIllhinney, R-Bucks, has the fate of the liquor privatization bill in his hands.

The Citizens Alliance of Pennsylvania sponsored the ad, which will run on cable networks in the southeast corner of the state where McIllhinney’s district is located.  The head of CAP said the group has enough resources to keep up the ad campaign throughout the summer and to target other senators, if necessary.

McIllhinney has previously been lukewarm about passing liquor privatization – a major priority for Gov. Tom Corbett and House Republican leaders – but this week he told a Philadelphia radio program he intends “to put forth a proposal to privatize the state stores.”

Unemployment falls to 7.9 percent in March after two months of increases

Unemployment in Pennsylvania for the month of March fell to 7.9 percent, two ticks down from February’s mark of 8.1 percent, according to data from the state Department of Labor and Industry.

Though the unemployment rate declined, the number of Pennsylvanians working also dropped, as did the size of the state’s labor force – the measure of people actively employed or seeking employment.

The number of Pennsylvanians with jobs slipped just below 6 million for the first time since October 2012.

Still, the two point drop from February was praised by Julia Hearthway, Secretary of the Department of Labor and Industry, as a positive sign that Pennsylvania was “cautiously, but steadily” growing out of recession.

Also on the jobs front, Democrats blasted Corbett over a report that said Pennsylvania was 49^th in the nation in job growth during March – only Wyoming created fewer jobs in the month.

The national unemployment rate was 7.6 in March, marking the seventh consecutive month that Pennsylvania has performed worse than the national average.

Medicaid expansion to cost feds billions in Pennsylvania

Taxpayers will be on the hook for additional costs if Pennsylvania decides to expand Medicaid in accordance with the federal health care law, but the those additional tax dollars will flow from the federal government, not from the state.

A new report from Pennsylvania’s Independent Fiscal Office – a nonpartisan number-crunching agency that serves as the state’s version of the Congressional Budget Office – said Pennsylvania would save about $220 million annually over the first eight years of the expansion, which would begin in 2014.  Most of those savings would be concentrated in the first three years, according to the analysis.

However, federal spending on Pennsylvania would increase by about $3.2 billion over the same period.

“Most of the Commonwealth’s savings under expansion would be generated by transferring individuals currently served by General Assistance to the federally-funded Medicaid program,” said Matt Knittel, executive director of the Independent Fiscal Office.

Corbett is still undecided on whether he will accept the Medicaid expansion, which states must voluntarily accept or reject, the U.S. Supreme Court ruled last year.

Follow @PAIndependent on Twitter for more.

HARRISBURG – Taxpayers will be on the hook for additional costs if Pennsylvania decides to expand Medicaid in accordance with the federal health care law, but the those additional tax dollars will flow from the federal government, not from the state.

MEDICAID: The federal government will pick up most of the costs for Medicaid expansion in Pennsylvania, but it all comes back to the taxpayers eventually.

A new report from Pennsylvania’s Independent Fiscal Office – a nonpartisan number-crunching agency that serves as the state’s version of the Congressional Budget Office – says Pennsylvania would save about $220 million annually over the first eight years of the expansion, which would begin in 2014.  Most of those savings would be concentrated in the first three years, according to the analysis.

However, federal spending on Pennsylvania would increase by about $3.2 billion over the same period.

“Most of the Commonwealth’s savings under expansion would be generated by transferring individuals currently served by General Assistance to the federally-funded Medicaid program,” said Matt Knittel, executive director of the Independent Fiscal Office.

Under the provisions of the federal health care reform law, Medicaid coverage will be expanded to 133 percent of the federal poverty level from the current ceiling of 100 percent, beginning in 2014.

The IFO report projects Medicaid expansion will provide health insurance coverage to 440,000 individuals, with about half of those being previously uninsured and the other half currently insured with private or employer-funded plans. The federal government will cover 100 percent of the costs for those newly eligible for Medicaid during the first three years of the expansion, with declining levels of subsidies in future years.

In June, the U.S. Supreme Court ruled that states had the option to accept or reject the Medicaid expansion portion of the federal health care reform law.

Senate Democrats, who requested the IFO analysis, said the report proved the Medicaid expansion would be good for Pennsylvania’s bottom line.

“The dollars identified by the IFO can be used for a variety of purposes including the investment in public schools, such as the cash-strapped Philadelphia School District,” said state Sen. Vincent Hughes, D-Philadelphia, on Tuesday. “We can leverage those dollars to solve problems.”

But additional costs – whether at the state or federal level – are still an increasing burden on taxpayers, said Elizabeth Stelle, a research analyst for the Commonwealth Foundation, a free market think tank in Harrisburg that opposes the Medicaid expansion.

“Rather than depending on deficit-spending from the federal government to bail out, Pennsylvania lawmakers must look to real reforms that reduce the costs of health care and reform unsustainable entitlement programs,” Stelle said.

Gov. Tom Corbett is still undecided on whether to expand Medicaid.  He has cited uncertainty about the federal government’s ability to meet its obligations in future years.

Christine Cronkright, a spokeswoman for the governor, said Tuesday that Corbett continues to seek reforms to the Medicaid program from the federal government.

“He believes we can increase access to healthcare and healthcare coverage for more Pennsylvanians, but only if we’re given the independence and flexibility to do so,” Conkwright wrote in an email.

The Corbett administration is also concerned about what would happen if the state is blocked from imposing its gross receipts tax on managed care organizations.  Pennsylvania uses revenue from that tax to finance part of the state’s share of Medicaid costs.

The federal Department of Health and Human Services is reportedly seeking to make changes that could limit how states apply that tax.

If Pennsylvania expands Medicaid and the federal government imposes tax changes, it could cost the state as much as $1.53 billion over seven years, according to administration projections.

The IFO report noted that disallowing the gross receipts tax would have a “material impact on budgetary outcomes.”

Boehm can be reached at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

HARRISBURG — As the nation looks to the Philadelphia trial of Kermit Gosnell and his “house of horrors” abortion clinic, a grand jury report alleges that substantial regulatory failures at the Pennsylvania Department of Health allowed gruesome actions go undetected — or detected but unresolved.

GOSNELL: Kermit Gosnell is facing death for the crimes he allegedly committed, involving the death of a 41-year-old woman and seven babies.

Prosecutors seeking the death penalty for Gosnell say he killed seven babies born alive, and caused the death of a 41-year-old woman. He is said to have performed numerous illegal late-term abortions, and neglected patients to the point of illness and even death inside an unsanitary, unsafe environment.

The trial started March 18.

Gosnell’s Women’s Medical Center went without an inspection from 1993 to 2010, according to details from the 2011 grand jury report. Previous reviews that found violations did not receive follow-ups. And the agency received numerous complaints that were not addressed, even one from a prominent Children’s Hospital of Philadelphia doctor advising the department that his patients contracted diseases after visiting Gosnell’s clinic.

The report skewers the Department of Health over its “utter disregard” for abortion patient safety.

