MONEY TRAIL: The SEIU gave $180,000 to Pennsylvanians for Accountability at the same time that the nonprofit started running political ads during the 2012 election.

By Eric Boehm | PA Independent

HARRISBURG — A nonprofit running ads attacking Gov. Tom Corbett received at least $180,000 last year from a powerful national labor union.

Pennsylvanians for Accountability, a Pittsburgh-based “social welfare nonprofit” is exploiting a loophole in state campaign finance laws to avoid filing reports on donations and expenditures. In addition to their attacks on Corbett, the group paid for mailers attacking Republican incumbents in four state House races during the final weeks of the 2012 campaign.

But a federal database of union spending gives one hint about where they got their funding.

The U.S. Department of Labor database shows that  Pennsylvanians for Accountability received $180,000 from the Service Employees International Union, or SEIU, in October 2012.

The contribution coincides with the distribution of campaign mailers paid for by Pennsylvanians for Accountability.

The labor department report indicates that the SEIU cash was used for “support for political advocacy” and describes the nonprofit recipient as a “political organization.”

But that does not fit with the group’s designation as filed with the state Department of State.

Pennsylvanians for Accountability is listed as a nonprofit 501(c)4, a designation that allows a group to keep donors secret and to engage in limited political activity, as long as those activities are not the sole or primary purpose the corporation exists.

The group’s spokeswoman, Lynsey Kryzwick, did not return multiple requests for information on Pennsylvanians for Accountability’s primary purpose.

ATTACK ADS: One of the mailers Pennsylvanians for Accountability dropped into four state House races with help from the SEIU.

Earlier she said the group consisted of “parents and students, homeowners and young people, the unemployed and the hard working” who were concerned about Corbett’s policies and the future of Pennsylvania.

The group’s website provides little public information and seems to serve only as a platform for the political ads the group has been running.

And there are other ties to politically powerful unions as well.  The three people listed as incorporators on the group’s registration with the Department of State have ties to the SEIU and the Pennsylvania State Education Association, or PSEA, a teachers’ union.

Barry Kauffman, executive director of Common Cause Pennsylvania, which advocates for accountable and transparent government, said shadowy political groups that are dodging campaign finance laws are a problem on both sides of the partisan divide.

“Every organization has an obligation to fully comply with the law and to be registered in line with their activities,” he said.

In the case of Pennsylvanians for Accountability, Republicans say the group looks like a political action committee and operates like a political action committee — so why isn’t it registered as a political action committee?

State Rep. Dave Reed, R-Indiana, chairman of the House Republican Campaign Committee, said the mailers the group paid for last year were “clearly trying to influence the outcome of an election.”

“I don’t have a problem with the content of the pieces,” Reed said. “In an election, anything is fair game, but I want them to disclose the information just like everyone else is required to.”

Matthew Keeler, spokesman for the Department of State, could not comment on whether the department is reviewing the group’s status.

“But if they are operating like a PAC, they would have to be registered as a PAC,” he said.

But Democrats say Republican outrage is a bit hypocritical, since Corbett and other Republicans also have benefited from campaign contributions through back-door channels like national nonprofits that do not disclose their funding sources.

According to a report from the Center for Public Integrity, Corbett benefited from $1.5 million in anonymous contributions during his 2010 gubernatorial election.  Most of that money seems to have funneled from the Republican Governors Association, a campaign group, to Corbett’s campaign through a series of political action committees in Pennsylvania.

But at least those PACs filed reports, making the money difficult — but not impossible — to track as it wound through various levels of giving and receiving.

In general, better reporting requirements and stiffer finance laws are needed, particularly in the wake of the Citizens United ruling from the U.S. Supreme Court that opened loopholes in federal election laws, Kauffman said.

And it’s up to the state to reform its own laws to prevent groups from dodging reporting requirements, he said.

“The people of this country have a right to know who is trying to influence the outcome of elections,” Kauffman said. “Disclosure is there for a reason. It’s so people know who is backing which candidates.”

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

HARRISBURG – On the Internet, no one really knows who could be on the other side of the screen. But pretending to be someone you’re not online could soon be a crime in Pennsylvania.

This week the House of Representatives passed House Bill 764, which would make it illegal to use the name or identity of someone else online while engaging in certain types of behavior. It would apply to web pages, social media, emails and text messages.

