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CapitalWatch VOL. 4 NO. 9
inside State appeals court rejects Sen. Orie’s double jeopardy argument PAGE 3
SEPTEMBER 2011
Ex-Rep Perzel pleads guilty to eight criminal charges
Former Pennsylvania House Speaker John Perzel has pleaded guilty to eight criminal charges stemming from a public corruption investigation. Prosecutors have described him as being at the center of a scheme to spend millions of taxpayer dollars on computer technology for the State Government benefit of GOP political campanel hearing on immigration wraps up paigns. Perzel entered the plea to PAGE 6 two counts of conflict of interest, two counts of theft and Poll says majority of four counts of conspiracy. After Pennsylvanians favor being sentenced, Perzel released the following statement in a natural gas industry release: PAGE 7 “I said from the start of this case that I would fight the Editorial: charges against me, and I have Don’t just sit done so for nearly every day of there talking. Do the last two years. It is a fight that has taken an enormous toll something. on my family and the friends PAGE 14 who have been so steadfast in their support. “I have decided today that Check us out online at my fight has come to an end. www.capital-watch.com The truth is that as the legislative leader of my caucus, Have a news tip or story I oversaw the spending of suggestion? New hires? Births, engagements, sightings? Got a better millions and millions of dollars in taxpayer funds, and I idea? Know of an interesting state bear the responsibility for the or local government program that improprieties that occurred addresses a real need or solves in the spending of those dola problem in an innovative — lars. It was up to me to see and widely replicable — way? that taxpayer funds were spent Know of a study, report, guidebook, website or other resource only for the betterment of the that would be helpful to your peers people of Pennsylvania, and not for my political benefit in state or local government? of that of my party. To the Tell us about it. people of Pennsylvania; to the E-mail the information to voters who put their trust in goodwinpin@comcast.net. me for the 32 years that I Anonymity is assured. had the privilege of serving the 172nd District; and to my
Rep. Sturla apologizes for using the word ‘womenfolk’ PAGE 4
Former House Speaker John Perzel pleads guilty to the criminal charges stemming from a public corruption investigation.
family and friends, I want to express my profound regret for my actions. You had a right to expect better from me, and I am sorry that I let you down.” Perzel’s nephew and codefendant Eric S. Ruth, a former House Republican technology employee, also pleaded guilty to conspiracy and conflict of
interest. Perzel and Ruth were among 10 people with links to the House GOP who were charged in November 2009 under a 188page grand jury presentment. As part of his plea agreement, Perzel is expected to testify against the remaining defendants in the case, dubbed “Com-
putergate” by the court. Four others are scheduled to be tried this month, including Brian Preski, Perzel’s former chief of staff, and former State Rep. Brett Feese, a Republican from Lycoming County. A former aide to Perzel faces a separate trial this year. In return, prosecutors dropped dozens of counts against Perzel and Ruth. Perzel is likely to lose his state pension as a result. The future of Ruth’s retirement is unknown. Perzel took a lump-sum payout of just under $204,000 when he was unseated in last fall’s election. That amount represented Perzel’s contributions to the state retirement system, plus interest. He has also received annual pension checks worth $85,653. With his plea, he forfeits future pension payments, prosecutors said, but he will not have to return what he has collected. Perzel’s guilty pleas amounted to four sets of two charges, each consisting of theft or conflict of interest as well as an accompanying conspiracy count that will run concurrently at sentencing. He faces up to 24 years in prison. Ruth’s charges carry up to five years apiece, but will not necessarily run concurrently. Perzel was first elected to the state House in 1979 and served as majority leader and then as speaker from 2003-07.He was defeated in a re-election bid for his Philadelphia House seat in November by Democratic State Rep. Kevin Boyle. CW
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To PPL Electric Utilities Customers:
You’re the Best At PPL Electric Utilities, we know our customers are the best anywhere. We understand the hardships that can be caused by extended periods without electricity. Yet despite those hardships brought on by Hurricane Irene, many of you supported us with your understanding, your words of encouragement and even a few cups of coffee. It’s at times like this that we are proudest of the communities in which we live and work. Over the challenges of the past week, neighbors looked out for neighbors. And, our repair crews also got a helping hand from utilities in other states, including our sister utilities in Kentucky. By the time our work was done, we had replaced more than 1,000 poles, miles of downed power lines and hundreds of other pieces of equipment. In terms of the number of repairs needed, it was the second worst storm we’ve ever experienced at PPL. The work was tough, it was exhausting and at times frustrating. Through it all, though, we were buoyed by your patience and kindness. Thank you! Once again, we were reminded why serving you is not just our job, it’s our pleasure.
The employees of PPL Electric Utilities
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SEPTEMBER 2011 CAPITAL WATCH
CapitalWatch www.capital-watch.com PUBLISHER/AD DIRECTOR Jim Laverty (717) 233-0109, ext. 122 EDITORIAL Editor-in-chief Jacqueline G. Goodwin, Ed.D. goodwinpin@comcast.net (717) 418-3366 Contributing Writers Peter L. DeCoursey Bill Hawthorne Sari Heidenreich Kevin Zwick News Service Capitolwire Graphic Design Lisette Magaro Production Shawn Skvarna Capital Watch is published every month. Reproduction of this publication in whole or part is prohibited except with the written permission of the publisher. Capital Watch is non ideological and nonpartisan.
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State appeals court rejects Sen. Orie’s double jeopardy argument Sen. Jane Orie, R-Allegheny, has struck out again in her effort to avoid a second trial on political corruption charges. A three-judge Superior Court panel rejected the Orie defense team’s argument that a second trial would constitute double jeopardy – being tried twice on the same charges. The panel ruled that the first trial was rightly declared a mistrial by Allegheny County Common Pleas Judge Jeffrey A. Manning and that Orie’s defense was responsible for the mistrial, thereby eliminating the double jeopardy issue. The panel’s decision didn’t go so far as to blame Orie directly for forged documents submitted as evidence, but stated those documents were “critical to her defense.” Orie was also ordered to stand trial for not only the original political corruption charges, but also new counts related to the submission of the forged documents. The Pittsburgh Tribune-Review writes the new charges filed against Orie by the Allegheny County District Attor-
Sen. Jane Orie has been ordered to stand trial for not only the original political corruption charges, but also new counts related to the submission of forged documents.