“We discovered that Pennsylvania’s Department of Health has deliberately chosen not to enforce laws that should afford patients at abortion clinics the same safeguards and assurances of quality health care as patients of other medical service providers,” reads the report. “Even nail salons in Pennsylvania are monitored more closely for client safety.”

In February 2010 Gosnell was caught “by accident,” when police raided his offices in connection with an illegal prescription ring he was running. Once inside, agents noticed “the disgusting conditions, the dazed patients, the discarded fetuses,” according to the report.

“That is why the complete regulatory collapse that occurred here is so inexcusable,” the report says. “It should have taken only one look.”

After the case became public, lawmakers reacted. In 2011, the General Assembly passed Act 122, bringing abortion clinics under the same regulatory guidelines as other outpatient health facilities like cancer treatment centers and hospice environments. It also provides for regular and unannounced inspections of such facilities.

The new law, and new leadership, holds abortion facilities to higher standards designed to protect the health and safety of women than it did in the past, said DOH press secretary Aimee Tysarczyk in an email to PA Independent.

“The department has a far deeper understanding of these facilities now than we did then and conduct regular, annual and unannounced inspections and require licensure as an (ambulatory surgical facility),” Tysarczyk said.

Maria Gallagher, the legislative director for Pennsylvania Pro-Life Federation, praised the state’s response. She said it ensures abortion facilities will be monitored. Unannounced inspections are a key element, she said, to ensuring that the health and safety of patients is protected.

“I think the question arises, are we going to ensure that women’s health and safety are protected by keeping a close eye on those facilities and making sure they follow the law?” Gallagher said.

She said the Gosnell case served as a “wake-up” call for stricter scrutiny of clinics. “It was just a massive regulatory failure on the part of the state of Pennsylvania and the Department of Health in particular,” she said.

But Donna Crane, a policy analyst for the NARAL Pro-Choice America, said the ambulatory surgical facility laws do not make women safer.

Facility health and safety laws already exist, and making facilities resemble “mini-hospitals” doesn’t necessarily make women safer, Crane said. Instead, these laws can end up limiting access by forcing providers out of business, which leads to illegal procedures, Crane said.

Pennsylvania has some of the most restrictive abortion laws in the country, Crane said. It earned an F from NARAL Pro-Choice America in its most recent round of state grading.

“What women need is proper health and safety regulations, and beyond that, they need the government not to pass laws that make abortions harder to get,” Crane said.

Crane said the Gosnell case illustrates how important it is that abortion is kept safe, legal and regulated like other medical procedures.

“You want any kind of care you’re getting to be properly regulated,” she said. “If the state falls down on the job, we need to make sure that never happens again.”

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – Debt is drowning governments across Pennsylvania. It’s not a new story, but this week financial problems at the Pennsylvania Turnpike Commission and in the state’s municipalities were front and center.

And in Washington, Sen. Pat Toomey, R-Pa., made national waves by co-authoring major new gun control measures.

Toomey under the gun with GOP after Senate compromise

Conservatives across Pennsylvania are criticizing Sen. Pat Toomey, R-Pa., for negotiating a deal on a gun control amendment that would increase background checks for firearms sales – and that includes gun rights supporters in Harrisburg.

STAND IN THE FIRE: Sen. Pat Toomey, usually a Tea Party darliong, is feeling the heat after co-authoring a gun control bill in Congress.

Toomey was a lead GOP negotiator in the U.S. Senate with Sen. Joe Manchin, D-W. Va., regarding the The Public Safety and Second Amendment Rights Protection Act, which expands background checks on gun purchases.

Following Wednesday’s deal, state Rep. Daryl Metcalfe, R-Butler, a vocal Second Amendment supporter who previously penned a letter urging Toomey to reject any compromise on new gun-control measures, said Toomey’s decision is hurting his base back home.

“We need to see Pat Toomey take a couple steps back here and understand that his base does not want these additional gun control measures,” Metcalfe said. “There’s already checks done on every retail purchase around this country.”

Toomey may also see backlash from the National Rifle Association, whose political arm has endorsed Toomey in the past and given him high marks.

More than 5 million Pennsylvanians live in distressed cities and towns

More than 5.2 million Pennsylvanians – about 41 percent of the state’s 12.6 million inhabitants – live in a city, township or borough facing some form of financial distress, according to the Coalition for Sustainable Communities, a group of business and civic leaders calling for changes that include reforms to municipal pension plans.

AIN’T THAT PRETTY AT ALL: More than 40 percent of Pennsylvanians live in financially distressed towns and cities.

And civic leaders warned Monday that things are probably going to get worse before they get better.

Ed Pawlowski, mayor of Allentown, said municipal pension costs are eating a hole in his budget. Costs rose from $6 million last year to more than $18 million this year and will climb to $31 million within a few years. By 2015, fully 30 percent of Allentown’s budget will pay for benefits to retired city workers, police officers and firefighters, he said.

“Unless we fix this problem, we’re going to see cities across this commonwealth fall like dominoes on a board,” Pawlowski said. “It’s going to collapse in on itself and pull down every other city in the state.”

Turnpike credit rating reduced due to high debt

Lower-than-expected usage and a steady stream of debt caused Moody’s Investors Services to downgrade the bond rating for the Pennsylvania Turnpike Commission.

The ratings agency called the turnpike’s traffic and revenue forecasts too optimistic, with lower usage and higher toll rates expected to bring lower revenues over the next 10 years.

Tolls on the turnpike have increased for five consecutive years and are expected to increase annually for at least the next decade, according to state projections. Despite those increases, state officials have maintained that the turnpike has a sustainable level of debt and will not lose customers due to higher tolls.

Moody’s appears to disagree. The rating agency concluded that commercial users sensitive to higher tolls will use alterative free routes.

The turnpike holds more than $8 billion in debt, mostly due to a 2007 state law that requires it to transfer $450 million annually to the state.

Senators introduce government reform measures

Two state senators — one a Democrat, the other a Republican — are peddling a nine-bill package aimed at increasing accountability and transparency.

MR. BAD EXAMPLES: A pay-for-play scandal at the Pennsylvania Turnpike prompted some reform proposals this week.

Sen. John Eichelberger, R-Blair, and Sen. Mike Stack, D-Philadelphia, on Monday unveiled their proposals that address gift reporting, alter lobbying laws and expand campaign disclosures for certain groups, among other ethics-minded reforms.

One of Eichelberger’s proposal would prohibit registered lobbyists and lobby firms from working for candidates on political campaigns.

“Campaign consultants are your lifeline, you depend on them,” he said. “And when they come in and say, ‘Hey we need you to vote for this or vote against that,’ that is undue influence on that elected official.”

Other proposals would specifically address government contractors, a hot topic in the wake of the pay-to-play scandal at the Pennsylvania Turnpike Commission. One bill would require contractors to disclose subcontractors they work with, and another would require the state’s Department of General Services website to list vendors’ political campaign contributions.