A DIFFERENT KIND OF PLAY: Manti Te’o, who was Notre Dame’s star football player last season, was at the center of a high-profile Internet impersonation case when the online girlfriend he thought had died turned out to be a made-up person.

But it’s not like making a parody account would suddenly be illegal. The online impersonation charge only applies if the impersonator was engaging in harassment, stalking, victim or witness retaliation or terroristic threats.

The crime would be a second-degree misdemeanor, and carry a maximum sentence of two years in prison and a $5,000.

The bill also addresses online impersonation from a civil standpoint, which could apply to cases where no other crimes are committed. Should a court find someone suffered loss of property, reputation or money because of online impersonation, it could award up to $500 in damages along with reasonable attorneys fees and whatever other fees are deemed appropriate.

The bill, which passed unanimously, is sponsored by Rep. Kathy Watson, R-Bucks, who sponsored a similar measure last session.

She began drafting the law after two students in her district pretended to be a teacher via email and harassed another student. But no crime could be charged under the state’s identity theft law because the teacher hadn’t suffered any monetary loss.

In a statement, Watson said online impersonation can cause long-lasting harm. And she emphasized that crime isn’t meant to curtail satire or free speech, but to target the type of “cyber bullying” that can destroy someone’s reputation.

“When this legislation first was being discussed last year, stories of online impersonation had not yet become national news,” Watson’s statement said. “But after seeing the sensationalism around college football standout Manti Te’o and his fake girlfriend, more people are realizing that impersonating someone online can have life-altering consequences that can damage one’s reputation and even his or her career. It’s time that this type of hateful behavior be put to a stop.”

The bill is supported by the Pennsylvania District Attorneys Association, the Pennsylvania State Police, the Pennsylvania Chiefs of Police Association, and the Pennsylvania State Troopers Association.

PENNSYLVANIA STATE CAPITOL

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

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

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

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

House will move budget bill in early June

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

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

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

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

The deadline to pass a new budget is June 30.

Liquor debate will spill into June

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

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

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

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

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

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

Democrats may push Medicaid expansion vote

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

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

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

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

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

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

Political nonprofit skirts campaign finance rules in the name of accountability

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

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

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

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

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

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

Common Core draws bipartisan critics

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

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

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

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

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

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

PA senators outraged by IRS target of conservative groups

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG — A new political nonprofit claims to be holding Gov. Tom Corbett accountable on behalf of Pennsylvanians.

But the group comes up short on the accountability scale, itself.

CAMPAIGN AD: One of several mailers distributed by Pennsylvanians for Accountability during the final weeks of last year’s election cycle.

The Pittsburgh-based nonprofit is called Pennsylvanians for Accountability, and in recent weeks it has been airing television ads attacking Corbett’s policies for supposedly short-changing education in order to fund corporate tax breaks.

An article published Wednesday by Public Source, an investigative reporting organization based in Pittsburgh, calls attention to the group.

The ads blast Corbett for playing a “shell game” that cuts money from education and forcing districts to lay-off teachers while “bankrolling big tax cuts for his corporate backers.”

The same group paid for mailers in four state House races last fall — ads that started turning up in mailboxes only a week after the group officially incorporated with the state Department of State last October.

The ads that ran last year were targeted at state Reps. Warren Kampf, R-Chester; Rick Saccone, R-Washington; Justin Simmons, R-Lehigh; and Dan Truitt, R-Chester.

All four won re-election in four of the closest races in the state.

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

Pennsylvanians for Accountability is one of several “dark money groups who attempt to sway public business, yet whose identity is unknown,” wrote Bill Heltzel, who authored the Public Source article.

ADS ON TV TOO: The group is now running ads against Gov. Tom Corbett.

“Groups that call for the election or defeat of a specific candidate must register as a political committee, and political committees must report donations and expenses. But by steering clear of words like “elect,” “defeat,” or “vote against,” social welfare groups are considered issue advocacy groups and do not have to register as political committees in Pennsylvania,” Heltzel writes in the report.

Nonprofits are not required to disclose their officers and directors in the state, though if the group gets an IRS certification, it will have to disclose some information.

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

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

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

The group uses the same address — office #5 at 801 Negley Ave in Pittsburgh — as the Pennsylvania division of America Votes, another nonprofit with the stated purpose of maintaining a “permanent advocacy and campaign infrastructure” to support progressive policies.