ney’s office include five felony counts of perjury and six counts of tampering with evidence, two counts of forgery and several other state election code violations, all misdemeanors, according to court papers. Prosecutors accuse Orie, who was processed and released at the Allegheny
County Jail on Aug. 29, of submitting forged documents in her political corruption trial in order to prove her innocence. Orie will also have to defend herself again against charges that she used taxpayer-funded resources for political campaigning purposes, the subject of her first trial. William Costopoulos, the attorney for state Sen. Jane Orie claims there’s nothing new to the additional criminal charges filed against her by Allegheny County prosecutors, contending the move is a “vindictive maneuver” meant to influence her pending Superior Court appeal aimed at preventing a retrial on public corruption charges. William Costopoulos emailed his response to The Associated Press and other news outlets on Aug. 30, a day after prosecutors filed the new counts. “I have read the new charges and every relevant factual allegation was before her last jury,” Costopoulos said. “This case has already been tried and the double jeopardy claim is before the Superior Court. The timing of these new charges is suspicious and I believe this vindictive maneuver was brought to influence the appellate process.” The Associated Press reported that the latest charges filed by District Attorney Stephen Zappala Jr. suggest Orie — herself — was directly involved in at least one of the forgeries and controlled dozens more “self-serving” documents the senator hoped would convince a jury that she never authorized her state-funded staff to do political campaign work. Orie, her family and her defense team have maintained her innocence of the political corruption charges and denied submitting forged documents to the court. Jack Orie, the senator’s brother, has even suggested the prosecution submitted the forged documents in an attempt to avoid losing the first case. CW
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SEPTEMBER 2011 CAPITAL WATCH
Rep. Sturla apologizes for using the word ‘womenfolk,’ maintains STDs are an issue By Sari Heidenreich, Capitolwire
Rep. Mike Sturla, D-Lancaster, apologized for referring to Pennsylvania females as “womenfolk” in comments to Capitolwire about the impacts of natural gas drilling. In an email to Capitolwire Sturla said,“aside from building roads so their trucks can get to drill sites and doing a little stream work to mitigate damage from their road building, exactly what are all those things the drillers are doing for the local communities? Patronizing the bars at night? Driving up the cost of rental housing? Spreading sexually transmitted disease amongst the womenfolk? ... Really community oriented stuff...” Sturla was responding to statements regarding the impacts of natural gas drilling made by Department of Community and Economic Development Secretary Alan Walker during a Capitolwire interview. Sturla’s comment came under fire when House Republican Spokesman Steven Miskin referred to it as chauvinistic and a “wrong direction for policy discussion.” “In what should outrage every Pennsylvanian, at least one House Democrat leader has concluded that the only impact of Marcellus Shale drilling in Pennsylvania has been increased business at local establishments and promiscuity,” Miskin wrote in a press release. “Talk about wrong-headed, misinformed, archaic, and just shocking,” said Rep. Sandra Major, R-Susquehanna in response to Sturla’s comments. “The House Democrat leadership attitude, after studying the impacts of the Marcellus Shale industry in Pennsylvania, is insulting.” There is a significant amount of drilling that occurs in Major’s district, which also includes parts of Wayne and Wyo-
ming counties. Sturla said he stood by his statement that drilling was causing a rise in sexually transmitted diseases but that “parlance of the term womenfolk was more in reference to how I think the outof-state drillers may view women in the state of Pennsylvania, and, if anyone was offended by that term, I apologize.” “I’m offended by the driller’s actions and their sort of willingness to, ya know, come in in a Wild West way. I think that’s where the offense is. If I mischaracterized … maybe these guys are gentleman that just spread sexually transmitted diseases, I don’t know,” he said. Miskin said Sturla’s “insinuation is that Pennsylvania’s most zealous industry workers are sex-crazed, disease-ridden people and that is just wrong on so many different levels.” “The House Democrats spent months holding hearings about the Marcellus Shale industry and this is the conclusion? Sexually transmitted disease and bars?” Miskin asked. “Did any member of that caucus step foot in the Marcellus Shale region? Did they see the growth? The homes being painted? People working? Or are they just remaining ignorant to that?” Sturla maintained his criticism of the industry, saying there is a “preponderance of evidence that the spread of STDs is there.” He cited a study by Bradford County’s Troy Community Hospital, which said they had experienced “an increase in sexually transmitted diseases” as a result of drilling in the Marcellus Shale. Bradford County is one of the state’s largest drilling counties. “I think this is a case of kill-themessenger because they [the Republi-
Rep. Mike Sturla’s comments about women have come under fire.
cans] don’t like what I have to say about taxation of Marcellus shale,” Sturla said. “They don’t like what I have to say about forest fragmentation of Marcellus shale, they don’t like what I have to say about the impact of Marcellus Shale. “If they’re concerned about my insensitivity to women’s rights, I think all they need to do is look at my record as it relates to women’s issues … I would think they would be outraged by Secretary Walker’s comments that … basically fly in the face of science.” The “science” referred to by Sturla is the interpretation of a two-year study, conducted under former governor Ed Rendell, by Jan Jarrett, head of the environmental advocacy group PennFuture,
that the study “determined that more leasing [of state lands] would irreparably damage the forest and threaten the certification that the forest is sustainably managed.” During a recent interview with Capitolwire, DCED Secretary Alan Walker said leasing the majority of the state’s forestland for drilling could help bring in $60 billion over the next 30 years. Walker went on to say such leasing posed few concerns: “The way the drilling platforms are being set up today – where you may only have to have one pad every so many square miles – it’s a minimum impact on the state forest property, and in a matter of a couple years, it’s going to be re-vegetated.” CW
State’s revenue collection lower than expected If Pennsylvanians are wondering why it doesn’t feel like the state is undergoing an economic recovery, they need look no further than the revenue collections reports coming out of the state Department of Revenue. On Sept. 1, the department announced that Pennsylvania collected $1.8 billion in General Fund revenue in August, which was $63.1 million, or 3.4 percent, less than anticipated. Fiscal year-to-date General Fund collections total $3.5 billion, which is $63.1 million, or 1.8 percent, below estimate. Sales tax receipts totaled $734.9 million for August, $15.7 million below estimate. Year-to-date sales tax collections total $1.5 billion, which is $15.7 million, or 1.1 percent, less than anticipated.
Personal income tax (PIT) revenue in August was $749.9 million, $55.2 million below estimate. This brings year-to-date PIT collections to $1.4 billion, which is $55.1 million, or 3.8 percent, below estimate. While individuals seem not to be feeling any uptick in the economy, corporations are faring better. August corporation tax revenue of $59.9 million was $3.7 million above estimate. Year-to-date corporation tax collections total $137.9 million, which is $3.4 million, or 2.6 percent, above estimate. Other individual fiscal indicators also were lagging. Inheritance tax revenue for the month was $69.5 million, $5.1 million below estimate, bringing
the year-to-date total to $135.8 million, which is $5.1 million, or 3.6 percent, below estimate. Realty transfer tax revenue was $28 million for August, $4.5 million below estimate, bringing the fiscal-year total to $55.7 million, which is $4.5 million, or 7.5 percent, less than anticipated. If the somber news makes you want to reach for a cigarette or grab a beer from the refrigerator, tax collections indicate you are not alone. Cigarette, malt beverage, liquor and table games taxes, totaled $129.9 million for the month; $2.1 million above estimate and bringing the year-to-date total to $243.2 million, which is $2.2 million, or 0.9 percent, above estimate.