Corbett provides extra transparency on South America trade mission

SPLENDID ISOLATION: Gov. Tom Corbett usually doesn’t share details about his meetings and appointments.

This week, Gov. Tom Corbett embarked on a privately funded 10-day trade mission to Brazil and Chili to boost Pennsylvania’s profile abroad, aiming to build relationships with new governments, businesses and attract jobs and tourism to the Keystone State.

But the governor’s press office is keeping Pennsylvania plugged in to the governor’s activities, providing a level of transparency not seen with Corbett’s Harrisburg activities.

So far, the governor’s press office has released to the media detailed itineraries of Corbett’s day-to-day activities. No such itinerary is provided to the press or the general public about the governor’s schedule when he is back in Pennsylvania.

Speaking from Sao Paolo, Corbett took about 40 minutes out of his schedule Tuesday to host a conference call with reporters in Pennsylvania. When asked if he would continue to release this daily schedule upon return to the state, Corbett said, “I’ll consider it.”

Online investigations into child predators won’t require judicial oversight

A bill to give law enforcement faster access to online information has moved through the state House and is headed for the state Senate.

Civil liberties groups warn that the proposal contained in HB 90 will erode privacy rights and allow law enforcement to bypass judicial oversight when obtaining data about Internet users in the name of tracking down child predators on the web.

But advocates for the legislation, including many groups representing law enforcement agencies in the state, say the change will let them move more quickly to track down the 3,000 suspected child sex offenders in the state.

The bill would allow police to get a so-called “administrative subpoena” from a district attorney for certain investigations instead of having to wait to get a warrant from a judge.

It passed unanimously Monday afternoon in the state House.

LOOKING FOR THE NEXT BEST THING: Revenue Secretary Dan Meuser says companies will go looking for better tax environments elsewhere if Pennsylvania doesn’t lower rates.

Business tax changes get first vetting in state House

A Corbett administration plan to overhaul business taxes in Pennsylvania would reduce Pennsylvania’s corporate income tax from 9.99 percent to 6.99 percent by 2025, close several tax loopholes and rarely used deductions and finish the phase-out of the capital stock and franchise tax, which businesses pay on physical assets, similar to a property tax.

The administration’s projections show the changes will produce 18,000 jobs and grow Pennsylvania’s gross domestic product by $2.8 billion by 2030.

During a day-long hearing on the proposed tax changes Thursday, Republicans seemed generally in favor of most of the measures while Democrats alternately voiced support for things like closing some tax loopholes and reducing the complexity of the tax code for small businesses. Democrats also suggested the package should go further in cracking down on corporations that register in Delaware and other onshore tax havens to avoid Pennsylvania’s high corporate income tax rate.

Follow @PAIndependent on Twitter for more.

HARRISBURG – It was a bit of an ugly week for taxpayer funds.

Despite some action from the state House, a loophole allowing retired state workers to collect a paycheck and unemployment benefits remains open for now.  Meanwhile, a solar energy firm in Pittsburgh that got $10 million from taxpayers is going bankrupt and a new no-bid contract means residents and business in Pennsylvania will be paying fees of $2 or more for some online government services.

Big dippers: Three scoops into state coffers for re-hired state workers on unemployment

The House of Representatives unanimously passed a bill to ban “triple-dipping,” or the practice of state retirees who come back to work temporarily and then receive unemployment benefits.

THREE SCOOPS: Some state employees get paid, collect a pension and get unemployment benefits.

House Bill 421, sponsored by Rep. Adam Harris, R-Juniata, would prohibit unemployment eligibility for public- and private sector employees who leave a job to protect their pension benefits.

State law says retirees who come back to work cannot hold the position for more than 95 days or they lose their pension checks and health benefits.

But since the term of employment is predetermined, the state’s unemployment system considers the leave involuntary. That’s when employees becomes eligible for unemployment compensation, on top of their pension benefits and temporary salary.

It’s a legal loophole through which hundreds of people have jumped. In 2010 and 2011, more than 450 state retirees received a combined $2.1 million in unemployment compensation, according to House calculations.

Solar energy firm going bankrupt after $10 million federal subsidy

A Pittsburgh-area solar energy company that received more than $10 million as part of the federal stimulus is asking a federal judge to allow it to file bankruptcy.

Ten former employees at the Flabeg Solar U.S. Corp plant have petitioned a federal judge for severance pay after they lost their jobs last month as the plant was shut down. The 10 employees listed in the filing are seeking $197,000 in severance pay, according to court documents.

BUST: A solar energy company in western Pennsylvania got $10 million from the feds, but it’s filing bankruptcy.

In 2009, when President Barack Obama announced a round of $2.3 billion in tax credits for 183 clean-energy projects in 43 states, including the $10 million for the Flabeg plant in Pittsburgh, he promised the investment would return 17,000 new jobs.

“Building a robust clean energy sector is how we will create the jobs of the future — jobs that pay well and can’t be outsourced,” Obama said in a statement at the time.

The $10 million awarded to Flabeg Solar was for the production of high-temperature solar mirrors to be used in solar energy power plants.

According to a report from the Pittsburgh Tribune-Review, the state and Allegheny County chipped in another $9 million to help get the plant off the ground.

Users will pay fees for sole-source services contract

Pennsylvania entered a sole source, no-cost contract with an online services company called NIC USA to take over operation of its online services.

NIC creates and maintains online services for more than 3,500 governmental bodies, including 28 other states.

The state pays NIC nothing out of its own budget. Instead, the site work gets funded by adding “convenience fees” to certain online transactions residents or businesses might complete, like a license renewal.

Dan Egan, spokesman for the Office of Administration, said the NIC contract was precipitated by multiple issues with the current system.

“No one company does everything that NIC does and can do in a way that isn’t going to cost us tens of millions of dollars,” Egan said.

State Rep. Robert Matzie, D-Beaver, expressed his concerns about NIC in a letter to Attorney General Kathleen Kane and Auditor General Eugene DePasquale. He protested the fact it was a sole source contract, meaning there was no competitive bid process.

“It shouldn’t have been done without an RFP (request for proposals) to see what other companies could’ve provided,” Matzie said.

Online voter registration legislation introduced

State Sen. Lloyd Smucker, R-Lancaster, sponsored a bill to create online voter registration in Pennsylvania.

CLICK AND VOTE: Online voter registration legislation has been introduced in the state Senate.

“The idea is to give additional options and provide greater convenience, and hopefully increase participation in voting,” Smucker said.

Smucker said he got the idea from a constituent who wondered why Pennsylvania didn’t have an online system like those used in other states.

Residents would be able to register online up to 30 days before an election. They also would be able to change their party affiliation, address or name on the online form.

Smucker acknowledged that an online system does open the possibility for fraud. But to safeguard against false registrations, those who register online would be required to enter part of their Social Security number and another identification number, like a driver’s license.