CAMPAIGN MAILER: The group ran ads in four state House races. This one targeted state Rep. Rick Saccone, R-Washington.

The building at 801 Negley Ave. is owned by a community group known as The Union Project, but the group’s executive director told Heltzel that he was unfamiliar with Pennsylvanians for Accountability.

And Heltzel points out that the group has a different address listed on its FCC records, which show spending on television and radio advertisements.

According to those records, the group has spent at least $250,000 in Pittsburgh, Harrisburg, Lancaster and York, according to the Public Source report.

Lynsey Kryzwick, who is listed as a spokeswoman for the group and works for Berlin Rosen, a public relations firm, told PA Independent that Pennsylvanians for Accountability consists of “parents and students, homeowners and young people, the unemployed and the hard working,” but offered no other details about the people who funded the ads last year, or the ones attacking Corbett.

In an interview Wednesday, state Rep. Dave Reed, R-Indiana, who heads the House Republican Campaign Committee, said he first became aware of the group last year when it sent mailers to voters in four state House races.

Reed said he expected the group would file campaign expenditures after the election, as other political action committees must do.  But those financial reports did not show up.

“We just want to know what the rules are — but we believe that everyone should have to disclose the information about who is giving money and how it is being spent,” Reed said.

Of course, even if there is nothing in state or federal law requiring the group to disclose its funders and its campaign expenses, there is certainly nothing preventing them from doing so.

This story was updated at 2:34 p.m. on 5/16/13 to include more information about the state lawmakers targeted by the Pennsylvanians for Accountability ads.

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

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 —

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

Their sentiments were released on Monday, several days after the IRS publicly stated it had targeted treatment of groups that had “tea party” or “patriot” in their names in applications for tax-exempt status.

TOOMEY: Pennsylvania’s Sen. Pat Toomey called for a congressional investigation into the IRS target scandal in a Monday statement.

Sen. Pat Toomey, R-Pa., said the issue should concern members of any political party, and that he’d like to see the matter as part of a congressional investigation.

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

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

“Pennsylvanians and Americans across the country deserve to know that the IRS and all government agencies do their jobs without prejudice or political agenda,” continued Casey’s statement.

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

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

“Criteria for selecting applications for the team of specialists should focus on the activities of the organizations and whether they fulfill the requirements of the law,” reads the IG report. “Using the names or policy positions of organizations is not an appropriate basis for identifying applications for review by the team of specialists.”

A story in the Harrisburg Patriot-News by Robert Vickers this week reported three Pennsylvania-based tea party groups who cite IRS intimidation as reasons they stopped attempts to seek tax-exempt status or abandoned plans to start up operations. From the article:

But the people in the Pennsylvania groups that claim they were targeted were not confident the president would ensure a proper investigation is conducted.

“I have as much confidence in the president of the United States [initiating a thorough investigation] as I do in the IRS treating people who are in political opposition to the president fairly,” said Jenifer Stefano, a Philadelphia area Tea Party activist.

Stefano said she tried to start her own group called The Loyal Opposition between 2010-2011. But when she applied for tax exempt status, the IRS responded with a litany of questions that put her off.

“I was pregnant and on a single income and they were asking me questions like, ‘Are you on Facebook,” she said incredulously. “They wanted my personal Facebook page.”

“A lawyer told me, ‘They’re going to come after you and if you make one mistake they could ruin your life’,” Stefano added. “I like to think of myself as very tough, but I’m ashamed to say I was intimidated and frightened, and I shut it down.”

HARRISBURG – House Appropriations Committee chairman Bill Adolph, R-Delaware, said Wednesday that the House will not add more spending to Gov. Tom Corbett’s $28.4 billion spending plan, and will not count potential pension savings into budget calculus.

In February, Corbett announced a $28.4 billion spending plan that was pegged on higher revenues that have not materialized.  In light of the state’s revenue situation, Adolph said there is no chance to increase spending above that point.

“I think we’re all agreed that is probably the ceiling,” Adolph said. “We’re not spending more than we’re taking in.”

On May 1, the state Independent Fiscal Office projected the state would end the year about $220 million short of what is needed to balance the budget.

A budget bill will not move out of committee until June 3 and will not be considered by the full state House until June 10, Adolph said.