Non-tax revenue totaled $33.8 million for the month, $11.6 million above estimate, which brings the year-to-date total to $60.9 million, which is $11.6 million, or 23.7 percent, above estimate. In addition to the General Fund collections, the Motor License Fund received $237.6 million for the month, $19.3 million above estimate. Fiscal yearto-date collections for the fund – which include the commonly known gas and diesel taxes, as well as other license, fine and fee revenues – total $428.7 million, which is $19.2 million, or 4.7 percent, above estimate. For more information, visit www.revenue.state.pa.us. CW
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SEPTEMBER 20112011 CAPITAL WATCHWATCH SEPTEMBER CAPITAL advertorial
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CW: What are your firm’s major products or services?
Denis P. O’Brien
Executive Vice President, Exelon President & CEO, PECO Denis P. O’Brien is responsible for leadership of PECO’s operations and overall performance associated with service reliability, customer satisfaction, financial management, and regulatory and external affairs. O’Brien was appointed to the top leadership position for PECO in 2003 and was named president and CEO in 2007. O’Brien was appointed to the top leadership position for PECO in 2003 and was named president and CEO in 2007. He has 30 years of utility experience in engineering, operations, strategic planning and executive management. Previously, he served as executive vice president and as vice president for operations with responsibility for engineering, construction, maintenance and emergency response for the company’s natural gas and electric distribution systems. His special assignments have included strategic planning on mergers and acquisitions, development of the company’s deregulation strategy and organizational redesigns to improve performance. PECO has been highly recognized for leading employee safety, diversity, economic development and environmental programs. O’Brien serves on the Board of Independence Blue Cross. He also serves on numerous civic and industry boards, including the Energy Association of Pennsylvania, American Gas Association, Electric Power Research Institute (EPRI), as well as the Pennsylvania Business Council, Greater Philadelphia Chamber of Commerce, The CEO Council for Growth, The Franklin Institute, and the Drexel University board of trustees. He also has previously served on the board of directors for the Pennsylvania Economy League, YMCA of Greater Philadelphia and WHYY, Inc. O’Brien holds a bachelor’s degree in industrial engineering from Rutgers University and earned a master’s degree in business from Drexel University. O’Brien and his wife, Carolyn, have three children.
DO: Based in Philadelphia, PECO is an electric and natural gas utility subsidiary of Exelon Corporation (NYSE: EXC). Last year alone PECO delivered 87.9 billion cubic feet of natural gas and 39.5 billion kilowatt-hourshours of electricity. Exelon Corporation is one of the nation's largest electric companies with more than $18 billion in annual revenues. Exelon's family of companies includes energy generation, power marketing, transmission and energy delivery. At PECO, we pride ourselves on our commitment to our customers and the many communities we serve. As part of this commitment we manage PECO Smart Ideas, our full suite of programs to help residential, business, governmental, industrial, institutional and non-profit customers save energy and money through energy efficiency. Our energy efficiency and consumer education programs are nationally recognized and we are exceeding statemandated efficiency requirements. Since its launch in October 2009, PECO customers have saved more than $140 million dollars in energy costs. This is in addition to about $50 million dollars also received by customers in PECO rebates and financial incentives for their energy saving actions. This energy savings has the same environmental impact as removing nearly 90,000 cars from roadways or planting about one million trees. CW: When did you join the firm? DO: I was appointed to the top leadership position for PECO in 2003 and was named president and CEO in 2007. In addition to my role as president and CEO of PECO, I also serve as executive vice president for Exelon Corporation. My more than 30 years of experience with the company began when I was a college intern, following in the footsteps of my father who was a former company employee. During my time at PECO I previously served as executive vice president and vice president for operations with responsibility for engineering, construction, maintenance and emergency response for the company’s natural gas and electric
distribution systems. I also have worked on many special assignments including strategic planning on mergers and acquisitions, development of the firm’s deregulation strategy and organizational redesigns to improve performance. During my time with the company we have been highly recognized for leading employee safety, diversity, economic development, and environmental programs. CW: What are your near-term and long-term goals for the firm? DO: At PECO we are keenly focused on helping our customers transition to a fully competitive electric market, and we really are working hard to help customers understand these changes, PECO’s role as an electric delivery company, the role of competitive suppliers, and the fact that customers may be able to save money by shopping with a competitive supplier. We remain dedicated to our PECO Smart Ideas suite of programs, and helping our customers save energy and money. And, we also are working towards the successful completion of our technology investment in state of the art, digital electric grid and metering technology. One of the largest investments in our company’s more than 100 year history this $650 million project – which was funded in part by one of only six $200 million stimulus grants awarded by the US Department of Energy – will help bring PECO’s infrastructure to the next level, enabling us to provide electric service more reliably and efficiently and provide future new products and services to our customers, like the option of purchasing electricity during times of the day when market prices are lower. CW: Are your customers local, regional, national or global? DO: PECO serves 1.6 million electric customers in Philadelphia, Bucks, Chester, Delaware, Montgomery and York counties; and 490,000 natural gas customers in Bucks, Chester, Delaware and Montgomery counties. CW: Where else does the firm have business locations? DO: PECO operates more than two dozen local operations sites and subur-
ban headquarters throughout Southeastern PA including areas like Berwyn, Baldwin, Coatesville, Plymouth Meeting, Warminster, West Conshohocken, Phoenixville, West Chester, West Grove, Doylestown and King of Prussia. CW: Would you invest more in PA? DO: Founded in 1881, PECO is one of the Greater Philadelphia Region's most active corporate citizens, providing leadership, volunteer and financial support to numerous arts and culture, education, environmental, economic development and community programs and organizations. PECO’s financial health is directly tied to the welfare of our region. The pipes and wires that we use to deliver energy to our customers aren't portable assets that can be moved based on short-term opportunities. We are only as successful as the region around us. That is why we work hard, with every project we are focused on, to ensure there is a benefit for not only our end use customers but also for the communities we serve. For example; as part of our effort to upgrade our infrastructure with investments in state-of-the-art, new, digital delivery technologies (often called ‘smart grid’), Econsult – a nationally-recognized Philadelphiabased small business – found that the projects included in PECO's 5year investment plan will support more than 8,000 jobs, generate more than $300 million in total wages and salaries in the region, and $700 million in total economic activity. CW: Are there public policy changes your firm is advocating? DO: The PA electric and natural gas industry is in support of House Bill 1294 which allows utilities to make investments to modernize their systems and create jobs. The other thing we are focused on is working to control the cost to customers of state-wide mandated programs. We believe this is our responsibility to our customers and have advocated smart policy in this area.