Corbett continues negotiating over Medicaid

Gov. Tom Corbett is continuing to seek a special deal with the federal government to increase flexibility in how Pennsylvania will administer Medicaid under the new federal health care law.

KEEP ON HUSTLIN: Gov. Tom Corbett is still negotiating with the feds over Medicaid expansion.

Corbett met Tuesday with federal Secretary of Health and Human Services Kathleen Sebelius, who is in charge of Medicaid, the health insurance program for the poor that is funded jointly by the states and the federal government.  On Wednesday, the governor described the meeting as productive but said it lacked any sort of definitive agreement between the two sides, though he acknowledged he wasn’t expecting one.

“There are ongoing discussions that will continue to flow back and forth,” Corbett said.

Corbett declined to go into the details of the negotiations, but earlier on Wednesday his office issued a statement that implied Corbett was seeking a deal similar to what the federal government previously granted to Arkansas.

Under the provisions of that arrangement — struck by Democratic Gov. Mike Beebe — Arkansas would be able to use the private health insurance exchanges that are a part of the federal health care overhaul to cover Medicaid patients.

Conservative groups warned that such a deal would be a bad one for the state and pointed to a Congressional Budget Office report indicating Arkansas would be on the hook for $3,000 for each new Medicaid patient in the health exchanges. Democrats continue to urge Corbett to accept the full Medicaid expansion, which they say will provide coverage for 800,000 people and will be mostly paid for by the federal government.

March a slow month for tax collections

Revenue Secretary Dan Meuser reported that Pennsylvania collected $4.2 billion in revenue for March, about $69 million less than the state was expecting.

The three major types of taxes that fund Pennsylvania government – corporate, sales and personal income taxes – all came up short of expectations for the month.

Even with the slow month, tax collections for the year are slightly above the state’s target for the year.  Pennsylvania has brought in more than $20 billion from taxpayers since the fiscal year began on July 1, 2012.

PSP investigating attack videos against PA rep

The Philadelphia Inquirer’s Angela Columbis reported this week Pennsylvania State Police are investigating who is behind a pair of anonymously posted videos attacking state Rep. Tarah Toohil, R-Luzerne.

The House Republican caucus requested PSP look into who was behind the videos, Columbis reported. Investigators have questioned at least a half-dozen people, including lawmakers. More from the Inquirer:

On its face, the investigation is a high-tech whodunit as police work to trace the videos. Behind that lies a messy tale of Capitol politics and personality.

Toohil, 33, entered last fall’s campaign with reason to be confident. She had, after all, faced stiffer competition: In 2010, as an upstart tea party candidate little known outside her Luzerne County district, the young lawyer had toppled Todd Eachus, one of the House’s most powerful Democrats, helping her party gain a majority in the 203-member House and positioning her as a bright new face in Harrisburg.

Then, last Oct. 16, a video titled “Pizza Party” was posted on YouTube.

Set to music that sounded ripped from a 1980s music video, “Pizza Party” displayed photos of a younger Toohil – at a table with what looked to be marijuana and a bong; she was also seen leaning toward another young woman, as if to kiss her on the lips.

The other video attacking Toohil, released before Election Day 2012, featured an image of a Guy Fawkes mask and voice-over demanding Toohil change her stance on marijuana legalization.

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HARRISBURG — A Pittsburgh-area solar energy company that received more than $10 million as part of the federal stimulus is asking a federal judge to allow it to file bankruptcy.

SOLAR ECLIPSE: A $10 million investment by the federal government and millions more from the state were not enough to prop up a solar energy company in western Pennsylvania.

Ten former employees at the Flabeg Solar U.S. Corp plant have petitioned a federal judge for severance pay after they lost their jobs last month as the plant was shut down.  Media reports indicate that as many as 60 workers were laid off at the 4-year old, 228,000 square foot facility near Pittsburgh.

The 10 employees listed in the filing are seeking $197,000 in severance pay, according to court documents.

Robert Lampl, the Pittsburgh-based attorney for the energy company, was not immediately available for comment, and a receptionist at his office said the bankruptcy filings were not yet available because they had not been officially submitted to the court.

Lampl told other media outlets on Thursday that the company was going to seek Chapter 11 bankruptcy protection in response to the lawsuit over the severance pay.

Calls to the plant were not returned before the initial version of this story was published on Thursday, but Flabeg spokesman Joerg Nolte contacted PA Independent on Friday to explain that the Pittsburgh plant was shutting its doors due to a lack of businesses.

“As the current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue with the Clinton plant, we have no other option but to close this plant with immediate effect and wind down operations,” Nolte wrote in an email.

The plant was owned by an American subsidiary of a German glass-making firm.  The plant in Pittsburgh was manufacturing glass mirrors used by solar energy companies that do not employ the more common photo-voltaic technology.

In 2009, when President Barack Obama announced a round of $2.3 billion in tax credits for 183 clean-energy projects in 43 states, including the $10 million for the Flabeg plant in Pittsburgh, he promised the investment would return 17,000 new jobs.

“Building a robust clean energy sector is how we will create the jobs of the future — jobs that pay well and can’t be outsourced,” Obama said.

Projects funded with the stimulus dollars would help to close a clean-energy gap between America and other nations, he said at the time, according to a press release.

At the same time, vice president Joe Biden commented that investments in companies like Flabeg were “what the Recovery Act was all about.”

The $10 million awarded to Flabeg Solar was for the production of high-temperature solar mirrors to be used in solar energy power plants.

According to a report from the Pittsburgh Tribune-Review, the state and Allegheny County chipped in another $9 million to help get the plant off the ground.

Friday, Nolte said the Flabeg plant near Pittsburgh did not remain in operation long enough to take advantage of the tax credits offered by various governments.

“To utilize the tax credits, sufficient profits are required that the tax credits can be applied against,” he wrote.

In addition to the tax credits, the company received a $1 million cash grant from the federal government, Nolte said.

George Jugovic, president and CEO of PennFuture, an environmental advocacy group based in Harrisburg, said not all investments in emerging industries like solar power are going to work out.

“The reason government steps into these cases is because they are too risky to get private capital,” Jugovic said. “But as with private investments, some companies fail.”

Despite some high-profile setbacks, Jugovic said public investments in solar energy were paying off and would continue to do so.

Kevin Shivers, executive director of the Pennsylvania chapter of the National Federation for Independent Businesses, said government can only pick losers when it tries to make risky investments.

“If private investors aren’t willing to invest in a company, that should be the first indication that something is wrong,” he said.

Rather, governments should focus on changing the tax and business climate to give start-up businesses in all sectors a better chance at success, he said.

The possible bankruptcy of the Flabeg plant fits into a narrative of major bankruptcies of so-called “green energy” firms, beginning with the much-publicized 2011 bankruptcy of Solyndra Inc., a California-based solar energy firm that received more than $500 million in federal loan guarantees and was touted by Obama as evidence of the growing clout of solar energy in America.