The House had initially expected to have a budget bill ready this week, but Adolph said the complexity of the negotiations will require more time.  The state House is not in session for the next two weeks due to the Memorial Day holiday.

Corbett’s plan also used $175 million in savings from a proposed overhaul to the state public pension systems, but there has been little legislative action on that front.

Adolph said the House budget would not take into account any savings from legislation that has not been passed – a not-so-subtle nod to the pension bill.

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

Last week, Corbett tried to spark some action on pensions. Without changes to achieve those savings, cuts will be necessary in other parts of the budget, he said, because pension costs are set to climb by about $500 million when the new fiscal year begins on July 1.

Democrats have not been involved in the budget discussions so far.  They have publicly called for several changes to Corbett’s spending plan, including an end to several tax credit programs and higher levels on spending for public education and economic development programs designed to create jobs.

Boehm can be reached 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.

HARRISBURG – In 2012, three suspects fired guns at Philadelphia police officers.

But during the same year, Philly cops shot at 52 people.  And 15 of those suspects died after their violent encounters with the city’s police force.

Those are the stunning statistics at the heart of a provocative story published Tuesday in the Philadelphia Inquirer, which takes a look at the record number of people shot by police officers last year, even as violent crime in the city continued its downward trend.

Here’s more from Sam Wood, who wrote the must-read article:

And the city’s own police watchdog says the department hasn’t provided a reason for the increase. The Police Advisory Commission has been repeatedly blocked in its efforts to review shootings and, according to the executive director of the Police Advisory Commission, Internal Affairs has refused to supply requested information about any of the shootings. 

Police Internal Affairs investigators and the district attorney’s office have not raised any known concerns about the shootings. But the number dwarfs that of the previous year. In 2011, 35 were shot. In 2012, the shootings increased almost 50 percent. 

Critics say the data, collected and analyzed by Philly.com, raise questions about the use of deadly force in Philadelphia.

“It certainly raises a red flag,” said David Rudovsky, the civil rights attorney and University of Pennsylvania law professor. “The numbers almost speak for themselves.”

The only defense that Police Commissioner Charles Ramsey can offer is that police officers are frequently the victims of assault.  According to documents quoted by the Inquirer, there were 896 assaults on police officers in the city last year, but only three of those assaults involved officers being fired at.

Previously, we’ve written about the Philadelphia Police Department’s complete disregard for laws that allow the public to film cops on duty.

Boehm is a civil liberties reporter for Watchdog.org and bureau chief for PA Independent. He can be reached at Eric@PAIndependent.com

HARRISBURG – An audit of the state liquor control board reveals that the state agency responsible for selling and regulating the consumption of wine and liquor overstated its assets by more than $1 million during the past fiscal year.

The audit, quietly released in March and uncovered by Keri Andren of the Pittsburgh Tribune-Review for a story published over the weekend, was conducted by the state auditor general and looked at the fiscal year that ended on June 30, 2012. It shows that the PLCB does not regularly take a physical inventory, leading to the inaccurate information on financial statements.

Andren explains:

The audit found that in a random sample of 10 items from the LCB’s list of assets, six items valued at $1.047 million were no longer being used or were described vaguely and could not be identified by LCB officials or a store manager.

The list of assets includes items such as store shelving and signs, cash registers and warehouse machinery. It does not include wine and spirits inventory.

Stacy Kriedeman, spokeswoman for the LCB, denies its assets were overstated. She said the audit’s sample looked at fully depreciated items, or older items that were beyond their useful life.

With the state legislature knee-deep in a debate over the future of the state-owned and operated liquor stores, the actual value of the physical assets owned by the PLCB is a significant point.

Pro-privatization Republicans like Gov. Tom Corbett and House Majority Leader Mike Turzai want to raise between $800 million and $1.2 billion from selling off the liquor stores, with most of the revenue coming from the auction of private liquor licenses.

But it’s understandable how the PLCB would have difficulty finding time to conduct inventory of their internal assets, what with all the time they spend developing ideas like million-dollar wine tasting rooms for government employees, ill-fated grocery store wine kiosks and advertisements that warn about the dangers of drinking alcohol (while simultaneously spending millions on ads convincing you to buy more booze.)

Boehm can be reached at Eric@PAIndependent.com.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contact Melissa Daniels at melissa@paindependent.com

HARRISBURG – In the aftermath of a legal battle over redrawing Pennsylvania’s state House and state Senate district maps, one key player believes the commission charged with redistricting the state every 10 years can do better.

