CHEERS: Privatization debates in the Pennsylvania General Assembly could mean changes to where Pennsylvanians can buy six packs.

HARRISBURG — A simple six-pack of beer is becoming a focal point of the most substantive legislative debate on Pennsylvania alcohol laws since Prohibition.

A Tuesday afternoon Senate Law and Justice Committee on liquor privatization, headed by Chairman Chuck McIlhinney, R-Bucks, featured numerous testifiers discussing the already-private industry of beer sales.

Chief among the concerns from the beer distributor industry and taverns is package reform, or allowing establishments who sell beer to sell different amounts. Under current law, beer distributors cannot sell less than a case, and bars or grocery stores with the ability to sell bottles cannot sell more than a 12-pack.

The Senate, under McIlhinney’s leadership, is evaluating House Bill 790, which the House of Representatives passed in March. That bill would privatize the state store system of the Pennsylvania Liquor Control Board by selling off the state stores. It also includes varying levels of package reform and changes to grocery store alcohol sale licenses.

But a rewrite of that proposal is at hand in the Senate, where achieving full-on privatization is dubious. As McIlhinney put it, it’s become not just privatization, but “alcohol reform.”

His goal, he said, is to get 26 votes to pass a plan – and that might mean giving beer sellers what they’re looking for. McIlhinney 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.”

Mark Tanczos, president of the Malt Beverage Distributors Association of Pennsylvania, represents about 450 beer distributors throughout the state, about a third of those who operate.

Tanczos said his organization has been lobbying for package reform – the ability to sell six-packs – since the law was created in 1936. He’s hopeful, with all the discussion going on, this might be the year they get it.

The key will be compromise, he said.

“All the proposals that have been out there, first of all start off with package reform for beer,” Tanczos said. “We, at a minimum, hope that happens.”

What beer distributors don’t want is convenience stores or gas stations getting in the beer business, Tanczos said. This could obliterate the “specialty retailer” niche that beer distributors rely on, the kind that has kept them in business.

“We have no other way to make a living and we have other outlets selling more conveniently than us,” Tanczos said. “And that’s been a challenge.”

Another wrinkle is grocery stores, which are already permitted to sell beer if they obtain an “R” license, which requires them operate a restaurant-like facility in order to sell up to two six packs of beer per customer. Throughout the commonwealth, there’s 160 such grocery stores, according to the PLCB.

Jason Hopp, vice president and general counsel with Pennsylvania-based Redner’s Markets grocery chain, said the business would like to see “R” licenses become more flexible in terms of the size of store to which they apply.

Amy Christie, executive director of the Pennsylvania Licensed Beverage Association, which represents alcohol-selling bars, taverns and restaurants, said privatization and package reform discussion pops up “every five or ten years,” but the HB 790 discussion has stronger momentum than past talks.

If legislators are open to reform alcohol laws, Christie said the key is to keep the changes equal across all tiers of alcohol sellers.

If beer distributors are allowed to sell six-packs, then taverns should be allowed to sell cases to create a level playing field, Christie said. And while grocery stores selling six-packs of beer may provide competition to neighborhood bars, they should operate under the same license.

“If anything happens in this debate, increase what our businesses can sell,” she said. “Increase the level of business that our members are able to produce and the number of jobs that we’ll be able to keep people employed at.”

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – Democratic leaders in the General Assembly say Gov. Tom Corbett has delayed long enough on a decision about expanding Medicaid in Pennsylvania.

CAPITOL DECISIONS: Medicaid expansion continues to hang over Gov. Tom Corbett and budget-making lawmakers.

And if the governor won’t make a decision, they are ready to force his hand.

“If Gov. Corbett is unwilling to do the right thing, my colleagues in the Senate must send a clear message that this is unacceptable. It’s time for a vote on Medicaid expansion,” said state Sen. Vincent Hughes, D-Philadelphia, on Tuesday.

Hughes has 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 immediately to the floor for a full vote.

Whether he will win support for it is questionable – Republicans hold a 27-23 edge in the state Senate, but some members of the GOP may support the proposal.

Some top Republicans seem to be growing weary of the governor’s maybe-maybe not approach to the issue. Last week, Senate Majority Leader Dominic Pileggi, R-Chester, said the “practical deadline” for a decision on the Medicaid expansion has arrived.

Christine Cronkright, a spokesman for the governor’s office, said Wednesday that no decision has been made and there is no timetable for one.

Corbett’s main concern, according to Cronkright, is that children currently enrolled in Pennsylvania’s CHIP program, which provides health coverage for children in poor families, would be forced into Medicaid as a result of the expansion.

“Moving these children into Medicaid will disrupt their continuing care and result in material changes in their choice of health care provider,” Cronkwright wrote in an email. “We believe these children should remain in CHIP to avoid unnecessary disruptions and costs.”

But Democrats in the state House support Hughes’ effort and turned up the pressure on Corbett Wednesday.

State Rep. Dan Frankel, D-Allegheny, said not accepting the Medicaid expansion would cost hospitals and other health care providers because federal subsidies for those who take a high percentage of Medicaid patients is set to phase out after the expansion begins next year.

“Not implementing the affordable care act is not just businesses as usual,” he said. “It doesn’t make economic sense and it certainly doesn’t make ethical sense.”

Some speculate that Corbett is holding out on Medicaid to use the issue as a bargaining chip in upcoming budgetary discussions – perhaps to leverage Democratic support for his top goals, like privatizing the state liquor stores or overhauling the state pension systems.

Frankel said Wednesday he was not interested in making such a deal, particularly if it meant Democrats would have to support “bad ideas” like privatization or pension reforms.

“I think Medicaid should stand on its own,” he said.

Whichever way the state goes, the decision will play a big part in state budget – not only this year but for years to come.

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 12-13 fiscal year by expanding Medicaid.

Advocates for the expansion say it will provide insurance to some 600,000 Pennsylvanians and will boost the state’s economy by bringing in millions from the federal government.  They also point to a potential reduction in uncompensated care – the health services provided by hospitals to those who do not have insurance and cannot pay.

But opponents point out that most of the savings from Medicaid expansion are simply the result of moving patients from state-level programs to the federally-funded Medicaid, which is still an increasing burden for taxpayers, no matter how you slice it.

The Medicaid expansion is part of the federal Affordable Care Act, but the Supreme Court ruled last year that states must opt-in to that part of the federal health reform law.  States across the country are divided over the expansion.

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

HARRISBURG – They don’t always agree on education policy, but when they do, it’s to oppose an unfunded mandate on school districts.

PASS THE TEST: A new test will determine whether high school students can graduate, but the standards used for those assessments is raising some questions.

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.  Though they have different reasons for opposing the Corbett administration’s phase-in of the new academic standards and the testing that comes with them, both groups agree that the Common Core represents a new, unfunded mandate on the state’s 500 school districts.

The Common Core is a national set of goals and expectations – not, strictly speaking, a curriculum – for public schools.  It is an outgrowth of the federal No Child Left Behind program and was adopted by Pennsylvania in 2010, though the state made changes to match the national standards with pre-existing state standards.

Along with the new standards comes a new form of standardized test, known as the Keystone Exam, which will be given to all students during 11th grade.  Though they were originally developed independent of the Common Core, the state has adapted them to fit the new standards and began administering them this year.

But that test is causing some of the concern.  If students fail the new Keystone Exams more than twice, they will be given the option to complete a non-test assessment to prove they have the knowledge necessary to graduate.

Teachers’ unions and Democrats say those rules will require extra time and effort from teachers, and they don’t see the state being willing to put up the extra cash necessary to cover costs.

“Putting an unfunded mandate disguised as a genuinely needed attack on crashing academic performance, during a time when the governor is erasing state support, is unconscionable,” said state Sen. Judy Schwank, D-Berks.

The total bill for the new standards, according to various groups opposed to the Common Core, will total between $300 million to $645 million.

The state Department of Education says those costs are inaccurately counted.

Districts will be relieved of some mandates – such as a “graduation project” that students must now complete – and other costs are being double-counted by opponents, according to the DOE. For example, districts would have pay to do replace their textbooks even if there was no Common Core, said DOE spokesman Tim Eller.

But there are still some questions.

The State Board of Education, an executive level agency charged with making regulations for the state’s school districts, reported in 2012 that the implementation of the new standards would not impose new costs. But the state’s Independent Regulatory Review Commission disagreed with that assessment, finding that the board’s analysis “does not adequately address fiscal impacts.”

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

The two largest teachers unions in Pennsylvania say that’s exactly what should happen, and several conservative groups agree.