The largest subsidiary of Suntech Power, a Chinese company that is one of the world’s largest solar panel manufacturers, was pushed to the brink of bankruptcy in March. It owes bondholders more than $541 million, according to multiple media reports.

This article was updated at 4:30 p.m. on 4/4/13 to include additional comments and information about Flabeg.

This article was updated at 11:50 a.m. on 4/8/13 to include comments from Flabeg’s spokesman.

Eric Boehm can be reached at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

RESOURCE FOR RESOURCE The federal government is cutting payments to states for resource extraction.

HARRISBURG — The effects of sequestration are starting to show – this time in the form of payments from the federal government for natural resource extraction.

But compared to other states – and other sequester cuts – Pennsylvania is getting off pretty easily.

The U.S. Department of Interior announced this week $110 million will be cut from mineral extraction royalty payments to states, as a result of automatic 5.1 percent across-the-board spending cuts triggered by Congress. In 2012, the payments generated $2.1 billion for states.

The payments are based on how much resource extraction occurs on federal lands. Such activity is sometimes energy related, involving coal and natural gas, but reaches other minerals like copper or cobalt.

Despite Pennsylvania’s leading role in the private resource extraction industry due to natural gas and coal, the feds aren’t in the business here. Last year, Pennsylvania received a little more than $67,000 in federal mineral receipts. The state will lose about $2,741 in payments this year as a result of the cuts.

Jessica Kershaw, press secretary for the Department of Interior, said states were notified of the payment reductions earlier this month, but are just now seeing the dollar figures.

“By law, revenue payments to states are not exempt from the sequester,” she said.

Hardest hit are Wyoming and New Mexico, which will see $53 million and $26 million in cuts, respectively.

After receiving the news, Wyoming’s Gov. Matt Mead began looking into legal ways to block the cuts, the Casper Star-Tribune reported.

The federal government doesn’t set rules for how states can use the mineral payments, meaning the money could be used to fund education, transportation or other budget items.

Jay Pagni, spokesman for the Pennsylvania’s Office of the Budget, said the fiscal effect of sequestration is less than the state originally anticipated.

“We expect about a $220 million hit to reductions in federal funding throughout various programs,” he said. “In the beginning, we thought it was going to be closer to 300 (million).”

Cuts affect 5 to 6 percent of discretionary spending.

Title One funding, which supports language arts studies in schools with low-income students, could be hit by as much as $21 million, Pagni said.

“In terms of the perspective, it is the federal government that’s choosing what is mandatory and what is discretionary in nature,” he said.

Overall, Pennsylvania receives about $21.5 million in federal funding annually, meaning the impending sequestration cuts total about 1 percent of federal dollars coming into the state.

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG — More Pennsylvania officials found themselves on the wrong side of the law this week.

A grand jury presentment alleges widespread corruption from former Pennsylvania Turnpike Commission officials, while the Philadelphia Traffic Court ticket-fixing scandal continues to unwind in court.

But for those who are operating business as usual, the legislative session is honing in on the key issues of budget negotiations. Lawmakers are still hammering out details of a potential solution to the pension problem, and liquor privatization debates are sure to steal headlines next week.

Eight charged in turnpike ‘pay-to-play’ scandal

Alleged corrupt behavior by management and associates of the Pennsylvania Turnpike has led to multiple charges from the Office of Attorney General.

KANE: Attorney General Kathleen Kane announced charges against eight men in connection with a bid-rigging scandal at the Pennsylvania Turnpike.

Attorney General Kathleen Kane, who announced the charges at a news conference Wednesday, said the officials were engaged in a “pay-to-play” arrangement with engineering firms, insurance companies and banks that had contracts with the turnpike between 2000 and 2011.

In total, eight men have been charged with various counts of conspiracy, bribery, bid rigging, theft and several other charges.  Kane said the officials used their power to secure “secret gifts of cash, travel and entertainment, along with political contributions” from contractors doing business with the Turnpike Commission.

Former state Sen. Robert Mellow, D-Lackawanna, was the only elected official charged.

According to the grand jury presentment, he was “actively involved in steering Turnpike contracts to particular vendors,” securing political contributions from turnpike officials and vendors and personally benefited from gifts, including tickets to New York Yankees baseball games and trips paid for by Turnpike contractors, which he did not disclose on state ethics forms.

Charges were also filed against Mitchell Rubin, former chairman of the Turnpike Commission, Joseph Brimmeier, former CEO of the Turnpike Commission, and George Hatalowich, a former COO and contract administrator for the Turnpike Commission.

The grand jury presentment makes mention of other officials who may have been involved in influencing decisions at the Turnpike, including an anonymous “Senator No. 6,” who is likely former state Sen. Vincent Fumo, D-Philadelphia, already behind bars for using public money on his political campaigns.

The pension problem: A decades-long, billions-deep issue

Though this year might be the year lawmakers change pension benefits for state employees to help stave off pension debt, a recent presentation from the Office of the Budget gave some long-term context to just how dire the state’s pension problem really is.

BILLIONS AND BILLIONS: The state’s two major pension funds are $42 billion in debt – and it’s only going to get worse in the years to come.

No matter what reforms might be enacted this year, $42 billion in debt is the best shape the state’s two pension systems will be in at any point for the next two decades, according to charts from the administration.

Some officials have floated ideas to shift this problem in another direction, like with pension obligation bonds.

At a state budget hearing last month, lawmakers and the heads of Pennsylvania’s two major pension funds — the State Employees Retirement System, or SERS, and the Public School Employees Retirement System, or PSERS — discussed the possibility of selling bonds to pay off a portion of the combined $42 billion debt for the two systems.

In theory, the state could borrow up to about $10 billion on the private bond market and repay that at a lower interest rate compared to what it would pay into the pension funds.

But right now, state law says such maneuvers are illegal, and they bring great financial risk. Defaulting on the bonds can drive up debt even further.

“Generally speaking, we don’t favor borrowing to pay for debt,” said Jim McAneny, executive director of the state Public Employee Retirement Commission, which advises the Legislature on pension issues.

Hedgehogs could be legalized in 2013

Of Pennsylvania’s many rules and regulations, one is rather prickly for potential exotic pet owners: Hedgehogs are illegal to own in in the commonwealth.

HOW CAN YOU SAY NO? Pennsylvania law says no groundhogs are allowed. Some lawmakers are trying to change that.

But this year, some state lawmakers are looking at legislation that would legalize hedgehogs and other so-called pocket pets.

State Rep. Jeff Pyle, R-Armstrong was contacted by a family in his district after 13-year-old Josiah Edwards was shocked to hear that hedgehogs, his dream pet, were illegal in Pennsylvania.

Pyle is jumping on board with House Bill 575, from state Rep. Gary Haluska, D-Cambria. The bill is a rewrite of the state’s exotic wildlife possession law. It aims to eliminate the permitting process for exotic animals, outlawing future ownership for creatures such as lions and tigers. The move though, would legalize hedgehogs and other so-called pocket pets.