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SEPTEMBER 2011 CAPITAL WATCH
State Government panel hearing on immigration wraps up By Kevin Zwick, Capitolwire
As the federal government announced plans to scale back deportations, a ranking conservative lawmaker’s two-day hearing on the illegal immigrant “invasion” wrapped up on Aug. 31. “Illegal aliens do not exist in our economy without violating one law after another. It’s not just the immigration law, but to exist in this economy, they have to violate transportation laws, labor laws – you name it,” said House State Government Chairman Daryl Metcalfe, R-Butler. The hearings centered on a legislative package dubbed “National Security Begins at Home Legislation” – more than a dozen bills sponsored by various House Republicans that would impose penalties on employers who hire illegal immigrants, require a proof of citizenship to receive public benefits, use an electronic identity verification system before starting work, and give local and state law enforcement the ability to enforce immigration law, among other things. Three Democrats attended the hearing, including Reps. Tony Payton, of Philadelphia, Steve Samuelson, of Lehigh County, and Tim Briggs, of Montgomery County. Briggs, who spoke for the Democrats during closing remarks, said that he had concerns that changes on the state level will be “restrictive.” “I definitely agree with a number of testifiers that there should be more reforms at the national level to address many on these concerns,” he said. “I have concerns at the state level that the proposals will be restrictive. I do feel that if we rush into this, we are really going to hurt many of our constituents.” The Obama Administration recently announced that the Department of Homeland Security and the Justice Department would halt the deportation of 300,000 illegal immigrants to individually review the deportations, while the U.S. Immigration and Customs officials were instructed in June to use “prosecutorial discretion” in determining deportation cases. Metcalfe in a press release called the move a “deplorable act of treasonous deceit.” “There’s been some very disturbing activity on the federal level by the Obama Administration, most recently with the direction of Homeland Security actually announcing that they were going to stop deportations and just focus on certain types of illegal aliens,” he said at the Aug. 31 hearing. Metcalfe said this creates a “backdoor amnesty” that allows illegal aliens to “fly under the radar” as long as they don’t commit “any violent crime or any felony type crime.” “They are in a sense going to feel protected now because the Homeland Security Department under the Obama Administration’s direction is not going to deport them,” he said.
The committee heard from the American Legion, the Tea Party Immigration Coalition and various think tanks. Mark Seavey, deputy director of The American Legion, said the organization supports efforts by cities and states to address illegal immigration. “It is appropriate in light of federal apathy, a state government be allowed to take action,” he said. One of the measures in the package would allow local and state law officials to enforce citizenship checks on “a person who is or should reasonably be suspected of being unlawfully present in the United States.” “We need to make sure we take the handcuffs figuratively off the law enforcement and enable them to put on the hands of the illegal aliens here committing crimes against Pennsylvania citizens,” Metcalfe said. Daniel Griswold, of the libertarianleaning CATO Institute, said to solve the immigration problem, the state should not look to an “enforcement-only” strategy, but one that would change the temporary worker program. “Our enforcement only approach has failed because it ignores the underlying economic and demographic realities,” he said. “Low-skilled immigration to the United States, both legal and illegal, is driven by the basic forces of supply and demand.” He said that as American workers become more skilled and educated, lowskilled immigrant workers fill “the gap between the expanding number of lowskilled jobs and the shrinking poll of native-born Americans who have traditionally filled them.” “The answer to illegal immigration is not to criminalize honest work but to change our immigration system to meet the labor needs of today and tomorrow,” he said. “We need to expand channels for legal immigration through a robust temporary worker program.” “More police hours and jail space will be consumed with prosecuting dishwashers, janitors, and landscapers rather than rapists, robbers, and gang members,” Griswold said. Steve Camarota, director of research for the Center of Immigration Studies, argued that by enforcing illegal immigration, the poorest and least-educated American workers who he said directly compete with illegal immigrants for work would benefit the most. “Seldom can policy makers both assist low-income workers and save taxpayers money at the same time,” he said. If the state had less illegal immigrants, Camarota said it would reduce costs associated with uncompensated medical care, Medicaid, public education, social services, and incarceration. Another measure would require workers to use the federal E-Verify system to determine the citizenship of workers. The Senate passed a bill in May that
Rep. Daryl Metcalfe says Homeland Security’s plan to stop deportations and focus on certain types of illegal aliens is “backdoor amnesty.”
would require the E-Verify system to be used on public works projects. Griswold said that E-Verify system will impose more red tape on the employment process and “will not create jobs for unemployed citizens … only add to their frustration.” He cited a government-commissioned study that found the system failed to flag more than half the illegal immigrants using the system, while incorrectly denying legal workers. Jack Martin, of the Federation for American Immigration Reform (FAIR), said that the 150,000 illegal immigrants in the state represent “a fiscal burden” of $1.4 billion per year through public benefits. He said that the state should work toward “remove the welcome mat extended by unwitting and exploitative employers.” Martin also pointed out that the E-Verify system doesn’t pick up valid social security numbers that were either provided to illegal immigrants or stolen, he said. Payton questioned Martin about a FAIR member’s statements that Payton said: “seemed to be racist … describing black folks as retrograde species of humanity.” “Is that something that your organization endorses and or supports?” Payton asked. Martin said that the individual who made the statement “is no longer a member at the present time.” “It certainly does not represent the views of our organization,” Martin said. Mark Shea, of the Pennsylvania Catholic Conference, said the organization opposes laws that “encourages racial profiling by permitting warrantless arrests based on probable cause that an individual is removable from the United States.” “It clearly prohibits racial profiling in the legislation,” Metcalfe said. “For all of
the boogeyman arguments being made by it, it specifically prohibits it.” Rep. Brad Roae, R-Crawford, rebuked some Democrats who opposed the legislation, saying that the laws would essentially help low-income workers. “Generally speaking, quite a few people associate the Republican Party for sticking up for big business and people that make all this money, corporate profits and stuff like that,” he said. “A lot of people associate the Democratic Party with protecting the working poor, the have-nots of society and low-income workers, and yet on this issue, there seems to be quite a few Democrats who oppose the efforts that we have here.” Roae said that if Americans were working jobs held by illegal immigrants, then corporate profits would be lower because they would have to pay higher salaries, while the low-income segment of the population would have better economic prosperity. Kathleen Appell, media coordinator for the Pennsylvanians for Immigration Control and Enforcement, a Tea Party Immigration Coalition member, testified about some of the crimes committed by illegal immigrants. She also said the country is involved in a “dangerous game of semantics … the correct term for Americans who oppose the invasion of millions of illegal aliens in this country is not the LaRazapreferred term – racist – but rather, it is patriot,” she said. Mariann Davies, founding member of the Tea Party Immigration Coalition, said the state should require not only the verification of citizenship, but also the authenticity of those documents, which are sometimes obtained fraudulently. The committee will debate the bills and consider amendments in September and October, Metcalfe said. CW
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SEPTEMBER 2011 CAPITAL WATCH sponsored by pcua
Pennsylvania Credit Union Foundation Reaches Three Million Dollar Threshold
T
he charitable arm of the Pennsylvania Credit Union Association (PCUA), the Pennsylvania Credit Union Foundation (PACUF), has topped three million dollars in donations since its inception March 19, 1996. The Foundation was formed following the tragic bombing in Oklahoma City where a credit union and its staff were devastated.
issued for financial literacy programs in the Commonwealth; more than $500,000 for 210 small credit union development activities; and more than $300,000 for 38 disaster relief efforts for hurricanes, tornados, fires, and earthquakes.