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

An online petition started by a group called Pennsylvanians Against Common Core has collected more than 1,800 signatures as of Monday afternoon.  The group says it aims to collect more than 10,000.

PACC warns that the Common Core is “the culmination of many years of the expansion of national controls over what should be local educational issues.”

Opposition to the Common Core appears to have been stirred up among conservatives after the Obama Administration began touting the new standards along with the national Race to the Top education program.

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.”

Business groups held a news conference event in the state Capitol on Tuesday to voice their support for the new standards, which they say ensure the state’s schools are adequately preparing students.

The Senate Education Committee has scheduled a hearing Wednesday to study the Common Core.

Cheryl Boise, director of the Commonwealth Education Organization, a nonpartisan research center based in Pittsburgh, will testify at that hearing.  On Tuesday, she said lawmakers should delay the implementation of the standards until school districts are up to speed with the requirements and the costs are understood.

“I think we have a lot of questions that have not been clearly answered,” Boise said. “We have created, for lack of a better word, a mess here.”

She suggested that Pennsylvania follow Indiana’s recent decision to suspend implementation of Common Core standards.

So far, 45 states have voluntarily signed onto the new standards – only Alaska, Minnesota, Nebraska, Texas and Virginia have refused – though some have merged those standards with state requirements, as Pennsylvania has done.

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

CONSIDER THE COST: A Monday hearing of the Senate State Government Committee involved testimony on adding a fee for commercial records requests.

HARRISBURG — North Cornwall Township Manager Robin Getz said she sees the municipality’s employees spending too much time fulfilling open-records requests made to earn someone else money.

That’s why she’s urging the state legislature to provide a fee structure for records submissions made for commercial purposes.

“Our staff is performing the duty for a business, which is further resulting in their efforts being taken away from the taxpayers that they are there to serve,” Getz said. “Government should not be utilized as promoters for any business.”

Getz was one of about a dozen people who testified in front of the Senate State Government Committee on Monday. The hearing concerned a proposed update to Pennsylvania’s Right-to-Know Law, which governs public records access for all state and local agencies.

As part of the rewrite, sponsored by Senate Majority Leader Dominic Pileggi, R-Delaware, Senate Bill 444 proposes a fee structure for requests made for commercial purposes.

MUTCHKER: Pennsylvania should consider a fee structure for commercial records requests.

Such requests are common, especially at the local level, said Office of Open Records Executive Director Terry Mutchler. A business who sells swimming pool liners may request information on pool permits to prepare a mailing list of their target audience. Same with dog licenses, or tax records that get sold off, Mutchler explained.

“What you see now is a township, county, and whatnot, putting in lots of hours and time in, and then that information is turned around and being sold,” Mutchler said.

Presently, the Right-to-Know Law says request approvals must be blind to the purpose. But the proposal would create a two-channel system — one for citizen requests, one for commercial entities.

The proposed law defines “commercial purpose” as obtaining records for sale or solicitation, or “in a manner through which the requester can reasonably expect to make a profit.”

The news media and academic institutions are explicitly exempted; Mutchler cited circumstances in other states where a local government officer may get “creative” and consider the local reporter making requests for purpose of profit.

The proposed fee would be calculated based on the hourly wage of the lowest-paid employee who is capable of handling records requests.

The system is similar to the federal Freedom of Information Act, which has one channel for citizen, student and media requests, and another for commercial purposes with a separate fee structure.

Mutchler said she doesn’t support adding fees for the time it takes government officials to answer citizens’ requests since taxpayers already pay government salaries. But there’s a difference between obtaining information in order to study the government, versus someone collecting public records for a money-making venture, she said.

“It’s not that they shouldn’t have access, they’re public records,” Mutchler said. “But I do believe there’s a better way to separate a citizen from a commercial user.”

Drawing that line will require lawmakers to consider what exactly constitutes commercial purpose.

Kenn Marshall, media relations manager at the Pennsylvania State System of Higher Education, said about 20 requests out of 116 in a single year came from businesses or law firms. He cited a request from an unsuccessful bidder on a health-care contract who wanted to see all the proposals that were denied. That involved reviewing more than 4,000 pages of proposal information and because the law requires the agency to alert unsuccessful bidders when their proposals are requested, the notification triggered several more requests for the same information.

“It certainly could be argued the purpose of such a request is commercial,” Marshall said, “as the information provided by the request could be used to increase chances of the requester submitting a successful bid in the future.”

Marshall also cited cases where law firms request public records as a way of outsourcing the legal discovery process. At 25 cents a page, using the law at PASSHE might be less expensive than traditional discovery methods.

Andy Hoover, legislative director for American Civil Liberties Union of Pennsylvania, said the legislature should carefully consider the language in the section regarding commercial fees, as there’s no clear definition for “solicitation.” He told the committee activities by a non-profit could be considered solicitation, even if it’s not for a commercial purpose.

Senate Bill 444 could be amended. Erik Arneson, Pileggi’s spokesman, said another hearing is likely to take place with a focus on state-related universities under the open records law.

Arneson said he hopes the Senate will consider the legislation by fall.

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG — Across Pennsylvania, times are tough for local governments. About 41 percent of the state’s population live in a municipality facing some kind fiscal distress.

DISTRESS SIGNALS: More than 40 percent of Pennsylvanians reside in distressed municipalities.

Yet Gov. Tom Corbett’s proposed budget holds municipal assistance relatively flat. That includes funding assistance for cities in Act 47, the official classification for the fiscally distressed.

But municipalities aren’t necessarily looking for state dollars. They’re looking for change, the kind that requires legislators to act.

This year, the administration proposes a $7 million transfer to the Municipalities Financial Recovery Revolving Aid fund for fiscally distressed governments. Last year the state transferred in a little more than $12 million. The year before, $1.4 million was transferred in, according to state budget documents.

Lyndsay Frank, a deputy press secretary with the Department of Community and Economic Development ,said last year’s increase was notable on two fronts.

“First, the increased funding for Act 47 made up for significant shortfalls in previous budgets that had the program on the path to insolvency,” she said in an email to PA Independent. “Second, the increased funding allowed the Governor’s Center for Local (Government) Services to utilize grants and loans from the program to support recovery plan implementation (Previous funding shortages did not allow for this).”

This year’s proposed funding, Frank said, will allow the state to support its 21 officially fiscally distressed communities.

Rick Schuettler, deputy executive director of the Pennsylvania Municipal League, said there is concern if more cities wind up in Act 47. That could threaten the money.

Barring that, Schuettler said municipalities understand that funding for more traditional state programs has waned during the past few years as the state dealt its own fiscal issues.

But, he said, “there are some things the state can do that would be on the expense side that could really help us.”

EICHELBERGER: The Blair County Senator is chair of the Senate Local Government Committee, and is sponsoring Act 111 reform legislation.

High on the list is municipal pension reform.

Collectively, Pennsylvania’s municipalities carry $6 billion in unfunded pension liabilities, $4 billion of which is from Philadelphia. Legislation from Rep. Seth Grove, R-York, would overhaul the system by creating new plans for police officers and firefighters.

Late last year, the Local Government Commission identified more than 6,500 “unfunded mandates,” or state laws that dictate local spending. Some of the more burdensome, according to the study, are Department of Corrections standards, stormwater planning requirements, competitive bid limits and legal notice publication requirements.

But one high-profile change Shelton said municipalities are looking for is updating Act 111, the state law governing binding arbitration between municipalities and public safety unions. The law prevents strikes; instead binding arbitration is used the event of a stalled contract negotiation.

Act 111 led to a $15-million settlement between the cash-strapped city of Scranton and the local firefighter union. The Pennsylvania Supreme Court ruled binding arbitration still applied though the city was declared fiscally distressed, though it didn’t have money to fulfill the original award of $30 million.

Sen. John Eichelberger, R-Blair, chairman of the Senate Local Government Committee, is sponsoring legislation to update Act 111, which hasn’t been changed since it was enacted in 1968.

Some changes initially discussed would split the cost of third-party arbitrators between the labor union and the local government, which is estimated between $3,000 and $5,000. It also would require arbitration meetings to be open to the public.

LES NERI: The executive director of Pennsylvania’s FOP says Act 111 doesn’t need any changes.

Les Neri, executive director of the Pennsylvania chapter of the Fraternal Order of Police, said changing Act 111 isn’t necessary.

Neri said the number of municipalities that wind up using binding arbitration is minimal compared to the state’s more than 3,000 municipalities. About 100 request an arbitration panel annually, though less than half end up using it, Neri said.