“My constituent asked me to try to enact on law on their behalf, and when you boil it all down, that’s my job,” Pyle said.

Liquor privatization debate intensifies

The House Liquor Control Committee will discuss on Monday proposals to sell off the state’s wine and spirit stores and switch to a private system. Those for or against the system will likely have strong words to say about the measure.

On Wednesday, a rally in the capitol offered something of a preview.

A video this week shows Wendell Young IV, president of the United Food and Commercial Workers Local 1776, at a pro-privatization rally voicing some strong opinions to the speakers.

UFCW Local 1776 represents the liquor store employees who work for the state, and their presence is sure to be felt as lawmakers continue to discuss the privatization plan next week and beyond.

Former traffic court judge pleads guilty to ticket-fixing

A third Philadelphia Traffic Court judge, Fortunato Perri, Sr., pleaded guilty to fraud and conspiracy charges Wednesday in connection with widespread ticket-fixing.

He faces up to six months behind bars.

Perri, who is retired, was charged separately from the indictment federal investigators released in a January crackdown on the court. But the charges against him stem from the same problem – dismissing or reducing tickets for friends and the well-connected.

The Philadelphia Inquirer reports Perri had received personal favors, like discounts on landscaping and a free patio, after fixing tickets for employees.

Crime still pays a pension in PA

State employees convicted of rape, grand theft auto and even murder can still collect lifetime pensions under Pennsylvania law.

SANDUSKY: Under current law, even crimes like those committed by Jerry Sandusky would not be enough to strip a state employee of his or her pension.

An attempt to change that is hung up, for now, in the state House after being voted out of committee on Tuesday morning.  If passed, it would allow the state to revoke pensions from any current or former state employee convicted of a number of felony offenses and violent crimes, including homicide, rape, aggravated assault, arson, burglary, sexual assault, robbery and criminal conspiracy.

A conviction of any federal crime also would trigger pension forfeiture under the proposed law.

State Rep. Daryl Metcalfe, R-Butler, chairman of the House State Government Committee, said the law was the first step in pension reform.

“There is certainly a need to expand the law to ensure that when somebody commits these types of crimes, they are not allowed to take with them the taxpayer-funded portion of their pensions,” Metcalfe said.

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HARRISBURG – Three former top officials at the Pennsylvania Turnpike Commission and a former state senator have been accused of running a political scheme that resulted in “untold millions” of taxpayer dollars being misused and stolen.

KANE: Kathleen Kane announced the charges against three former top Pennsylvania Turnpike officials and a former state senator Wednesday.

Attorney General Kathleen Kane said the officials were engaged in a “pay-to-play” arrangement with engineering firms, insurance companies and banks that had contracts with the turnpike between 2000 and 2011.

In total, eight men have been charged with various counts of conspiracy, bribery, bid rigging, theft and several other charges.  Kane said the officials used their power to secure “secret gifts of cash, travel and entertainment, along with political contributions” from contractors doing business with the Turnpike Commission.

“The former state officials charged wielded extraordinary power which they wrongfully used for self-enrichment for their own political purposes,” Kane said. “Those who ‘pay-to-play’ have sought and been rewarded with multimillion-dollar turnpike contracts, and the public has lost untold millions of dollars.”

Former state Sen. Robert Mellow, D-Lackawanna, was the only elected official charged.

According to the grand jury presentment, he was “actively involved in steering Turnpike contracts to particular vendors,” securing political contributions from turnpike officials and vendors and personally benefitted from gifts, including tickets to New York Yankees baseball games and trips paid for by Turnpike contractors, which he did not disclose on state ethics forms.

Charges were also filed against Mitchell Rubin, former chairman of the Turnpike Commission, Joseph Brimmeier, former CEO of the Turnpike Commission, and George Hatalowich, a former COO and contract administrator for the Turnpike Commission.

All were involved in funneling contracts to certain vendors and securing political contributions from those vendors.

Pennsylvania State Police Commissioner Frank Noonan called it “a complex scheme.”

MELLOW: Former Senate leader Bob Mellow, D-Lackawanna, was charged Wednesday. His portrait still hangs in the main corridor of the State Capitol, though the senator himself now resides in federal prison.

He said the investigation was aided by former employees of the turnpike who tried to “do the right thing” and were reassigned or terminated by the commission for speaking out about the criminal activities.

“This has happened all too often in Pennsylvania,” Noonan said. “Pennsylvanians deserve better from our government.”

The investigation began under the watch of Gov. Tom Corbett while he was attorney general and continued under Linda Kelly, who Corbett appointed to the office when he resigned in January 2011.

Kane said she proceeded with all charges recommended by the grand jury.

The four other men charged were: Dennis Miller, a turnpike vendor; Jeffery Suzenski, a consultant; and former turnpike employees Melvin Shelton and Raymond Zajicek.

Charges have been filed against all eight men.  Six of them – all except Brimmeier and Mellow – are expected to be arraigned Wednesday.

Brimmeier will be arraigned on Thursday, and Mellow’s arraignment will take place in the coming weeks, as the timing has to be worked out with federal authorities because Mellow is already behind bars.

Mellow was sentenced in January to 16 months in prison for using public funds for campaigns.

Kane said other public officials may have received political contributions as part of the scheme, but charges were only brought against those who had control over the contributions.

Noonan said the activity at the turnpike was widely rumored and discussed in political circles, but charges were only brought in situations where direct evidence was found by the grand jury.

CHARGED: Eight people were charged on Wednesday with alleged crimes related to the awarding of contracts in exchange for political contributions and gifts.

Both declined to comment on whether more charges were expected, though they both labeled the investigation as ongoing.  Both also declined to comment on whether any state officials were given immunity in return for their testimony.

The grand jury investigation lasted 44 months.

According to the presentment, Mellow and another unnamed senator – known as “Senator #6” and identified as a Philadelphian who served as chairman of the Senate Appropriations Committee during much of Mellow’s tenure as Democratic leader of the state Senate – “exerted tremendous influence over the Turnpike,” and used their positions to appoint Rubin and other high-ranking officials, who then carried out the senators’ instructions.

The state Senate must confirm appointees to the Turnpike Commission.

Noonan and Kane declined to identify “Senator #6.”

Also implicated but not named in the grand jury presentment are four former gubernatorial candidates who received contributions from firms connected with the turnpike.

The grand jury concluded that the “political relationships and exercise of authority” from the top officials and state senators “superseded any efforts on the parts of Turnpike staff to legitimize their processes.”

Attempts on Wednesday to contact the men who were charged were unsuccessful and their lawyers gave no comment to reporters at the arraignment.

Boehm can be reached at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

HARRISBURG – The Federal Aviation Association has authorized at least four drones to fly in restricted airspace over Fort Indiantown Gap, a large military installation in central Pennsylvania about 25 miles from Harrisburg.

The drones are used for training and equipped with several cameras, including one with infrared capabilities, according to the FAA authorization.