“This wonderful milestone arrived very early on my watch,” said Ray Brunner PACUF Chairman and CEO of WEST-AIRCOMM FCU, Beaver, who took the reins in May. “Full credit goes to my predecessors Bob McCormack, Scranton Times Downtown FCU, Scranton; John Kebles, Choice One Community FCU, Wilkes-Barre; John Gulick, Central Valley FCU, Arnold; Bruce Foulke, American Heritage FCU, Philadelphia; Ron Lasich (deceased), Visionary FCU, Pittsburgh; Norb Kaczmarek, Erie FCU, Erie; and Diana Roberts, Hershey FCU, Hershey. The Foundation has always served as an instrument that helps the underserved both within and outside our movement,” says Brunner.
In recognizing the milestone, “I have always taken pride in the ability of our Foundation to serve the underserved both within and outside our movement,” said PCUA CEO and PACUF Ex Officio Jim McCormack. “For this reason, I consider it the best run credit union Foundation in the country. The many volunteers who have served on the Board - at large and ex officio - have devised a first class strategy resulting in the Foundation’s success throughout the past 15 years.”
PACUF provides grants to promote financial literacy, including school branches and classroom instruction; small credit union development; and disaster relief efforts. Nearly $700,000 for 115 grants have been
Executive Director Joe Wambach credits the fundraising chairmen and Board members who have served over the past 15 years. “I attribute our fundraising success to the communication and people skills of fundraising Chairmen John Kebles; Bob Marquette, Members 1st FCU, Mechanicsburg; and Dave Ackerman, USX FCU, Pittsburgh, who served in this challenging post over 15 years,” said Wambach. “All three certainly share my passion and intensity to raise funds. They have provided leadership and magnificent service during their years on the board. In addition, the caliber of grants approved by the entire Board has lent itself to the Foundation’s fundraising success.”
Poll says majority of Pennsylvanians favor natural gas industry Pennsylvanians overwhelmingly like the natural gas industry and favor taxing it, but are divided about whether the benefits outweigh possible environmental harm, according to a new Franklin & Marshall College poll released Aug. 31. State residents also strongly oppose opening more state forest land to drilling and think drilling has improved the state’s quality of life. When asked if they favor or oppose taxing companies that extract and sell natural gas, almost two-thirds, 65 percent, of adults said they favor taxation, with 45 percent saying they are strongly in favor. Only about two in 10 or 21 percent, said they oppose taxation. Sixty-six percent said they have a favorable view of the industry, with almost a third, 31 percent, saying they have a strongly favorable view. The percentage of people who said the benefits of drilling outweigh the envi-
ronmental damage was barely greater than the percentage who think the opposite: 39 to 35 percent. Thirty-five percent said drilling improved the quality of life in Pennsylvania compared to 26 percent of those who said it reduced the quality of life. Pennsylvanians were especially protective of state forest lands with almost three quarters, 72 percent, opposing the leasing of state forest land to natural gas drilling, including more than half, 54 percent, strongly opposed. Less than a quarter or 22 percent said they somewhat favored more forest drilling. Almost three-quarters, 72 percent, also think any revenues from taxation should be shared by state and local communities. The state General Assembly is expected to take up the question of imposing a tax or fee on the natural gas industry when it returns later this month.
Gov. Tom Corbett, who opposed any fee or tax while he ran for office last year, now says he favors using a fee to clean up the environment. “I think that the results of the Franklin and Marshall poll shows the ambivalence that people feel about the gas industry,’ said Jan Jarrett, president and chief executive officer of PennFuture, an environmental group. Pennsylvanians understand “there are upsides,” said Jarrett. “They know the upsides have significant costs in some way,” she said. “Pennsylvanians would like to see those costs covered by a severance tax.” Pennsylvanians clearly embrace their state forests and fear they will be harmed,” Jarrett “I imagine that extends to state parks,” she said, though the poll did not ask specifically about parks. The Marcellus Shale Coalition, a gas
industry trade group, issued a statement quoting coalition president Kathryn Klaber, who said the poll shows Pennsylvanians “understand the enormous environmental, economic and national security benefits associated with this historic opportunity before us.”” The poll also shows promoters of shale gas are “engaging in fact-based dialogue with responsible stakeholders across the commonwealth,” Klaber said. For more information about the poll go to: https://edisk.fandm.edu/FLI/ keystone/pdf/keyaug11_1.pdf
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SEPTEMBER 2011 CAPITAL WATCH
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Keystone Research Center releases annual State of Working PA report In the Keystone Research Center’s annual “State of Working Pennsylvania” report, they call it “austerity economics” and they say that, instead of being a good and prudent course of action, it is increasing joblessness, sparking greater economic inequality and undercutting American values. The report notes that many people believe that cutting state and federal spending is the only way to go because “nothing can be done” about the current economy. “The problems in our economy are self-inflicted,” said co-author Stephen Herzenberg, PhD, an economist and Executive Director of the Center. “A bold shift of economic policy could restore growth and competitiveness, while bolstering the middle class.” The annual review of how working Pennsylvanians and their families are faring in today’s economy holds little good news for most working people. “From the perspective of most Pennsylvanians and Americans, our economic system is broken,” said Mark Price, PhD, a labor economist for the Center and co-author of the report. “We remain stuck in the most extended period of high unemployment since the Great Depression.” The report found: • During the past year, over a quarter of Pennsylvania workers experienced joblessness or worked part time despite wanting more hours. • For every job opening in the state currently, there are nearly eight Pennsylvania workers who need a job or want additional hours of paid work. • 43 percent of likely U.S. voters report that they or a family member have experienced unemployment since 2009. • For those who do have full-time work, the sluggish job market has resulted in stagnant wages. Only the highest-paid 5 percent of Pennsylvania earners experienced significant wage gains from 2002 to 2010. Even college-educated Pennsylvanians were not immune, experiencing a 3.1 percent decline in hourly earnings. Meanwhile, CEO pay rose 23 percent in Pennsylvania in 2010. The report authors cautioned against the likely impacts of even more cuts in state and federal spending at a time when businesses and consumers are not ready or able to drive economic growth. Such cuts, researchers wrote, could be particularly devastating to high-unemployment rural Pennsylvania, where federal extended unemployment benefits have prevented an even more serious downward economic spiral. “When people have less work and wages aren’t going up,” Dr. Price said, “they can’t buy as much. If extended unemployment benefits expire in December and cuts are made to health care for seniors or food for kids, local economies
will sink further, and we will all suffer.” With working families still struggling in this weak economy, policymakers should step into the breach with a plan that focuses directly on job creation and building a stronger economy, researchers wrote in the report. The report showed that since 2002, wages have either fallen or remained stagnant at all levels of the economic spectrum except for the highest paid 5 percent of the population. They saw their earnings climb by 4.4 percent. CEO pay rose faster than anyone else with the average CEO salary climbing by 23 percent in 2010. The State of Working Pennsylvania made a number of specific recommendations. Among them were: • Continuing the federal extended unemployment benefits set to expire in December. • More federal assistance for state and local government to avoid more public sector layoffs. • Investing in infrastructure. • Modernizing the social safety net for jobless workers rather than simply paying people for not working including more opportunities for training, expanding work-sharing, incentivizing job creation and even direct public job creation if unemployment creeps much higher. COUNTIES WHERE MORE THAN 30 PERCENT OF PERSONAL INCOME FROM TRANSFER PAYMENTS COUNTY PERCENT Cameron 37% Clarion 30% Clearfield 31% Crawford 30% Elk 30% Fayette 34% Forest 39% Greene 30% Huntingdon 30% Jefferson 31% Lawrence 31% Mercer 30% Mifflin 32% Snyder 30% Sullivan 34% Venango 35%
Note: Transfer payments include disability insurance, programs like Medicare and Medicaid, food stamps and unemployment insurance. For a full description, go to http://goo.gl/CMZTy Source: Keystone Research Center analysis of Center for Workforce Information and Analysis data Note: In Pennsylvania’s most urbanized county, Philadelphia, the percentage of personal income from transfer payments is 28 percent. The county with the lowest percentage of personal income from transfer payments is Chester County at 9 percent.