The majority of labor contracts are settled in negotiation – and that’s where savings can be found. Neri cited a recent example in Chester County where benefits reforms saved $200,000 to $300,000 in the local budget.

“We’ve even gone in and voluntarily taken pay freezes, we’ve gone in and restructured our benefits,” he said. “We’re willing to work with them in restructuring the way we do business in reviewing what pay raises are potentially available to our members.”

Neri said there’s no issue with making negotiations public, but such a law could be added to the state’s open meetings law rather than opening up Act 111. As for the arbitrator cost, some police unions have “only two or three members,” which would make cost-splitting unfair, he said.

“It would be more than the pay raise they could possibly receive to pay for neutral arbitrators,” he said.

Eichelberger also is chairman of the Local Government Commission, which is embarking on a long-term plan to reform Act 47. Legislation is expected by the end of 2013.

Eichelberger said the commission also is looking at what “unfunded mandates” could be eased. The goal, he said, is to reduce costs to local governments rather than hand over money.

“If we can unlock their handcuffs with some of the rules they have to live by,” he said, “we can lift some of the mandates that are funded off of them and we can give them a fair playing field with union negotiations, then they’ll be very happy with that.”

Contact Melissa Daniels at melissa@paindependent.com

Correction: This article was updated to correct the spelling of Rick Schuettler’s name.

HARRISBURG – Finally, Pennsylvania will have new legislative districts.

In a unanimous decision announced Wednesday, the state Supreme Court upheld a redistricting plan drawn by a commission of legislative leaders and ordered it to be used for the next round of legislative elections in 2014.

The plan had been challenged by residents for containing too many legislative districts that unnecessarily divided counties and municipalities, but the court dismissed those appeals.

NEW MAPS: The state House and Senate (pictured here) redistricting maps were approved by the state Supreme Court on Wednesday.

A previous plan prepared by the Legislative Reapportionment Commission, or LRC, had been rejected by the Supreme Court in January 2012, largely because the court found it contained too many county and municipality splits.

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 LRC’s new plan is not perfect,” Castille wrote. “By necessity, a reapportionment plan is not required to solve every possible problem or objection in order to pass constitutional muster.”

The commission charged with redrawing the district lines consisted of Senate Majority Leader Dominic Pileggi, R-Chester; Senate Minority Leader Jay Costa, D-Allegheny; House Majority Leader Mike Turzai, R-Allegheny; House Minority Leader Frank Dermody, D-Allegheny; and and retired Superior Court Judge Stephen McEwen, who was appointed by the state Supreme Court as chairman.

Costa was the lone dissenting vote on the redistricting plans when they were approved by the commission in April 2012.

Costa on Wednesday said he was disappointed by the court ruling.

“Our belief is that the map approved by the commission is partisan and only serves narrow, partisan political interests,” Costa said. “We believe there are better alternatives.”

Pileggi said politics are a part of the redistricting process, and the court ruling acknowledged that there are subjective issues at play in political map-making.

VICTORY: State Sen. Dominic Pileggi reviews the Supreme Court ruling during a press conference Wednesday.

“As long as the explicit constitutional requirements are met, it does not make the process constitutionally invalid,” he said.

Wednesday’s ruling marks the end of a long saga that sets new parameters for how legislative redistricting will be accomplished in Pennsylvania.

In its 4-3 ruling in January 2012, the court rejected the first set of legislative maps created and approved by the commission.

In that case, the court agreed with a challenge brought by Amanda Holt, a resident of Allentown who argued that the commission’s maps contained too many districts that unfairly divided counties and municipalities.  Holt developed her own “alternative maps” with fewer splits and Castille found her argument compelling enough to join the three Democratic justices in ordering the commission to try again.

The commission redrew the maps and the court heard the case in October.

As she had done successfully in the first round of appeals, Holt and her team argued that the new maps were contrary to law because they contained more county and municipal splits than were “required by law.”

In the maps she created, Holt had only 86 splits in the House plan and 17 splits in the state Senate plan.

The maps created by the commission had 221 splits in the state House map and 37 splits in the state Senate plan.

But the second time around, the commission’s lawyers argued that they did not have to meet the standard established by Holt.  Unlike her, the commission needed to reach a political consensus on the district maps, which required more subjective issues than simply looking at the number of splits.

In Wednesday’s ruling, Castille said the issue of splits was “close” but the court determined the new maps passed constitutional muster.

As the court pointed out, its job is not to weight whether an alternative plan is “better” than the plan offered by the commission, but only if the commission’s plan meets the constitutional obligations.

Holt said she was disappointed by the ruling, but was still reviewing Castille’s opinion and could not comment.

She said she was glad to have played a role in changing how the process played out.

“It’s undeniable that the districts – whatever they end up looking like – are definitely an improvement from what was originally proposed,” Holt said.

Because the redistricting process was delayed after the Supreme Court rejected the commission’s maps in 2012, the elections last year took place on the old district lines, drawn in 2001.

The new maps will be used for the 2014 legislative elections, according to the Supreme Court ruling.

The 6-0 ruling did not include former Justice Joan Orie Melvin, who was suspended from the court when the case was heard and deliberated.  She was convicted on multiple counts of political corruption and voluntarily stepped down from the court in March.

The newly-approved state House and state Senate maps can be viewed here.

Contact Eric Boehm at eric@PAIndependent.com

LONG ROAD: Pennsylvania lawmakers are in the throes of a discussion on whether or not to increase driver fees and potentially gas prices in order to get more funding for roads.

HARRISBURG — In 1997 a postage stamp cost 32 cents, a dozen eggs about $1.17, and a gallon of gas about $1.32.

It was also the most recent time Pennsylvania lawmakers touched the state gas tax to raise more money for roads and bridges, said Senate Transportation Minority Chair John Wozniak, D-Cambria.

As consumer costs have risen, so have the costs for roads.

“I challenge anybody to say they’ve stopped at a convenience store and a cup of coffee is the same today as it was 15 years ago,” Wozniak said. “Government isn’t immune to market forces.”

As a result, drivers may have to pay more, too.

WOZNIAK: The Cambia County lawmaker is a strong supporter of passing transportation infrastructure, saying it’s time for the state to collect more to pay for roads.

Wozniak was among the lawmakers who voted in favor of a $2.5 billion transportation funding package, which passed out of the Senate Transportation Committee on Tuesday morning in a 13-1 vote.

That was the first step in what’s shaping up to be a tense legislative debate pitting transportation needs against new costs for drivers. Senate Bill 1 brings increases on a variety of motor vehicle fees and potential jumps in the cost of gasoline.

But it’s the first comprehensive legislation on the table since Gov. Tom Corbett’s Transportation Funding Advisory Committee identified $3 billion worth of vital infrastructure needs.

Sen. Richard Kasunic, D-Fayette, cast the only committee vote against the proposal, citing uncertainty about how the plan would affect his district. Kasunic wants to see a five-mile stretch of Route 219 connect to a highway in Maryland, which he says will open up his district to new economic opportunities. But so far the project isn’t on the state’s to-do list.

“The potential that is there is tremendous,” he said.

Kasunic is also worried about changes to the gas tax structure.

“My township supervisors don’t know whether they’re getting an increase or not,” he said.

KASUNIC: The Fayette County representative is holding out support for a transportation funding overhaul because of a key project in his district.

The legislation would generate $1.6 billion of its spending plan by uncapping the oil franchise tax applied to the wholesale price of gasoline. The tax now is only applied to the first $1.25 of a gallon. Uncapping it means gas could cost more, should wholesalers pass those costs along.

The plan also decreases the liquid fuels tax, paid at the gas station by consumers, by 3 cents.

Additional fee increases in the plan would fund mass transit, rail, airport and seaport improvements. Fees would go up for driver’s licenses, renewals and other fees charged by the Pennsylvania Department of Transportation. Those funds, per the state constitution, must be directed toward roads and bridges.

The bill also adds a $100 charge on top of all traffic fines.

Sen. John Eichelberger, R-Blair, voted in favor of the bill. He said he was comfortable with most parts of the legislation, as the increases don’t appear to be arbitrary “revenue generators” and are generally tied to the cost of inflation.

But Eichelberger pointed out one fee increase that he thought deserves a second look – a $9 jump on the cost to obtain motor vehicle history records from the PennDOT, which now cost $5.

“As the chairman said, we’re going to take this through the process and he’s willing to look at issues like I’ve brought up today,” he said. “But what we see as user fees is an accurate description.”

Senate Transportation Chairman John Rafferty, R-Montgomery, who sponsored the bill, said he knows the legislation is “not an easy lift” politically. But it’s necessary, he said.