NOW OFFICIAL: The second set of district maps (Senate map seen here) were approved by the Supreme Court this week. But should there be changes when the process begins again in 2021?

Amanda Holt is the Allentown native whose homemade district maps proved to the state Supreme Court in January 2012 that the Legislative Reapportionment Commission violated the state constitution by unnecessarily splitting too many counties and municipalities. Friday, Holt said she thought too much of the process played out behind-closed-doors and without clear rules for what the maps should look like.

Holt said the court set a clearer path for future commissions but did not set definitive rules about how and where counties can be split for political reasons.

“There still seems to be a lack of clarity about what ‘absolute necessity’ means,” said Holt, referring to the state constitution’s requirement that political subdivisions be split only when “absolutely necessary.”

New state House and state Senate districts will be in place for the 2014 election cycle after the state Supreme Court unanimously approved a pair of legislatively drawn district maps this week. But the court’s historic move in January 2012 to reject the first set of maps was seized upon by would-be reformers as a reason to change the legislative redistricting process, which would require a constitutional amendment.

Friday, Holt stopped short of calling for wholesale changes, but she said future redistricting commissions should make changes to how they operate to be more transparent and accountable.

The process will not play out again until 2021, after the next U.S. Census.

‘I THINK IT WORKS’: Senate Majority Leader Dominic Pileggi, R-Chester, said the process is meant to be political.

But now that the redistricting saga has come to an end, those calls for reform will probably be ignored.

Wednesday, Senate Majority Leader Dominic Pileggi, R-Chester, said he thought the process worked well this time – despite the setback from the court.

“I think it works, and I think it provides for both parties in both chambers of the General Assembly to be actively involved,” he said.

Even while it was signing off on the new round of district maps, the Supreme Court took the time to blast the commission for conducting much of its work in private. Chief Justice Ron Castille, in the majority opinion, suggested that future reapportionment commissions make an effort to conduct more of their work in open meetings.

House Majority Leader Mike Turzai, R-Allegheny, who also served on the commission, said the body adhered to state laws regarding open meetings and conducted “an awful lot in public.”

He also found some humor in the Supreme Court — a notoriously closed-door institution in Pennsylvania —making such a suggestion.

“I’m sure a lot of people could say the same thing about the court,” he said. “It’s a little like the pot calling the kettle black.”

But Holt said the commission should listen to the court.

During one meeting of the commission in October 2011, members of the commission left the room two-by-two for private meetings about the maps while three members remained behind, all to avoid violating the state’s laws on open meetings.

But while the commission respected the letter of the law, they seemed to be violating its spirit.

“It’s not so much about the public being able to make comments, it’s about the public being able to hear the comments from the people making the decisions,” Holt said. “We have an opportunity to speak, but we don’t get to hear anything.”

The other members of the commission were Senate Minority Leader Jay Costa, D-Allegheny; House Minority Leader Frank Dermody, D-Allegheny; and retired Superior Court Justice Stephen McEwen, who was appointed by the Supreme Court to chair the commission.

Some – such as government reform group Common Cause Pennsylvania – have recommended scrapping the current state redistricting process in favor of a so-called “citizens commission” charged with drawing maps and sending them to the Legislature for approval.

Chris Borick, a professor of political science at Muhlenberg College, said a better redistricting system would produce better races, better candidates and, ultimately, better government.

He suggested a nonpartisan process that would remove the state lawmakers from actively drawing their own districts, though he acknowledged a lack of a flawless means of political map-making.

“You can try to diminish it in some ways, but there is always going to be political parts to it,” Borick said Friday.

Aside from the difficulty of changing the constitution, such arrangements in other states have not always proven to be as free from political influence as they might at first appear.

“There’s no perfect process; they all have strengths and weakness,” Pileggi said. “Considering all the alternatives, I think this is a pretty good process.”

In one sense, the 16-month back-and-forth between the Legislature and the Supreme Court over the new maps may be seen as proof the current system does work.

In writing the majority opinion on both occasions, Chief Justice Ron Castille seemed to acknowledge as much.

In the first decision in January 2012, Castille wrote about the court’s warning to the commission in 2001 that future maps could be imperiled if the lawmakers’ did not rein in some aspect of their politically motivated map-making.