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For more information: BetterSaferRoads.com ReConnectPA.com PPTA.net PaHighwayInfo.org TFAC.pa.gov Legis.state.pa.us
By now, nearly every Pennsylvanian is aware of the state’s transportation funding dilemma. After several years of unsuccessful efforts to shore up certain funding streams, it appears that the General Assembly will consider a comprehensive plan this fall.
How did this problem occur? How wide is the funding gap? What are the elements of the proposed solution? How much will this cost me? What will I receive in return? Who supports the Transportation Funding Advisory Commission’s recommended solution? How can we keep this from happening again? This primer was compiled by Associated Pennsylvania Constructors, the trade association for the state’s highway construction industry. And, yes, while the industry certainly has a vested interest in a long-term funding solution, it should be clear by now that every Pennsylvanian has a stake in how efficiently we are able to move people and goods within and through our commonwealth.
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n n How did this problem occur?
n n How wide is the funding gap?
The problem is not unique to Pennsylvania. In Washington D.C. and across the country, policymakers have had increasing difficulty developing consensus on numerous issues, particularly those whose solutions require an infusion of revenue. In 2006, a national commission examining all forms of surface transportation – air and sea ports, freight and passenger rail, public transit, and bike and pedestrian trails as well as highways – concluded that America as a whole should be spending about $226 billion annually to maintain and improve its transportation infrastructure. The number America was actually spending was about one-third of what it should be spending. As a result, the U.S. was losing an important competitive edge over countries whose economies were growing. Five years later, the only thing that has changed is that the problem has worsened. Federal mileage standards have become more stringent, vehicles have become more fuel efficient, and alternative fuels designed to reduce dependence on foreign oil have evolved. But while revenue per mile traveled has dropped, the federal gasoline tax – 18 cents per gallon – has not been increased since 1993. The state gasoline tax – just under 32 cents per gallon – has not been increased since 1997. Oh, yes, and then there is inflation. The cost of road-building materials such as petroleum, concrete and steel, have increased at a greater rate than the cost of living, weakening the buying power of departments of transportation across the nation.
As policymakers languished without consensus, the problem became more difficult to fix. In Pennsylvania, a commission appointed by the governor estimated the state’s annual funding gap at $3.5 billion for state and local highway maintenance and construction and public transit. And while Pennsylvania is not alone in facing such a dilemma, the Keystone State is near the top of the list when it comes to the extent of the problem. Partly because it has so many of them, Pennsylvania leads the nation in the number of structurally deficient bridges, and PennDOT has had increasing challenges in maintaining the 40,000 road-miles of highways for which it is responsible. While PennDOT’s 40,000 miles of roads are the ones most often discussed, municipalities are responsible for a whopping 77,000 miles of roads. Even if most of your driving is on a state road or highway, nearly everybody’s day begins and ends on a local road. Boroughs, townships and counties have divided about $300 million per year for maintenance of local roads and bridges. Many have needed to augment their allotments with local tax dollars simply to keep pace with the needs. The associations representing boroughs, townships and counties support a comprehensive solution to the funding issue, recognizing that it would help free up local resources for other local needs.
n n The elements of the proposed solution At the beginning of his term, Gov. Tom Corbett established the Transportation Funding Advisory Commission, chaired by newly appointed PennDOT Secretary Barry Schoch. Unlike previous commissions, the TFAC was tasked with exploring specific funding options and developing recommendations. While the funding gap, by consensus, was identified at $3.5 billion annually, the governor asked the commission to aim for a figure between $2 billion and $2.5 billion. As Secretary Schoch explained, the dilemma had been years in the making, and it would take several years to ramp back up. Additionally, it was thought that at some point the federal government may address the issue and contribute to part of the solution as well. On Aug. 1, the TFAC delivered its recommendations to Governor Corbett. The recommendations include the following:
Modernization The TFAC first took an intensive look at PennDOT’s business processes and management systems to identify opportunities to deliver its services and programs as efficiently as possible. The modernization recommendations include: • Driver and vehicle services – Renew vehicle registrations every two years instead of every year, make drivers’ licenses valid for eight years instead of four, eliminate safety inspections for new vehicles, consolidate driver license centers, eliminate registration stickers, allow drivers to select a private provider for drivers’ tests and give people the option of paying a $500 fine instead of sustaining a three-month vehicle registration suspension. • Traffic control, enforcement and safety – Update traffic signals to LED and optimize timing, automate work zone traffic control, allow cities in addition to Philadelphia to install red-light cameras and expand and update Highway Occupancy Permitting process. • Project delivery – Bundle individual projects into programs and outsource to the private sector, eliminate local government cost-sharing for Americans with Disabilities projects, streamline the review process for minor projects and streamline the approval process for use of new technologies and materials. • Public transit – Study consolidation of small transit systems to serve regions where appropriate, including shared-ride and fixed-route services. • Aviation – Enable airport improvement projects to move forward more quickly, adjust charges and reimbursement methods for PennDOT Flight Services to reduce the burden on the Aviation Restricted Account and revamp aviation funding to make funding levels more predictable. • Interagency coordination – Consolidate the traffic management operations
of PennDOT and other state agencies into one centralized statewide facility, work together more closely with local governments and the Turnpike Commission and collaborate more broadly with other governments and agencies in transportation planning, operation and maintenance. • Energy – Support alternative fuels such as Biodiesel, compressed natural gas (CNG), electric plug-ins, magnetic recharge and other technologies. • Finance – Allow marketing and advertising within state right-of-way, collect motor fuel taxes at a higher level than at the wholesale distributor level and allowing commercial businesses to advertise on the trucks that provide service patrols in urban areas.