“We cannot overlook our need to provide for the people of Pennsylvania a core function of government, providing for safe transportation,” Rafferty said.

Now that the bill is out of the committee, Wozniak said, the Senate won’t pass it until there’s an agreement with the House.

“The issue is not Democratic, it’s not Republican,” Wozniak said. “It’s not urban, it’s not rural. It’s not just roads and bridges, it’s our ports, it’s our airports.”

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – The state House on Monday voted to overhaul Pennsylvania’s corporate tax code, sending to the state Senate one of Gov. Tom Corbett’s top priorities for this year’s legislative session.

The bill reduces the state’s 9.99 percent corporate tax rate, beginning in 2015.  By 2025, the tax rate will be 6.99 percent.  It also eliminates some rarely used tax credit programs, overhauls the state’s tax appeals process and will close part of the so-called  “Delaware loophole” that some businesses use to dodge paying Pennsylvania corporate taxes.

TAX MAN: State Rep. Dave Reed, R-Indiana, sponsored the corporate income tax overhaul that is headed for the state Senate.

The final vote was 129-65.

Advocates of the bill said it would make Pennsylvania more competitive with other states, would boost the state’s bottom line in the short term and would give the state more tolls to go after companies that continued to dodge tax payments.

“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.

Reed said the slow pace of the phase-down of the tax was necessary due to the state’s long-term budget challenges.

According to a House analysis, the bill would generate an additional $3 million for the state next year, the first year where the new provisions would be in place.

But 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.

“Any short-term income will pale in comparison to the long-term losses,” said state Rep. Joe Markosek, D-Allegheny, minority chairman of the House Appropriations Committee.

Democrats opposed to the bill advocated for “combined reporting,” which 22 other states currently use.  The process would require companies operating in Pennsylvania to report all the revenue from affiliates to the state — essentially making the company report their taxable revenue as if they were a single entity.

They said that would go further in shutting the Delaware loophole than the Republican-backed plan, which uses a so-called “add-back provision” to require companies to report revenue transferred out of state for tax purposes.

According to the National Conference of State Legislatures, 44 states have some form of corporate net income tax. The rates range from a low of 4 percent in Kansas to a high of 12 percent for the highest-earning companies in Iowa.

Pennsylvania’s rate of 9.99 percent puts it second in the nation.

The Pennsylvania Chamber of Business and Industry, which represents businesses in the state, endorsed the changes.

The bill also makes changes to the state’s processes for tax appeals, which will improve the state’s business climate, according to Jason Skrinak, a principal with the Pennsylvania Institute of Certified Public Accountants.

“Pennsylvania’s tax appeals system can be described as arcane, confusing, complex, inefficient and time consuming,” Skrinak told the House Finance Committee last month.

A similar set of corporate tax changes passed the state House last year, but were mostly abandoned by the state Senate.

Republican leaders on Monday said they hoped the bill would become part of the mix during the upcoming budget negotiations, even if not all parts of the proposal made it into law.

The changes have the backing of Corbett, who called for the long-term reduction in the corporate net income tax during his February budget address.

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

DATA HACKS: Data breaches in government agencies are becoming more common and exposing more records, according to a report from Rapid7, an IT security firm.

HARRISBURG — Digitized government data is no stranger to security breaches, but residents may at least be able to count on swift notification when their information is at risk.

The Pennsylvania Senate unanimously passed a bill Wednesday requiring state agencies to notify affected residents of a data breach within a week. The law now says the state must notify them “as soon as possible.”

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.

PILEGGI: The Pennsylvania Senate Majority Leader sponsored legislation to ensure residents are notified of data breaches.

Pileggi said data theft is “a growing concern,” according to a statement after the vote.

“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.”

In addition to the seven-day notification requirement, the bill requires state and local agencies involved in a beach to notify the state Office of Administration or local district attorney within three days. Those agencies would decide whether the situation warrants further criminal investigation.

The legislation also requires OA to develop a data storage policy for personal information, one that aims to reduce the risk of data breaches.

A similar bill passed the Senate this past session, but the House failed to take it up. This session, Steve Miskin, House Republican caucus spokesman, said the House will consider the bill.

Misken added Pileggi has communicated with House Majority Leader Mike Turzai, R-Allegheny, about the bill, and the caucus agrees with “the goal of protecting the rights and privacy of people.”

In September 2012, a data breach at the South Carolina Department of Revenue exposed the Social Security numbers of about 3.8 million residents and 3.3 million bank account numbers. The breach was the result of a phishing scam encased in an email opened by an employee.

A research report from Boston-based security firm Rapid7 found individual records at government agencies are increasingly exposed.

In 2010, breaches exposed a total of 1.5 million personal records. Through the first five months of 2012, that figure was 9.6 million.

“Government agencies are facing an increase in data breaches as a result of cyber attacks, weaknesses in federal information security controls, and poor best practices for protecting data on portable devices,” the report concluded.

Categorically, most of these breaches happened as a result of unintended disclosure, such as an email sent to the wrong recipient, or accidentally uploading information. From 2009 through May 2012, 78 out of 268 cases linked back to unintended disclosure.

Lost or discarded portable devices such as laptops, hard drives or smartphones were the next most common cause of data breaches (51 incidents), followed by physical loss of non-electronic records (46 incidents) and hacking (40 incidents).

That last category, though, is a rising concern, according to the Rapid7 report. Between Jan. 1, 2012 and May 31, 2012, government agencies reported more hacking incidents than any other category, and a year-over-year comparison shows a nearly 50 percent increase from 2009 to 2011.

“It’s important to note that the hacking category contains many breaches where the number of records exposed was reported as unknown,” the Rapid7 report read. “This makes it impossible to accurately measure the damage.”

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – For most of the last two years, the debate over alcohol privatization in Pennsylvania has focused on the financial aspects of the Republican-backed plan to sell-off the state liquors.

But such bottom-line issues took a backseat on Tuesday as the state Senate held the first of three planned hearings on the liquor bill passed by the state House in March.

Social issues were front and center in the Senate Law and Justice Committee, with privatization painted as a harbinger of doom by a litany of testifiers who promised everything from an increase in crime and disease to higher rates of unemployment and prostitution.

CONSEQUENCES: Testimony at Tuesday’s hearing told of liquor privatization as a harbinger of social chaos, but advocates of privatization say the concerns were overblown.

And all, they said, because a private retailer would be allowed to sell a bottle of wine instead of a state-run establishment.

State Sen. Charles McIllhinney, R-Bucks, said the hearing was a chance to vet aspects of the proposal that had not been heard during the House debate.

“I think it was important to get that out first,” he said. “Whatever we decide to do, there are consequences.”

The House-passed liquor bill would slowly close the 620 state-owned and operated liquor stores as up to 1,200 private liquor licenses are auctioned off. It would also allow grocery stores to obtain a license to sell wine and would let beer distributors obtain a license to sell wine and spirits.

With all those new retail markets for liquor, there would be a need for more resources dedicated to enforcing the state’s liquor laws, representatives from law enforcement groups said on Tuesday.

“We would need even more members, which would mean even more funding,” said Joe Kovel, president of the Pennsylvania State Troopers Association.  He asked the Senate panel to include $5 million in additional funding, if privatization was approved.

The state police are charged with enforcing most of the state liquor code.

State Police Commissioner Frank Noonan agreed with the assessment of $5 million in additional costs for necessary liquor enforcement, but he said the police would be able to handle any increased social ills to come from privatization by boosting their ranks and changing how they approach the issue.

Estimates for revenue generated range from $600 million to $1 billion. Gov. Tom Corbett wants to use most of that revenue to create a new block grant program for school districts.

State Sen. Richard Alloway, R-Franklin, said he was sure the government would be able to find an additional $5 million to cover the concerns of law enforcement out of the “hundreds of millions of dollars” expected to be generated by selling the private licenses.

The list of testifiers at the hearing was stocked with opponents of privatization – and opponents of access to alcohol in general – who blasted the bill as a gateway to increasing a host of social ills, including increases in child abuse, teen pregnancies, car crashes, mental problems and alcohol abuse.

Others talked about the costs of more emergency room visits, higher divorce rates, more poverty, higher unemployment, more crime and children born out of wedlock.

“Regardless of what you think about alcohol policy, it’s not just about making money,” said Deb Beck, president of the Drug and Alcohol Service Providers Organization of Pennsylvania, which works with individuals struggling with substance and alcohol abuse. “If you increase access to a desired substance, you’re going to increase consumption.  If you increase consumption, you’re going to increase alcohol-created problems.”

But advocates of privatization say there are plenty of controls in the legislation to prevent rampant abuse of a private alcohol system.