In the second decision, handed down this week, Castille recognized the limits of the court’s role in telling the Legislature what to do, and gave a nod to the idea that politics are inherently built into the process.

But not everyone is convinced that the court stayed within its own bounds.

State Rep. Daryl Metcalfe, R-Butler, said the Supreme Court overstepped its boundaries by rejecting the first reapportionment map and ordering the Legislature to take another crack at it.

As chairman of the House State Government Committee, where any changes to the redistricting process would likely have to be vetted, Metcalfe’s opinion on the matter is an important one. But he does not seem too interested in changing how the process works.

If any reforms are to be had, Metcalfe said, they should aim to rein in the court’s role in the redistricting process.

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

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

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

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

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

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

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

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

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

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

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SEC announces charges against city of Harrisburg

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

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

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

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

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

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

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

Senate Transportation Committee votes out $2.5B plan

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

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

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

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

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

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

New district maps finally get Supreme Court “OK”

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

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

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

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

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

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

Corporate tax overhaul heads to state Senate

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

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

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

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

House will kick-off budget scramble next week

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

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

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

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

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

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

The state budget deadline is June 30.

Follow @PAIndependent on Twitter for more.

HARRISBURG – Piano-teacher-turned-redistricting-activist Amanda Holt said Friday she will not take up further legal action against the state House and state Senate maps approved by the Pennsylvania Supreme Court in a unanimous decision this week.

Holt, whose challenge to a first round of new redistricting maps caused the high court to throw them out in January 2012, said she was grateful for the court’s “lengthy and thoughtful” decisions on the redistricting issue.  She said she was proud to have played a role in reducing the number of municipalities and counties split by districts for political purposes.

By her tally, some 9 million people were affected by the splits when the first legislative maps were approved by the state’s Legislative Reapportionment Commission.

After the Supreme Court made the commission redraw the maps, about 7.2 million were affected.

“It’s unfortunate that those people will have to suffer with a diminished voice for the next 10 years,” she said. “But it’s baby steps towards constitutionality.”

The state constitution says that existing political boundaries should be divided by legislative districts only when “absolutely necessary.”  Holt’s homemade maps had fewer splits, which she argued should prove that districts could be drawn more fairly than in the legislative maps produced by the commission.

After Wednesday’s decision, Holt said she was considering additional legal action, but there was no clear path forward for appealing the decision – and federal courts have historically been unwilling to wade into state-level redistricting issues.

Boehm can be reached at Eric@PAIndependent.com

HARRISBURG – In April 2010, there was a party in Newtown, Bucks County — a political fundraiser, like dozens or perhaps hundreds of similar events held across the state that election cycle.

But this was different, an illustration of how complicated Pennsylvania politics can be.

It was held at the Temperance House, an ironic name, perhaps, since the restaurant is owned by Pasquale “Pat” Deon, a businessman who owns a chain of beer distributors in the Philadelphia suburbs. Deon also chairs the board that governs SEPTA, serves on the Pennsylvania Turnpike Commission and is a major player in Republican politics.

The event raised money – tens of thousands of dollars, according to campaign finance reports – for a political action committee, the Lower Bucks Leadership Fund.

This particular night, the biggest check written to the fund came from the campaign committee attached to the IBEW Local 98, a politically powerful Philadelphia-area union representing electrical workers. The head of the union, John “Johnny Doc” Dougherty, is a major player in Democratic politics in the city and, by extension, the state.

Dougherty’s union that night gave $25,000 to the Lower Bucks Leadership Fund, a political action committee.

Two days later, the fund wrote a $25,000 check to state Sen. Charles McIlhinney, R-Bucks.

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

Now, as was the case during that fundraiser in 2010, McIlhinney finds himself at the center of an issue combining the big money of politically prominent Pennsylvania businessmen and unions across party lines — the privatization of the state liquor stores.

Ideology doesn’t rule the day

Pennsylvania is a politically moderate state, a fact frustrating to those on the right as well as the left.

“Not everything breaks down along ideological lines. There are always economic interests at play,” said Terry Madonna, a pollster and professor of political science at Franklin and Marshall College.

It’s not unusual for members of the General Assembly to get cash from prominent donors on both sides, and the general perception in the state Capitol is big unions and big business interests have undue influence over policy matters.

That situation has played out in Bucks County.