U.S. Army Staff Sgt. Clarence Clark launches a Raven unmanned aerial vehicle in Fort Indiantown Gap, Pa., (Photo via Wiki Commons)

Staff Sargent Matt Jones, a spokesman for the Pennsylvania National Guard, said Thursday that the drones – known as “The Shadow” – are used exclusively for training purposes.  They never carry weapons and never leave the airspace over the fort, where training exercises take place, he said.

“It’s the same as flying the Apache (a military helicopter) around, but we don’t load it with Hellfire missiles and fly it over your house,” Jones said.

The training missions never include recording data from the drones’ cameras, he said, as they are only meant to help soldier learn to use the devices in preparation for overseas deployment.

The drone is authorized to operate between 7 a.m. and midnight on weekdays any time of the year, according to FAA certification. Flights are estimated at between five and six hours each.

Officially known as an RQ-7B Shadow, the drone is manufactured by Maryland-based AAI Corporation, a defense contractor. It is billed as a tool for “reconnaissance, surveillance, targeting, and assessment,” according to AAI Corporation’s website.

The entire system of four aircraft with trucks, launcher and other vital components costs roughly $15 million, Jones said.

The Pennsylvania National Guard also owns smaller drones known as “Ravens” which are small enough to be launched by hand, Jones said.

But the National Guard may not be the only group in Pennsylvania using drone technology.

Penn State University was included on a list of public institutions that requested Federal Aviation Administration permission to fly a drone, according to a list published by the Electronic Frontier Foundation, a pro-liberty think tank based in San Francisco, which obtained detailed records of FAA permits for drones.

Last month, the Penn State request was denied by the FAA, according to multiple media reports. A professor at the school had hoped to use a drone as part of a research project on albatrosses.

The issue of drones came to the forefront of national politics this week when Sen. Rand Paul, R-Ky., lead a 12-hour filibuster on the Senate floor Wednesday to criticize the United States’ use of the unmanned vehicles in the War on Terror.

Allie Bohm, an advocacy and policy strategist for the American Civil Liberties Union, or ACLU, said privacy laws need to be strengthened and updated to allow the positive aspects of drone technology to be used while limiting their potential for violating privacy laws.

“We want to make sure they’re not used for indiscriminate, mass surveillance,” she said.

FAA regulations keep drones out of conventional airspace, and thus out of densely populated areas, but that could be changing soon.  Congress has ordered the FAA to come up with looser drone regulations by 2015.

State Rep. Angel Cruz, D-Philadelphia, plans to introduce legislation to ban law enforcement from using drones for surveillance purposes without a warrant from a state judge.

The same legislation during the last session attracted only five sponsors and did not move out of committee.

Bohm said requiring a warrant is an “excellent standard” for drone surveillance.

Arizona, Montana and North Dakota have similar bills to require a warrant for drone surveillance that have passed at least one chamber of their state legislatures, but no states have laws requiring it.

In Virginia, a two-year moratorium on the use of drones by law enforcement has passed the legislature and is waiting for Gov. Bob McDonnell’s signature.

The Pennsylvania State Police do not use drone technology, said assistant press secretary Diana Bates.  She could not comment on whether the state police would pursue the use of drones in the future.

Boehm is bureau chief for PA Independent.  He can be reached at Eric@PAIndependent.com

HARRISBURG – Budget hearings came to an end this week, the last shot for department heads to plead their case for extra funding in front of the powerful committees that will have much to say about the state budget’s fate between now and June 30.

Gov. Tom Corbett continued to take heat for not only the budget plan and the various other agenda items he has linked to it, but also his acceptance of gifts from lobbyists and other political interests.

House Dems call out question marks in Corbett’s budget plan

Pennsylvania House members, after three weeks of hearing about departmental spending plans, finally had the chance to grill Budget Secretary Charles Zogby.

CAN’T HOLD US: The state budget hearings wrapped up this week with Democratic lawmakers grilling Budget Secretary Charles Zogby.

It all came down to the big-ticket policy changes proposed by the administration as part of Gov. Tom Corbett’s $28.4 billion budget, which must be passed by June 30.

Funding that plan is contingent on the passage of changes to the state’s pension system, altering the amount employees and the state contribute toward two funds carrying $41 billion in liabilities. Other asterisks proceed liquor privatization and transportation infrastructure investments, which Corbett also proposed.

Democrats may be in the minority, but they’re not going along quietly. Several House Democrats, including state Rep. Steve Santarserio of Bucks County, said Thursday they aren’t sold on Corbett’s vision for next year.

“I don’t think it is responsible budgeting to present a budget that’s predicated on an outcome that may well not come to pass,” Santarserio said.

Zogby said he believed the pension reform proposal would be seen as constitutional if it were challenged in state court.

Corbett again under fire for accepting gifts, tickets

Gov. Tom Corbett and his wife, Susan, accepted more than $11,000 in gifts from business executives and lobbyists during 2010 and 2011, and Democrats have pounced on the news by filing an ethics complaint against the embattled governor.

The Philadelphia Daily News’ Will Bunch pulled together Corbett’s financial interest statements and did the math on the gov’s gifts – which included tickets to Pittsburgh Penguins and Pittsburgh Steelers games, a trip to Rhode Island, free flights on private jets and donations of clothing for the inaugural ball in 2011.

Administration officials said the governor followed the letter and the spirit of the state ethics law by disclosing the gifts and their value, but that did not stop the Democratic Party of Pennsylvania from filing an ethics complaint with the State Ethics Commission, citing the Daily News article.

Critics say the law should be strengthened to prohibit such gifts because they give certain individuals greater access to the governor and thus could influence policy decisions, even if unintentionally.

Film tax credit flat-funded, for now

Funding for Pennsylvania’s six-year-old film tax credit program will, for the foreseeable future, stay flat, with an annual operating budget of about $60 million.

THE HEIST: Pennsylvania’s Film Tax Credit will remain at $60 million next year for movie studios.

Last year, however, lawmakers adopted laws to allow the program to give out multi-year credits by appropriating money from future fiscal years. This year, the department approved $92 million in film tax credits, with $32 million coming from revenue in future years.

At a Senate Appropriations Committee budget hearing for the Department of Community and Economic Development, Secretary Alan Walker said he does not envision expanding the film tax credit beyond the recent changes.

In an annual report delivered to the General Assembly, the department said the program has awarded a total of more than $298 million to about 292 projects in its first five years. The state estimates the direct economic impact at almost $1.4 billion.

But critics see the tax credit program as little more than a giveaway to Hollywood film studios that does little to produce long-lasting or high-paying jobs in the state.

Liquor privatization vote in House scheduled for late March

House Majority Leader Mike Turzai, R-Allegheny, said Tuesday a vote on his liquor privatization proposal could take place within the next month.

STARTING OVER: Liquor privatization will be on tap in committee in mid-March. Will this be the year it succeeds?