Funding for highways and public transit In addition to increased efficiencies and cost-savings, the TFAC identified $2.5 billion in additional resources through new funding sources. The target is to be achieved over a five-year period, allowing time for additional funding to come on line throughout a transition period and allowing a more gradual increase in fees. The commission recommended the following funding mechanisms for increasing the revenue available for transportation: • Cap the amount of revenue from the Motor License Fund used to fund State Police operations, and gradually shift $300 million in annual funding to the General Fund. • Increase vehicle and driver fees to inflation, at 3 percent per year going forward, and phased in for commercial vehicles over 26,000 pounds. • Gradually uncap the Oil Company Franchise Tax over five years. • Increase fees and fines that go to the Motor License Fund. • Cost savings resulting from modernization. • Restructuring the Act 44 funding mechanism to increase public transit funding by $200 million per year. • Dedicate 2 percent of the overall revenue generated from existing sales tax to public transit. • Give local transit agencies the option to raise revenue locally. The measures described above would increase transportation funding by $682 million the first year, growing to $2.7 billion in Year 5. By moving revenue generated from surcharges for moving violations from the Motor License Fund to a new Intermodal Transportation Fund, Pennsylvania could increase the funding available for the other important surface transportation modes – aviation, freight and passenger rail, and ports and waterways. This initiative would increase intermodal funding by $54 million per year.
www.BetterSa
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n n How much will this cost me?
n n What will I receive in return?
The impact on a typical driver would be modest, beginning at 70 cents per week in the first year, and eventually growing to $2.54 per week – less than the cost of a gallon of gasoline. In fact, transportation investment that reduces traffic congestion eventually would result in a net savings. For example, if you commute 15 miles to work, and the uncongested travel time is 20 minutes, you are averaging 45 miles per hour. If traffic congestion causes that same trip to take 30 minutes, you have driven the equivalent of 7 ½ additional miles in gas-guzzling stop-and-go traffic. If you do that twice a day, five days per week, you’re wasting around three gallons of gas per week in your 25-mile-per-gallon vehicle. At $3.50 per gallon, that’s about four times the cost of the TFAC-recommended investment by Year 5.
It’s a fair question, and PennDOT is in the process of fleshing out a vision for the improvements that will occur if the TFAC’s recommendations are adopted. The initial focus would be on restoring the existing transportation system to an acceptable state of repair. Beyond that, what PennDOT terms “a decade of investment” would include:
n n Who supports the TFAC plan? For several years, a group called the Keystone Transportation Funding Coalition has been at the forefront of the push for a comprehensive solution to Pennsylvania’s transportation funding problem. The highway construction industry and public transit agencies have been joined by groups representing labor unions, the business community, freight haulers, freight and passenger rail, air and sea ports, local governments, bicycle and pedestrian trail advocates, land-use advocates, local chambers of commerce, travel and tourism organizations, environmental advocates, health care providers, AARP and AAA. The group is united in its belief that the various transportation modes constitute a single, integrated, interconnected transportation network. Members of this group have been behind www.ReConnectPa.org., an interactive web site designed to stimulate discussions around the various local transportation projects needed around the state.
“If traffic congestion causes your 15-mile commute to take 30 minutes instead of 20, you’re wasting about three gallons of gasoline per week. At $3.50 per gallon, you’re paying four times what the recommended funding solution would cost.”
n n How can we keep this from happening again? For decades, transportation system advocates have called for funding mechanisms that are predictable, and which will grow with inflation. By removing the artificial cap from the Oil Company Franchise Tax, and by indexing certain fees to accommodate inflation, the TFAC recommendations will ensure sustainable funding sources that will restore Pennsylvania’s transportation system to an acceptable state of repair. Moreover, within a few years, the recommendations would enable the state to again undertake projects to improve transportation system capacity and relieve congestion, thus providing for future prosperity and an improved quality of life. To accomplish this, Governor Corbett and the General Assembly would need to approve measures that would give local governments the option to raise revenue, provide for public-private partnerships, revise the current methods for funding public transit, remove the artificial cap on the Oil Company Franchise Tax and provide for modest increases in licensing and registration fees.
• System-wide safety enhancements and Intelligent Transportation Systems (ITS). Eventually, an ITS system would provide real-time information about traffic and road conditions by using, say, an app on one’s smart phone. • Reduction in structurally deficient bridges. Pennsylvania has more structurally deficient bridges than any other state, and the situation is slowly reducing the level of safety on our roadways. • Improved roadway resurfacing and reconstruction. PennDOT would be able to undertake longer-lasting types of repairs of higher quality than is possible at current funding levels. • New road and bridge capacity projects. These will help relieve traffic congestion and accommodate the significantly higher volumes of traffic that our highway system now carries. • Increased transit facilities and services. Even residents of less populated areas – particularly older Pennsylvanians – will benefit from shared ride and paratransit programs and services. • Upgrades and improvements for rail freight network, airports, and ports. These will benefit all of Pennsylvania’s industries, from agriculture to Zamboni manufacturing. PennDOT Secretary Schoch has been insistent that local Metropolitan Planning Organizations, Rural Planning Organizations, and local and state elected officials have the opportunity to help determine the priority for “decade of investment” projects at the local level. Initially, however, PennDOT has identified several examples of the types of projects that clearly would contribute to a better quality of life by improving safety, relieving congestion, and accommodating economic growth. They include: • Interstate 83 widening and reconstruction. Bottlenecks at the “York split” and the Eisenhower Interchange in the Harrisburg area are among the worst Interstate Highway bottlenecks in the country. • U.S. Route 222 improvements between Lancaster and Reading. These improvements would improve safety and relieve congestion. • Birmingham Bridge rehabilitation. This bridge, spanning the Monongahela River in Pittsburgh, nearly suffered a catastrophic failure in February 2008 when frozen rocker bearings caused its deck to drop six inches. • Advancing I-95 improvements. Of the 50-mile stretch running through Pennsylvania, 17 miles is bridges, 25 percent of which are structurally deficient. This is a major safety and congestion project on one of the most traveled highways in the country. • South Central Centre County Transportation Study. This project ultimately would complete U.S. Route 322 as a four-lane highway for the entire distance between Harrisburg and State College. • U.S. Route 219. Widening this highway to four lanes down to I-68 would create significant economic development opportunities, as well as relieve congestion and improve safety. • Statewide Intelligent Transportation System. Expanding this network of traffic cameras would make real-time traffic information available, which would be available via several channels, including smart-phone applications. Travelers would instantly be able to choose alternate routes based on traffic conditions. PennDOT officials say these projects are examples of major improvements that can be made if the TFAC funding plan is adopted, and that without the funding plan, they most likely cannot move forward.