During the 2010 cycle, the Lower Bucks Leadership Fund got contributions from businesses leaders as well as unions. In addition to McIlhinney, the PAC funded — to the tune of thousands of dollars — the campaigns of state Sen. Tommy Tomlinson, R-Bucks, and Lt. Gov. Jim Cawley, another Bucks County Republican and former county commissioner.

Three years later, as the new chairman of the Senate’s Law and Justice Committee, McIlhinney is arguably the most important vote, at least now, in the ongoing battle to privatize Pennsylvania’s state-owned and operated liquor store system.

Unions, led by the UFCW Local 1776, which represents about 3,000 liquor store employees, oppose privatization. Beer distributors, such as Deon, are not exactly thrilled at the prospect of liberalizing a market that offers a carved and protected niche.

But plenty of McIlhinney’s fellow Republicans – such as Gov. Tom Corbett and the 105 members of the state House who voted for the bill on March 21 – favor the privatization effort.

As do many business groups and other statewide Republican and conservative activist groups, which play an increasingly important role in electoral politics.

What’s a guy like McIlhinney to do?

In an interview Wednesday, McIlhinney said he wants to move forward with a plan to allow grocery stores to sell wine if they have a license to sell beer, which some already do. He wants to allow beer distributors to sell six-packs, in addition to cases and kegs.

Still, he sees little reason to immediately close state liquor stores — it would  “disrupt hundreds of peoples’ lives,” he says – when Pennsylvania’s beer and liquor market could first be liberalized in other ways. The state could phase out the liquor stores, he said, but he did not provide a time frame.

“I can’t say that I’m just agreeable to selling alcohol like any other product. It’s a drug and it should be regulated,” McIlhinney said. “There is a social impact; that’s undeniable. It’s not going to be treated like bread.”

But last week, the first hearing on the issue Tuesday morning was stacked with opponents of privatization, without so much as a single person who testified in favor of the plan.

Afterward, privatization supporters raised plenty of questions about McIlhinney’s intentions – Was he trying to kill momentum for the issue? He said no, defended the lineup of testifiers Tuesday and promised that supporters of privatization would get their say later.

Another hearing is scheduled for May , and a third is planned for early June.

McIlhinney’s self-imposed deadline for placing a proposal on the table comes two weeks after the third hearing.

Union contributions questioned

UNION CASH: The IBEW gave $25,000 to the Lower Bucks Leadership Fund in 2010. (Click to enlarge)

Some are openly questioning whether McIlhinney’s campaign contributions from big unions might change the course of the privatization bill.

The IBEW Local 98 is an electoral heavy-hitter in Pennsylvania. During that same 2010 cycle, the union spent more than $4.5 million on political contributions, according to the Center for Responsive Politics, which aggregates political spending.

That $25,000 McIlhinney got from the IBEW was one of the four largest sources of contributions to his 2010 re-election campaign, according to campaign finance records. The top three came from Republican sources.

Rob Ciervo, a Republican township supervisor from Bucks County who is on the record as considering a 2014 primary challenge to McIlhinney, has openly criticized the state senator for failing to take swift action on the privatization plan.

Ciervo said he was “deeply troubled” by the money McIlhinney apparently received from the powerful IBEW union.

IN MCILHINNEY’S WALLET: Two days later, the PAC wrote a check to McIlhinney. (Click to enlarge)

“Once again we see that Mr. McIlhinney is a member of the union party, seeking to block much-needed reforms in Harrisburg and doing the bidding of special interest groups from Philadelphia instead of looking out for the taxpayers of Bucks County,” Ciervo said.

McIlhinney said any attempt to connect those three year-old contributions to his work on liquor privatization were “ridiculous.”

“It certainly seems like Mr. Ciervo is wearing his tin-foil hat,” he said Wednesday. “I didn’t ask the IBEW to give me that money.”

Facing heat from all sides

McIlhinney is also facing pressure from a conservative campaign group – the Citizens Alliance of Pennsylvania – which is running television ads encouraging constituents to call the senator and voice support for liquor privatization.

Meanwhile, the UFCW is running a million-dollar statewide television and radio campaign trying to kill the bill, though those ads are aimed at Corbett and more broadly attack the issue.

Deon probably plays a big role, too.