For starters, all retail stores will be required to have ID card scanners and will face penalties if caught selling to underage customers. The state police will also run compliance checks on all private liquor stores – no such checks are currently done on the state-owned system.

Some grocery stores already have licenses to sell beer by obtaining restaurant licenses, and those that sell adult beverages have an excellent track record, said David McCorkle, president of the Pennsylvania Food Merchants Association, a trade group.

Nathan Benefield, research director at the Commonwealth Foundation, a free market think tank in Harrisburg, said he was disappointed that evidence on the social ills of private alcohol sales were presented without the chance for current retailers or retailers in other states to counter the claims.

Since Pennsylvania ranks in the middle-of-the-pack in terms of underage drinking offenses and accidents caused by drunk driving, it is hard to argue that the state-control model is preventing many of the harms that opponents point to, he said.

McIllhinney said the second hearing would focus on the retailers and the wholesalers, while the third hearing, scheduled for mid-June, would look at the logistics of privatization.

He reiterated his opposition to the version of the liquor bill passed by the state House and said that bill would fail in the state Senate, if it were given a straight up-or-down vote. But he maintained that the state Senate would make an effort to get a liquor bill to Corbett’s desk before the end of June, though he was noncommittal when asked if the hearing schedule allowed enough time for that to happen.

“If I feel I need more time, I’ll take more time,” McIllhinney said.

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

SCARNATI: The Senate President Pro Tempore addressed the Pennsylvania Press Club Monday, noting the need to talk about the state budget and not just liquor privatization.

HARRISBURG — Whether in a fast-food drive-through or with lawmakers in Harrisburg, people want to talk about liquor, said Senate President Pro Tempore Joe Scarnati, R-Jefferson.

“I took my son to the drive-through at McDonald’s last week to get a large French fry. The gal that handed me my bag out the window said, ‘Do you think the state stores are going to be privatized?’” Scarnati said during a speech at the Pennsylvania Press Club on Monday.

The crowd laughed. But Scarnati got serious when he talked about the attention privatization is getting in Harrisburg.

“Everybody wants to talk about liquor and that’s fine, we can talk about liquor,” he said. “But my point is, let’s not forget we have a budget.”

Attention has turned toward the state Senate since the House passed House Bill 790, which would effectively close all state-owned wine and liquor stores and create a new private licensing system.

There’s little to no support for the bill as written in the Senate, according to Scarnati. But that doesn’t mean lawmakers aren’t still furiously crafting and re-drafting proposals to get some type of liquor bill passed and sent to Gov. Tom Corbett.

Tuesday, senators will address the issue during a public hearing headed by the Senate Law and Justice Committee.

Scarnati said while access to liquor is important to his constituents, what’s more important is a plan that works.

“The last thing I want to be part of is creating another system that doesn’t work,” he said. “Let’s get it right.”

The state must constitutionally pass a budget by June 30, but Corbett has outlined three major proposals for passage along the same timeline – privatization, pension reform and transportation funding.

Scarnati said it’s time for lawmakers to start talking about the budget in concert with these policy changes. So far, caucus leaders and the administration haven’t had any substantive meetings, he said. On top of that, the state is facing revenue shortfalls, he said.

“You cannot go in and shut the LCB off like a light switch and it’s not going to cost the state budget something this year or the following year,” Scarnati said. “We have to account for that.”

But if privatization in some form is to happen, Scarnati said, the Senate aims to find a balance between the “ideology” of getting the state out of the liquor business without compromising existing private-sector businesses.

“It’s not just about grocery stores, it’s about beer distributors, too and we have to understand that,” Scarnati said.

Scarnati has a long history in the restaurant business, and he said it’s not fair to penalize liquor license holders who’ve played by the rules by suddenly expanding their local competition.

He also received $6,500 in campaign contributions from the Pennsylvania Beer Alliance in the 2012 election cycle, the most of any state lawmaker that year.

A compromise could wind up keeping state stores open. Scarnati is a co-sponsor of a proposal from Sen. John McIlhinney, R-Bucks, that would allow beer distributors to sell wine and spirits. Such a bill would expand retail outlets without selling off the state system altogether or shutting down the financially lucrative wholesale end of the Pennsylvania Liquor Control Board.

McIlhinney, chairman of the Senate Law and Justice Committee, is holding a hearing on liquor privatization Tuesday.

Republicans hold a one-seat majority in the Senate, meaning 26 of their 27 members must favor a proposal for passage.

As Scarnati put it, there’s no room for “slippage.” But Senate Democrats prefer a plan to modernize the state stores that expands hours and pricing models to make the LCB as much as $100 million more in revenue a year.

Caucus members are concerned privatization would increase alcohol consumption to Pennsylvania’s detriment. Modernization wouldn’t go as far, they say.

Senate Minority Appropriations Chairman Vince Hughes, D-Philadelphia, said the last thing a distressed community — one with high unemployment, drugs or already-high alcohol consumption — needs is more places to buy booze.

“There’s a difference between the number of hours a wine and spirits shops are open versus the number of outlets and retail outlets in a community,” Hughes said.

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – Pennsylvania’s state sales tax code – already full of carve-outs for niche industries and special interests – is about to get a little more complicated.

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.

FLYING IN STYLE: A new sales tax exemption for airplane parts would make life a little easier for those who own private planes.

The proposal is good news for plane owners, who might be paying thousands in 6 percent sales tax on a $50,000 repair. But some say the bill is further complicating a tax code that already gives plenty of specialized tax exemptions.

Proponents of the measure, like bill sponsor Rep. Bill Kortz, D-Allegheny, said plane owners in Pennsylvania are flying their jets to other states in order to avoid paying sales tax on costly maintenance.

States like New York, Massachusetts, Ohio and Connecticut all have a partial or full sales and use tax exemption for aircraft. If Pennsylvania follows suit, it will boost a stagnant industry, Kortz said.

“The bottom line is I want people to work, make money, expand the business, and pay taxes,” Kortz said. “This will do just that in the aviation industry.”

There’s about 8,000 planes in Pennsylvania, and about 130 airports. The Federal Aviation Administration mandates planes must be inspected on a routine basis after certain numbers of hours of flying, and Kortz said this creates a built-in market for services.

Kortz faced some opposition on his proposal even within the Democratic caucus, as some felt it was favoring special interests with another tax break. The bill passed the state House with bipartisan support, though it saw 23 negative votes.

Bipartisan support also exists in the state Senate. The Democratic caucus has the exemption listed on their 2013-2014 budget plan, Sen. Dave Argall, R-Schuylkill, has a similar proposal in the works, and Kortz said he’s met with the governor’s staff to discuss the proposal.

To Kortz, the measure isn’t a tax break but a tax shift, as aviation industry jobs will balance out the lost sales tax dollars.

“If we get more tax dollars, I don’t care how we get it,” he said. “We’re stagnating in this industry.”

FEWER TAXES, MORE JOBS: The sales tax exemption would lure jobs to Pennsylvania, supporters say.

State Rep. Jim Marshall, R-Beaver also sponsored the bill. He compared it to an existing exemption for helicopter sales, rentals and maintenance that affects about 550 companies, according to commonwealth estimates. The exemption totals about $400,000.

Marshall said that exemption created about 400 jobs at Sikorsky Global Helicopters in Coatesville.

Marshall noted the Pittsburgh Institute of Aeronautics in Allegheny County has programs that teach airplane maintenance, but 95 percent of graduates move out of state. He said the exemption would boost jobs and benefit businesses with aviation fleets, without over-complicating the state’s tax code.

“There are so many exemptions now, and it’s so complex, I hardly believe this one is going to tip the scales on that,” Marshall said.

A report from the Independent Fiscal Office on the airplane exemption estimates the state would lose about $12.5 million in the first year. About 2,060 direct jobs and 2,680 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.

The IFO concluded the exemption would likely increase demand for aircraft parts and services in the state, though it’s unclear by how much.

But it added the strongest effect of the exemption “would be the retention of residents who might otherwise purchase parts and services out of state.”

Sharon Ward, executive director of the progressive Pennsylvania Budget and Policy Center, said these types of tax exemptions are passed in other states via urging of plane owners. She said the exemption is an example of putting special interests above the broad public interest.

“It’s simply going to give a tax break that will reduce the costs for these plane owners, but will really kind of drain the treasury and not return back very much in terms of jobs and tax revenue,” she said.

Typically in Pennsylvania, such tax exemptions rarely deliver on the promised benefits, she said. If jobs generated by the exemption don’t balance out, the state loses money.