But how much support exists for the proposal in its current form is somewhat of a question mark.

Turzai introduced his legislation, House Bill 790, Tuesday. The legislation would enact Gov. Tom Corbett’s plan to privatize Pennsylvania’s state-controlled wine and spirits system by closing the state stores and auctioning off licenses to private retailers – including grocery stores, pharmacies, beer distributors and stand-alone liquor stores.

The first stop for the bill is the House Liquor Committee. A hearing on the proposal is scheduled for March 18.

Turzai said he anticipates moving the bill in the House on March 20 with a final passage vote the following day or on April 8.

Whatever bill the House ends up voting on is subject to change. House Liquor Committee Chairman John Taylor, R-Philadelphia, said last week he anticipates changing the governor’s proposal.

That could include changing the timetable of getting rid of state stores. Turzai’s bill outlines a four-year plan.

Some lawmakers, including Republicans and Democrats in the Senate, would rather see the state system modernized. That would include changes to the state system to make it more profitable, like expanded hours.

Amtrak line in western Pennsylvania will cost $6 million to maintain

Unless the state ponies up about $6 million to replace disappearing federal subsidies for Amtrak’s “Pennsylvanian” line — the portion of the run that connects Harrisburg to Pittsburgh — the service may be cut entirely.

THIN LINE: The Amtrak line in western Pennsylvania might soon be brought to a screeching halt because ridership is low and subsidies are high.

The federal government subsidizes that line and requires nothing of the state, but those subsidies will be reduced next year, leaving a $6 million gap that the state will have to fill.

Pennsylvania Secretary of Transportation Barry Schoch said Wednesday the cost of subsidizing the western portion of Pennsylvania’s Amtrak line would be $27 per rider per trip.

“We don’t intend to cancel the service, but you have to look at the taxpayer dollars also,” Schoch said of the western Pennsylvania line. “Are we going to subsidize $27 per trip for a five-and-a-half hour trip?”

The windy 444-mile trip from Harrisburg to Pittsburgh had 212,000 riders in 2012, a 32.5 percent increase since 1991, according to a recent Brookings Institute report. But the line lost more than $7 million in 2011, the most recent year for which data is available.

The eastern half of the line is an entirely different story. It has seen a 220-percent increase since 1991 and had more than 1.4 million riders in 2012, making it one of the most traveled lines in the nation, according to the Brookings report.

Proposed budget addresses increase of teacher misconduct reports

The Department of Education received more than double the amount of teacher misconduct reports last year than it typically does, and the state is looking to up teacher certification fees to handle the backlog.

From 2008 through 2011 the department averaged 250 annual complaints. In 2012, it received 563.

Gov. Tom Corbett’s proposed 2013-14 budget recommends adding $775,000 to the department’s Office of Chief Counsel to address the increase.

The money would come from a $25 increase to the $100 fee teachers pay to become certified in Pennsylvania.

In Pennsylvania, complaints with the Department of Education are filed in two circumstances: cases of criminal misconduct or non-criminal misconduct. State law spells out certain crimes in which a conviction means a teacher will automatically lose his license — such as homicide, rape or theft – but the department still handles the procedural aspects of the revocation.

In the non-criminal realm, the cases may involve inappropriate behavior, such as a teacher viewing pornography in the classroom.

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HARRISBURG — One never knows what lawmakers might say when facing a microphone.

FERLO FIRES OFF: Sen. Jim Ferlo had some strong words about tourism agency VisitPittsburgh at a Monday budget hearing.

State Sen. Jim Ferlo‘s blood, for example, is boiling over VisitPittsburgh, Allegheny County’s official tourism agency.

Even though the agency doesn’t receive General Fund appropriations, he griped about the organization during a Department of Community and Economic Development budget hearing, in front of Secretary Alan Walker.

“Not one public official are they accountable to,” Ferlo, an Allegheny County Democrat, said during the Monday hearing. “Whether it’s the county executive, the mayor or anybody else.”

Ferlo said he’s been raising “holy terror” about VisitPittsburgh for years. He’s upset over “political patronage,” saying both Republicans and Democrats have “milked it” for consultants.

Ferlo said a former VisitPittsburgh executive is still on the board of directors, making $230,000 annually. He called it a “waste of an organization.”

“They have unbelievable payroll,” he said. “Dozens of people making in excess of $100,000 plus, more than our own economic development directors in the city and the county.”

Ferlo went on to criticize the work of the organization and used the budget hearing platform to make a direct appeal to the governor.

“If you’re big on privatization, Mr.Corbett,” Ferlo said in referring to Gov. Tom Corbett, “then take some of that darn money and hire some of the professional firms we have in the city to really market this city.”

Ferlo, by the way, isn’t an advocate of privatizing the state liquor system.

VisitPittsburgh is a nonprofit with the mission to bring in business and leisure tourism to city and Allegheny County and gets most of its revenue from the Allegheny County hotel tax. According to its 2011 financial statements, about $7.9 million of the agency’s $9.9 million revenues were from that tax.

It also received more than $300,000 in state grants that year, mostly from a Regional Marketing Initiative Grant.

VISITING PITTSBURGH: The agency Ferlo criticized receives most of its budget from the county’s hotel tax.

VisitPittsburgh disputes Ferlo’s claims, including the salary assertions. President and CEO Craig Davis said if Ferlo has concerns, a state budget hearing — from which the agency gets no appropriation — was the wrong place to bring them up.

“We only have 50 people working here, we only have nine department heads or nine senior staff members, so his assertions are unwarranted,” he said.

Davis said there’s “not a lot” of people who make more than six figures at the agency. He said some staff members may make in excess of six figures when salary and benefits are combined.

VisitPittsburgh is the main sales agent for the David L. Lawrence Convention Center, which, Ferlo said, is under used. Davis disputed this claim, citing a $120 million economic impact from events held at the convention center in a year’s time.

He said the city has the highest hotel occupancy of comparable cities, such as Charlotte or Cleveland.

“The city is doing tremendously well, in part due to the efforts of VisitPittsburgh,” Davis said. “I fail to see how Senator Ferlo arrives at his conclusion.”

Davis has been in his role as VisitPittsburgh’s director for nearly a year, and said he did not know why Ferlo took such a strong stance regarding his organization.

“We have reached out to his office before and he has not been willing to see us,” Davis said.

Where Ferlo’s vitriol comes from isn’t clear, but the timing of his comments is interesting. Ferlo has a long history in Pittsburgh city politics, as he previously served as a council member there. And he may be eyeing a run at mayor, now that Mayor Luke Ravenstahl has decided against seeking another term.

As Ferlo wrapped up his comments Monday, Walker reminded him VisitPittsburgh does not receive state money.

Ferlo’s response elicited laughter.

“I know you don’t but I gotta appeal to somebody,” he said. “If I can’t appeal to my good friend Governor Corbett, I don’t know who I can appeal to.”

Contact Melissa Daniels at melissa@paindependent.com