Though Deon has been publicly silent about the liquor privatization plan, there is ample evidence he is pulling strings behind the scenes. Beer distributors disliked the initial plan put forth by Corbett and withheld their support until the House changed the rules, keeping in place rules giving beer distributors a protected market in Pennsylvania.

Deon’s influence will likely be felt in the state Senate, too, as Deon and McIlhinney are known to have a close relationship. He did not return calls for comment.

McIlhinney also took issue with the perception he is “Deon’s guy” in the process.

If anything, the bill passed by the state House – which gave beer distributors a deeply discounted license to sell wine and liquor while preventing grocery stores from selling beer – was more of a giveaway to the beer distributors than anything he has proposed, the senator said.

When the liquor bill passed the state House in March, defeated Democratic leaders proclaimed that night to be the end of the “moderate Republican,” with electoral forces threatening defeat to any member of the party who did not move to the right on ideological issues such as the state’s role as sole distributor and retailer of liquor and wine.

The fate of the liquor bill in the state Senate will test that thesis – or determine that moderates indeed still rule the day in Pennsylvania.

Madonna said polls show most Pennsylvanians would prefer a privatized liquor system, but the issue is not one that carries a lot of weight for most voters. It would be surprising to see any member of the General Assembly lose his seat over the outcome of the liquor debate, he predicted.

McIlhinney gives the impression of a man who is taking it all in stride as the state’s powerful political forces swirl around him.

“You just handle it like any other issue,” he said.

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

HARRISBURG – Yesterday, the state Supreme Court unanimously approved new state House and Senate districts that will be in place for the 2014 election cycle.

The new maps are drawn to reflect population changes in the state since the last redistricting in 2001, and by necessity some districts have to be literally picked up from one place and plopped down in another – moving out of areas where there is low population growth and into areas where people are moving.

When the new maps were first drawn last year – before the 2012 elections – the five state House districts headed for the moving van were all occupied by retiring lawmakers.  The idea was to keep any incumbents from having their districts yanked out from under them like rug.

But since the new districts were not approved in time for the 2012 elections, those five empty seats had to be filled.  Now, those five representatives will find themselves in new districts for 2014.

Here’s the seats that are moving:

The 5th District: Occupied by state Rep. Greg Lucas, R-Crawford, this district is heading for a new home in western Berks County, where it is likely to be retained by a Republican.  Lucas’ hometown of Edinboro will now reside in the 3rd district, setting up a potential showdown with state Rep. Ryan Bizzarro, D-Erie.

The 22nd District: Occupied by state Rep. Erin Molchany, D-Allegheny, this district will move clear across the state to Allentown in Lehigh County, where is it likely to remain in Democratic hands.  Molchany ends up in the 36th district with state Rep. Harry Readshaw, D-Allegheny, setting up a potential primary.

The 74th District: Occupied by state Rep. Tommy Sankey, R-Clearfield, this district will shift to a new home in western Chester County, where it is a good chance for a Democratic pick-up in 2014.  The new district will include the Democratic stronghold of Coatesville.  Meanwhile, Sankey will have a new district all to himself, thanks to some creative map-making that left two nearby Democrats in the same district.

The 115th District: Occupied by state Rep. Frank Farina, D-Lackawanna, this district will hop just across the border to neighboring Monroe County, where it is likely – though not a sure bet – to remain in Democratic hands. Unless he decides to move down the road to keep the seat, Farina will be absorbed by the 112th district, where he faces a potential primary battle with state Rep. Kevin Haggerty, D-Lackawanna.

The 169th District: Occupied by state Rep. Ed Neilson, D-Philadelphia, this one is a guaranteed Republican pick-up in 2014 after it moves to rural York County. Neilson will have to win a primary against state Rep. John Sabatina, D-Philadelphia, in the 174th district to keep his spot in the state House.

There is one state Senate seat also shifting across the state:

The 40th District: Now occupied by state Sen. Randy Vulakovich, R-Allegheny, the district will move from Pittsburgh to the Poconos, where Monroe County has been clamoring for better representation in the state Senate for more than decade. The new district seems to favor Republicans, but could go either way.

Vulokovich is now drawn into the same district with state Sen. Jim Ferlo, D-Allegheny, but the district seems to favor the Republican, at least at first blush.

In a statement Wednesday, Ferlo said it was too early to write his political obituary.

See all the new districts (and the old ones too) here.

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

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.