Free market advocates point to exemptions like this as picking winners and losers in the economy. Nathan Benefield, director of research at the Commonwealth Foundation, said Pennsylvania’s tax code is littered with niche exemptions, from gold bouillon to American flags.

“In terms of good taxation, you should have one that’s fair, flat, low rate, and easy to understand,” Benefield said. “We’ve made the sales tax so complex, and exempting some products and taxing others is just not good policy.”

Pennsylvania has the 16th  highest sales tax rate in the nation with a six percent rate. But because of the exemptions, the state is not generating as much revenues as that would suggest. Pennsylvania’s percent per capita revenues rank 27th, according to data from The Tax Foundation, a tax policy center in Washington, D.C.

Daniels can be reached at Melissa@PAIndependent.com and follow @PAIndependent on Twitter for more.

HARRISBURG – The state House gave bipartisan support to a bill that would block insurance plans offered through the state’s new health insurance exchanges from covering abortions.

Abortions would still be allowed in the event of rape, incest, or if the life of the mother was at risk, in line with other state laws governing abortion through state or federally subsidized insurance programs. The exchanges are set to begin operating in 2014 as part of the federal health care reform law.

OBAMACARE: Pennsylvania has taken a step towards opting out of abortion coverage in the new federal health care exchanges

The bill was pitched by Republicans as a necessary step to prevent state and federal tax dollars from being used for abortion, bringing plans offered through the state exchange in line with existing state and federal law.  But Democrats called it an expansion of governmental regulation over health care choices of Pennsylvanians who will be using the health exchanges.

“It certainly flies in the face of any ideology or any party that claims to support a free market,” said state Rep. Brian Sims, D-Philadelphia.

After a contentious three hours of debate, the chamber approved the bill with a vote of 144-53. The bill moves to the state Senate for consideration.

State Rep. Donna Oberlander, R-Clarion, sponsor of the bill, said the issue was not whether abortion should be legal or not, but whether taxpayers in the state should have to fund a procedure that they view as morally or religiously wrong.

“This bill does not limit abortions.  This bill maintains the status quo for the funding of abortions in Pennsylvania,” she said.

Other state-funded health insurance options in Pennsylvania are already blocked by state law from funding abortions, and federal programs like Medicaid have similar restrictions.

When the federal health care reform law was passed in March 2010, it included a provision allowing states to opt out of covering abortion in the state-level exchanges.

So far, 17 other states have done so, according to the National Conference of State Legislatures.

But Republican arguments that the bill would prevent taxpayer funding for abortions were short-circuited on Monday, when the House Appropriations Committee released its fiscal analysis of the bill.  It showed that there would be no costs or savings to the state by passing the measure.

“Not a dime of commonwealth money is being implicated one way or the other because of this bill,” said state Rep. Steve Santarsiero, D-Bucks.

He said the only issue was whether a private individual has the right to purchase private insurance to cover abortions – even if they are making that purchase through a health-care exchange.

Still, Republicans argued the bill is necessary because the federal exchanges are being set up with tax money and some of the plans offered through the exchanges will be subsidized with federal funds.

“It does not limit a woman’s ability to choose to have an abortion,” said House Majority Leader Mike Turzai, R-Allegheny. “The bill simply maintains the status quo of public funding – none – in Pennsylvania.”

There were more than 38,000 abortions performed in Pennsylvania in 2008, according to the most recent information from the Kaiser Foundation, a nonprofit that studies health issues.

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

HARRISBURG – A much-maligned loophole in Pennsylvania’s Open Records Law may soon be closed.

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.

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.

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.

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. Mark Cohen, D-Philadelphia, minority chairman of the committee, picked up that line of argument on Monday.

He said the four universities have had more autonomy because they are mostly privately-funded institutions.  The 14 schools in the State System of Higher Education, by comparison, are nearly entirely funded by the state, to the tune of $412 million this year.

Currently, the schools are required to release an annual list of their 25 highest paid employees and select other information from their tax returns.

At a hearing with the state Senate in February, Penn State President Rodney Erickson said the school is “fully committed to accounting to every public dollar,” but said he did not believe the right-to-know exemption should be lifted.  The heads of the three other schools agreed.

THE PRICE OF TRANSPARENCY: The four state-related universities got more than $500 million from the state this year.

But the fact remains that the four state-related schools get more than $514 million from state taxpayers each year, and the right-to-know loophole has been criticized as one of the worst in the nation by pro-transparency groups like Sunshine Review.

Former Auditor General Jack Wagner also recommended bringing the schools under the right-to-know law, following his review of the school’s handling of the Jerry Sandusky child sex abuse scandal last year.

On Monday, state Rep. Kerry Benninghoff, R-Centre, chairman of the House Finance Committee and the sponsor of the bill, said the changes should be made to eliminate the grey area where the four state schools currently reside.

“To the average citizen, this seems to make a lot of sense,” he said “You’re either in or you’re not.”

The committee approved the bill with a vote of 17-6, with all six “nays” coming from Democratic members of the panel.

If the bill becomes law, the four schools would have to hire or appoint right-to-know officers to handle requests.  Personnel data and material like emails between students and professors would be exempted because they are not covered by the state right-to-know law.

This past week, Penn State sent a missive to lawmakers urging them to oppose the bill, which was scheduled to be heard in committee on Wednesday but was moved up to Monday at the last minute.

Some Democrats questioned why legislation dealing with transparency was handled in a previously-unannounced committee meeting on Monday afternoon.

“I’m not against transparency,” said state Rep. Jordan Harris, D-Philadelphia, who voted against the bill. “What I’m against is having something rammed down my throat.”

Republicans responded that the meeting was held in accordance with state sunshine laws, since it was called from the floor of the state House during Monday’s session.

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

SANE OR SENILE: Justices in Pennsylvania are trying the constitutionality of the state’s retirement mandate in court.

HARRISBURG — For Pennsylvania judges, turning 70 means it’s time to retire whether they’re ready or not.

But in the face of constitutional arguments and spry septuagenarians of the modern age, state lawmakers are taking a look as to whether that law is worth an update.

A House subcommittee hearing Thursday examined House Bill 79, which would raise the required retirement age for justices to 75. The Pennsylvania Constitution states all justices must leave the bench by the end of the year they turn 70. They can continue to serve as a senior judge, which part time, until they turn 78.

To bill sponsor Rep. Kate Harper,R-Montgomery, it’s hard to believe a justice is suddenly unable to do their job at 71. Age brings reason, she said, and justices can be plenty effective after age 70.

“If we want wise and just judges making the right decisions for the individuals who stand in front of them, we just might learn to prize their extensive experience and the wisdom that it brings,” Harper said.

Though lawmakers have broached the issue in the past, several justices nearing t70 are plaintiffs in two pending cases challenging the constitutionality of the retirement requirement. One of those cases is scheduled to go before the Pennsylvania Supreme Court on May 8.

HARPER: The Montgomery County lawmaker and attorney wants to raise the age for justice retirement from 70 to 75.

In order to change the Constitution, the bill would have to pass two consecutive sessions of the General Assembly and go to voters in a statewide referendum.

Proponents of changes say age is relative, and the judiciary system has existing structures to remove justices who become unfit to their job at any age. But others question diminished mental capacity, and say booting judges out at a certain point allows for fresh turnover.

Dr. Thomas Weida, a professor at the Penn State College of Medicine, said age isn’t the only factor that can diminish capacity for reason. Diet, exercise, genetics and other health considerations can play a role in cognitive abilities. And conditions like dementia aren’t statistically more likely to set in at 75 than they are 70, he said.

“Even in advanced age, the prevalence of dementia which can interfere with decision making is relatively small part up until the age of 75,” Weida said.

Weida described the parts of the brain that deteriorate with age, called spiny dendrites, which affect capacity for new memories. But the parts associated with long-term knowledge, called stubby dendrites, suffer no declines.

In cases where a judge of any age may appear to lose their capacity to serve, the court already has in place a process for removal that starts with a complaint.

Further, judges often will step down of their own volition, said Pennsylvania Bar Association President Tom Wilkinson.

“It is not at all uncommon for other members of the judiciary and the county where a judge who might be impaired serves, or for the bar and others, to encourage more senior judges who are less effective or productive to step down,” Wilkinson said.

This chart, provided by Pennsylvanians for Modern Courts, breaks down the arguments associated with the state’s mandatory retirement age for justices.

Nationwide, 33 states have provisions on mandatory retirement, according to Lynn Marks, executive director of Pennsylvanians for Modern Courts. While Marks said the organization had no official position on the bill, she said there is a national trend towards increasing or eliminating these requirements.

Ken Gormley, dean of the School of Law at Duquesne University and an expert on the Pennsylvania Constitution, said the retirement mandate was created during the 1968 Constitutional Convention. Before then, judicial age was open-ended, which created problems if justices began show signs of senility.

“It was to eliminate the unpleasantness of forcing the Supreme Court or some other body to remove judges, a small number of judges, who were having some kind of mental or physical infirmity,” Gormley said.

Gormely said the framers had the expectation the mandate would be updated in the future. At the time, average life expectancy was about 70. Nearly half a century later, average life expectancy is at 78. Additionally, more women have entered the profession, who tend to have longer life expectancies than men, Gormley said.

He called the legislation “a perfect balance” between updating the law, while still ensuring turnover in the judicial system. The state’s amendment process is designed precisely to allow for these kind of updates, he said.

“If there is no point at which judges must retire or take some sort of senior status, this may ultimately harm the citizens of the commonwealth if there is no opportunity for the fresh ideas, fresh talent and diverse pool of qualified candidates to compete for judicial election or appointment,” he said.

Contact Melissa Daniels at melissa@paindependent.com

OBERLANDER: The Clarion County lawmaker is introducing legislation to eliminate the PA Turnpike, saying there’s no reason to have two state agencies dealing with transportation.

HARRISBURG — Pennsylvania has two transportation agencies. One controls more than 40,000 miles of state roads and 25,000 bridges, and another maintains 545 miles of tolled highway.

The former has seven executives, one for every 5,857 miles of roadway; the latter nine executives, one for every 60 miles of roadway.

For a group of Republican lawmakers, this doesn’t add up, especially when one of those agencies was the subject of a 44-month long grand jury investigation over alleged bid-rigging.

Standing alongside a dozen other GOP lawmakers, Rep. Donna Oberlander, R-Clarion, introduced legislation Wednesday to abolish the “corruption-infested” Pennsylvania Turnpike Commission and fold the route’s operation and tolling into the Pennsylvania Department of Transportation.

“I believe that PennDOT is uniquely qualified and more than capable of handling the additional 545 miles of turnpike roadway and bridges,” she said.

Oberlander said it’s redundant for taxpayers to foot two bills for the agencies, and the legislation would cut down on government bureaucracy.

House Bill 1197 would create a Bureau of Toll Administration within PennDOT to manage turnpike tolling. The state would honor all collective bargaining agreements with union employees, though the commission itself would be eliminated.

Oberlander said the biggest challenge is how to handle the financing, as the turnpike carries more than $8 billion in outstanding debt. She could not prognosticate on the effects of taking on that debt as it relates to the commonwealth’s own financing or bond rating. It will be part of the discussion, she said.

The bill would create a five-person commission in charge of determining how to pay, and eventually retire, the debt. Members would include the governor, the state treasurer, the state auditor general, the speaker of the House and the Senate president pro tempore.

So far, Oberlander’s legislation has nearly three dozen co-sponsors.

Rep. Mike Vereb, R-Montgomery, said the turnpike is “a tumor beyond radiation,” adding that it’s up to the General Assembly to make the grand jury reports things of the past.

“We call it corruption. Back home, it’s called organized crime,” Vereb said.

Vereb introduced a similar proposal in December 2009, which didn’t get far. But consolidation at that time would have resulted in anywhere from $300 million to $400 million in savings for the commonwealth, Vereb said, and present savings could be more.

He also said taxpayers are already responsible for the turnpike’s debt.

“Taxpayers and toll payers are going to end up paying the debt no matter what,” he said. “So why not, when you’re paying down the debt, know this is never going to happen again?”

Carl Defabo, spokesman for the turnpike commission, said the agency has no position on the proposal and is rehabbing its business practices because of the grand jury report.

“It’s a fact that the Turnpike began to improve business practices years before these accusations were brought to light,” DeFabo said in a statement, “and Turnpike CEO Mark Compton launched even more aggressive reforms in the wake of the investigation to improve accountability and operations.”

That includes evaluating the procurement process, reviewing past contracts and enforcing an employee code of conduct.

DeFabo also said PennDOT and the commission are working closer than ever. The “Mapping the Future” partnership already has the agencies sharing services, such as design standards, training initiatives and inspection services.

Contact Melissa Daniels at melissa@paindependent.com

THE BIG SHOW: Sen. Rafferty held a well-attended press conference to announce his $2.5 million transportation plan.

HARRISBURG — The latest proposal to fund repairs to Pennsylvania’s aging roads and bridges could mean steeper costs for all drivers, especially those with a lead foot.

Sen. John Rafferty, R-Montgomery, chairman of the Senate Transportation Committee, unveiled his proposal for $2.5 billion worth of transportation funding Tuesday.

The plan uncaps the oil-franchise tax, which is paid on the wholesale price of gasoline, to raise about $1.6 billion, and brings in millions more by increasing Pennsylvania Department of Transportation fees and a new surcharge on top of traffic tickets.

“If we want to be competitive and we want to move the state forward, we have to do something in the way of transportation funding,” Rafferty said, flanked by dozens of senators, House members, private-sector business leaders and union representatives. “A core function of state government is providing safe roads and bridges for the citizenry.”

For the better part of two years, Pennsylvania state lawmakers have debated how to pull together money to repair nearly 4,400 structurally deficient bridges and more than 10,000 miles of dilapidated state roads. Gov. Tom Corbett made headway earlier this year when he announced a plan for a $1.8 billion in annual revenue from uncapping the oil franchise tax.

Now, Rafferty’s plan proposes spending more by getting money directly from the pockets of drivers.

According to PennDOT estimates, the financial impact on the average Pennsylvania driver comes out to about $2.50 a week by the third year, considering fee increases and at-the-pump gas prices.

A recent survey from AAA Mid-Atlantic showed about 44 percent of drivers were comfortable paying up to $2.50 to improve the state’s infrastructure.

“The people that may experience some increase because of our adjusting these fees are the same people who are going to be using the roads and bridges at this time,” Rafferty said.

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. Right now, Pennsylvania has the 18th lowest license fees in the country, and 10th lowest registration fees, Rafferty said.

Rafferty’s plan adds a $100 fee to all moving traffic violations, like running a red light or getting a speeding ticket, on top of whatever fine the ticket already carries. This would raise an estimate $75 million next year, and $100 million five years out.

“There’s a message there,” Rafferty said, when asked about the fee.

The proposal also would increase a citation fee from $25 to a range of $100 to $300 for drivers who negotiate fines for certain violations instead of losing points off their license. That would raise an estimated $25.5 million annually.

Rafferty’s proposal also would raise all other PennDOT fees to adjust for inflation. Some of those fees, Rafferty said, haven’t been addressed since the 1970s or 1980s and do not take into account inflation or PennDOT’s actual costs. Those increases would earn the state more than $219 million within five years.

SECRETARY SCHOCH also attended the press conference, saying Sen. Rafferty’s proposal is the start of a discussion.

The proposal suggests about $1.9 billion in spending 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.

Though the plan includes fees not included in Corbett’s original proposal, Secretary of Transportation Barry Schoch said the Senate bill is a beginning point for debate and discussion.

“The governor and I have always said we’re open to dialogue about the scope and size and magnitude of the project,” he said. “Obviously there are balances between the costs to consumers and the benefits.”

Corbett, speaking with reporters on a conference call while in Chile on a trade mission, said he would not comment on the details of the plan, but added he is “very careful” about what would happen to the taxpayers of Pennsylvania.

“This is just the beginning, this is nowhere near the end,” Corbett said.

Rafferty said he hopes lawmakers can get a plan on Corbett’s desk by June. If so, PennDOT could add more construction projects to its fall schedule, Schoch said, and add more than $2 billion worth of construction projects starting next year.

Rafferty’s plan has won endorsement from all transportation chairmen in the General Assembly, including Sen. John Wozniak, D-Cambria; Rep. Dick Hess, R-Bedford, and Rep. Mike McGeehan, D-Philadelphia.

Wozniak said increasing taxes on gas and drivers fees is no easy political feat, and it will require bipartisan support. He also said consumers concerned about the cost increases should take a look at their discretionary income, and the costs of other amenities.

“What is important to you, a safe modern highway system, or a bottle of beer?” Wozniak asked.

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – A state House committee voted Tuesday to approve two bills that aim to chip away at a costly state mandate.

Prevailing wage laws are another front in the ongoing struggle between unions and governmental entities in Pennsylvania. The unions favor the law because it guarantees higher wages on publicly funded projects in the state, but groups representing local governments and school districts say the law burdens their budgets with unnecessary costs.

Rick Gray, mayor of Lancaster, said the prevailing wage rule has cost taxpayers in his city as much as $447,000 since 2009 on 21 different public works projects.

HAMMERING AWAY: Prevailing wage laws have hit local government budgets hard, and now Republican state lawmakers are looking to chip away at them.

“This is not about Democrats versus Republicans,” Gray said during an event at the state Capitol on Monday calling for prevailing wage changes. “It is about taxpayer-funded projects and the ability for local governments to keep up with infrastructure upgrades.”

But on Tuesday, it was about Democrats versus Republicans.  The two bills were voted out of committee with straight party-line votes of 15-10.

Pennsylvania’s prevailing wage law has long been a target of local governments and school districts, which have to bear higher labor costs because of 1961 mandate.  The prevailing wage varies from county-to-county and for different types of work, but it typically runs between 20 percent and 50 percent higher than the average wage in the county.

All publicly funded construction projects costing more than $25,000 must use the prevailing wage.

But the two bills approved in committee Tuesday would ease the law’s restrictions.

The first would raise the threshold for projects to qualify for prevailing wage to $75,000 from the current $25,000. That threshold has not been updated since the law was first passed.

The second bill would exempt road maintenance projects from the prevailing wage requirements, though construction of new roads or a rebuilding of an existing road would still qualify.

Advocates of the measures said both would help local governments and school boards make ends meet during difficult economic times.

“The burdensome prevailing wage law has made it particularly difficult for schools and municipal governments to maximize a competitive bidding process to get the best deal for taxpayers,” state Rep. Mario Scavello, R-Monroe, said in a statement.

Unions fiercely defend the prevailing wage mandate because it ensures higher pay for their members on public projects. They also argue that it ensures contractors use their best workers on public projects, and that it benefits the middle class in a broad way by keeping wages higher.

The added expenses caused by the law are overblown because labor costs typically account for less than 20 percent of the total cost on a project, they also argue.

State Rep. Bill Keller, D-Philadelphia, minority chairman of the committee, said the bills were “an assault” on the working class people who would be working on those projects.

Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, said the bill would help reduce local property tax burdens by reducing some costs for local governments.

He said there was no timetable for a vote on the bills by the full chamber.

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

HARRISBURG – A group of Republicans pitched a plan Monday to use money from privatizing Pennsylvania’s liquor stores to rebuild some of the state’s transportation infrastructure.

KNOWLES KNOWS: State Rep. Jerry Knowles, R-Schuylkill, and other Republicans said Monday they want to pump liquor privatization funds into transportation.

The state expects to generate about $800 million from the sale of the state liquor stores — as long as the privatization plan makes it through the legislative process. Meanwhile, lawmakers are also trying to grapple with the state’s 5,000 structurally deficient bridges and 7,000 miles of road that will cost an estimated $3.5 million annually rebuild.

State Rep. Jerry Knowles, R-Schuylkill, said it makes sense to link the issues.

“My legislation would take an antiquated state asset and invest its worth into roads and bridges,” Knowles said. “I think we all can agree that a safer infrastructure is what Pennsylvania needs.”

But it’s a significant break from the proposal offered by Gov. Tom Corbett in January.

Corbett had proposed using the estimated $800 million from selling off private liquor licenses to fund new programs in public schools, including investments in school safety and increasing math and science education. The money from privatizing the liquor stores would be delivered to districts over four years.

Some of Corbett’s fellow Republicans are unsettled by that idea, which they see as creating another funding cliff for public education similar to the one caused by the federal stimulus.

Instead of spending one-time revenue on an ongoing expense such as hiring school security officers, it would make more sense to spend that money on one-time costs such as rebuilding brides, state Rep. Will Tallman, R-Adams, said.

BOOZE FOR BRIDGES? Gov. Tom Corbett said through a spokesman on Monday that he still thinks liquor privatization cash should fund education.

“I build a bridge, it takes a year or two to get that done, the money is expended and it’s no longer there,” he said.

Corbett is in South America on a 10-day trade mission, but administration spokesman Eric Shirk said Monday the governor “still believes that education is the best place to spend the proceeds from getting Pennsylvania out of the liquor business.”

Many Democrats and the state’s teachers unions have opposed the governor’s plan – they argue that Corbett is holding additional education money hostage to his political agenda by tying funding increases to liquor privatization.

Monday, Senate Minority Leader Sen. Jay Costa, D-Allegheny, said the caucus won’t support privatization regardless of where the money goes. Instead, the caucus supports modernizing the state liquor stores, or changing laws to make them earn more money.

Proposals would create annual revenues of $75 million to 100 million a year.

“We need to modernize, and we need to take those revenues and drive them back into our budget,” Costa said.

Costa also criticized the “linkage” of using liquor store sales revenue for education or any other purposes. Those issues, he said, should stand on their own.

Separately, Corbett also has proposed increasing spending on transportation by $1.8 billion over the next five years by uncapping a portion of the state’s gasoline tax that is now only applied to a portion of the price of gas.

On Monday, Knowles said no one should think about raising taxes or fees on Pennsylvania drivers without first using the available revenue from the liquor store privatization – if it were to happen.

“It’s just a no-brainer to me,” he said.

To thicken the plot, Senate Transportation Committee chair John Rafferty, R-Montgomery, is set to unveil his own package of transportation revenue bills Tuesday. Rafferty is looking to spend more than what Corbett has proposed.

Generally speaking, House Republicans are not as keen on increasing transportation spending as their counterparts in the state Senate – though state Rep. Stan Saylor, R-York, made it clear that other transportation proposals could be considered along with the plan to use the liquor privatization funds.

But all of this is putting the cart ahead of the horse in some respects. There will be no additional revenue for either education or transportation if the plan to privatize the state liquor stores does not reach Corbett’s desk.

The House passed the bill last month, but it faces an uncertain future in the state Senate.

Melissa Daniels contributed to this report.

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

HARRISBURG — It’s going to take more than a decade, but the first small step to reducing Pennsylvania’s corporate income tax could be taken by the end of the spring.

A Corbett administration plan to overhaul business taxes in Pennsylvania will improve the state’s competitiveness and increase opportunities while cracking down on some corporations that try to cheat the system, Revenue Secretary Dan Meuser said Thursday during a hearing of the House Finance Committee. No specific legislation was considered at the hearing.

TAX MAN: Revenue Secretary Dan Meuser

“We in Pennsylvania, of course, want to be on the short list to attract the best companies in the world to Pennsylvania,” Meuser said. “It will be one big step in the right direction.”

In his Feb. 5 budget address, Gov. Tom Corbett pitched a litany of business tax changes he said he would like to see approved before the end of June.

Among them is a long-term plan to reduce Pennsylvania’s corporate income tax from 9.99 percent to 6.99 percent by 2025, the closure of several tax loopholes and rarely used deductions and the continued 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..

COLOR HER SKEPTICAL: State Rep. Phyllis Mundy, D-Luzerne, says Corbett’s tax overhaul doesn’t do enough to crack down on tax cheats

“I’m curious why there is no effort made to close that (Delaware) loophole,” said state Rep. Phyllis Mundy, D-Luzerne, minority chairwoman of the committee. “To me, that leaves the rest of Pennsylvania to pick up the tab.”

Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, a liberal think tank in Harrisburg, also was skeptical of the changes.

She suggested Pennsylvania join 23 other states in adopting “combined reporting” – laws that require businesses to file taxes based on all revenue they collect in all states, rather than breaking down their filing on a state-by-state basis.

Meuser said the state was adding more auditors and increasing scrutiny of businesses that deliberately shifted assets out of Pennsylvania to avoid paying taxes, but cautioned that cracking down too hard in a difficult economic climate “would cause more harm than good,” prompting companies to move elsewhere.

And Pennsylvania already is struggling to compete with other states when it comes to tax rates. The corporate tax rate of 9.99 percent is the second highest in the nation, Meuser said. Iowa is No. 1 with top rate of 12 percent.

According to data from The Tax Foundation, a nonpartisan Washington, D.C., think tank, Pennsylvania ranks 19th in the nation for overall business tax burden.

In addition to lowering the tax rate, the package includes a number of measures meant to streamline and reduce the number of pages in the tax code, Meuser said.

That’s a major selling point for small businesses in the state, said Kevin Shivers, state director of the Pennsylvania chapter of the National Federation of Independent Businesses.

It can cost a small business in Pennsylvania much as $74 per hour to handle tax paperwork, he said.

“The complexity is the number one problem for our members,” Shivers said. “This plan will help small businesses because it’s going to simplify the tax code.”

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