aferRoads.com
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Q&A
Q: How can you expect people to afford any increase, even $2.50 per week? A: Let’s say you commute 15 miles to work, and the commute should take you 20 minutes averaging 45 miles per hour. However, because of congestion, the one-way trip takes 30 minutes. You have therefore driven the equivalent of 7 ½ additional miles, or 15 miles per round trip. If that’s your daily routine, you’ll drive the equivalent of 75 additional miles in a typical workweek. If your car averages 25 miles per gallon – and that’s pretty good gas mileage – you have consumed an additional three gallons of gas in a week’s time. If gas is $3.50 a gallon, you have wasted $10.50, more than four times the amount that the Transportation Funding Advisory Commission recommendations would cost you (and by the way, that’s not until the fifth year). We’re not even counting the additional costs of maintenance and repairs caused by rough roads, or the “frustration tax” levied on all who spend more time than necessary in traffic instead of with family, friends or hobbies. The real question is, how can you afford not to invest in a safer, less congested transportation system?
Q: Why should the rest of Pennsylvania pay for public transit in Philadelphia and Pittsburgh? A: That’s probably the biggest myth in the entire transportation funding discussion. The areas with the heaviest concentration of people contribute far more revenue for transportation than they receive. The truth is, residents of the Philadelphia and Pittsburgh areas are paying for the transportation system in less populated areas of the state, rather than the other way around.
Q: Why don’t we just eliminate waste, fraud and abuse and reallocate it to transportation? A: First, the magnitude of the transportation funding gap – $3.5 billion annually – is far greater than any degree of inefficiency in state government. Second, bridges and highways are funded entirely through user fees – the gas tax, drivers’ licenses and vehicle registrations, tolls. Third, PennDOT has proven to be one of the country’s most efficient departments of transportation, making the most of limited resources by pushing bridge and highway projects through the competitive bidding process.
Q: How can you say PennDOT is efficient? There are always highway workers leaning on their shovels at every construction site. A: Nearly all highway construction except the most minor projects is competitively bid by private-sector companies. Because of intense competition for the work, many projects are coming in at costs of 30 or 35 percent less than the estimates. As for people at construction sites who may not appear to be “doing anything,” that’s just the nature of construction work, where the top priorities are safety and quality. In the extremely competitive highway construction business, private-sector companies do not allow their workers to waste time.
Q: With gas prices near their all-time highs, why isn’t there enough money for highways? Where is all that money going? A: The per-gallon taxes on gasoline have not been increased since 1997 (state) and 1993 (federal). The Oil Company Franchise Tax, which is levied at the wholesale level, has been artificially capped since 1981. So, higher gasoline prices do not translate into more highway revenue. In fact, as higher gas prices cause motorists to conserve, and as mileage standards increase, gas-tax revenue has actually gone down. Q: Isn’t transportation funding a federal issue? A: Whether the federal government should have a more prominent role in transportation funding or not, it is clear that there is no consensus among Congress or the administration about any type of transportation policy, including funding. States cannot afford to wait for Washington to solve this problem. Additionally, it is more efficient to raise the required revenue at the state level and have more control over where and how it is spent rather than to be subjected to conditions imposed at the federal level.
Q: Do the Transportation Funding Advisory Commission recommendations include tolling? A: No. Tolling is a federal issue, and federal officials have been reluctant to allow it (as they have been reluctant to provide for any type of additional revenue source). The commission recommended that the state consider tolling options, should they ever be offered by the federal government, but tolling still would require legislative approval.
Q: Highway funding supporters always talk about the number of jobs that would be created, but why should the state help just one industry when everybody else needs help too? A: Actually, 58 percent of the jobs created with a comprehensive transportation funding solution would be in industries other than highway construction, according to an economic study by the American Road & Transportation Builders Association. The majority of jobs would be in sectors such as manufacturing, retail, health care, finance, real estate, etc. To view the ARTBA study, including a county-by-county breakdown of the number of jobs created, visit www.PaHighwayInfo.org and look for the link on the home page.
Q: Highway funding supporters always mention “safety” as a reason to support more revenue, but are highways really that unsafe? A: Have you ever come over a hill or around a curve upon traffic that has stopped due to congestion? Has it ever caused you to wonder whether that trucker you passed a couple of miles back will see the backup in time to stop safely? Congestion isn’t the only factor that creates safety risks. Outdated signals or signage, deteriorated pavement, faded lane markings, weakened bridges and many other factors can expose motorists (and their passengers) to danger. A study by the Pacific Institute for Research & Evaluation concluded that roadway condition contributes in 52.7 percent of 42,000 highway deaths per year.
Q: How can we be sure that the revenue collected in the name of increased highway funding won’t be redirected to some other state government program? A: The Pennsylvania State Constitution requires that all revenue from gas taxes and license and registration fees be channeled to the Motor License Fund. From there, it can be spent only for highways.
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10 news
SEPTEMBER 2011 CAPITAL WATCH
Corbett budget guidance plan says schools should report real-time attendance data By Sari Heidenreich, Capitolwire
Budget Secretary Charles Zogby has told the Department of Education they should seek to “tighten the link between education funding and student needs” by reporting school attendance data in real-time. Zogby said the current system leads to numbers, sometimes as much as two years old, being used to determine how much money is appropriated to schools. “At a time of resource scarcity and advanced technology, there is little excuse for making billion dollar spending decisions based on out-of-date data,” Zogby wrote in Gov. Tom Corbett’s 2012-2013 budget policy guidelines. School officials say the data wouldn’t amount to a difference of more than a halfdozen students at most. But legislative leaders said it is at least worth exploring. A school’s average daily membership, which the state uses to determine appropriations, is calculated by averaging their attendance over a given school year. But since this data isn’t typically available till July, lawmakers and the Department of Education typically use a school’s Oct. 1 attendance data to prepare their budgets for the following year, explained Pennsylvania School Boards Associations’ Director of Research, David Davare. Budgeteers use the previous year’s Oct. 1 data in their budget deliberations.
By the time, the funding is apportioned in the July budget, that data is nearly two years old, Davare said. Davare said switching to real-time reporting would only make a marginal difference in funding levels. “I don’t think we’re talking substantial dollars,” he said, adding that he does not expect real-time attendance numbers to fluctuate from the traditional data by much more than half a dozen students. But according to the Budget Office, it could make a big difference in areas with
rapid population changes, such as south central and northeastern Pennsylvania. Zogby wrote that “data quality concerns are compounded at the school level where current budget and accounting practices make it nearly impossible to know exactly how much is actually being spent at any single school, how much it costs to deliver a particular course or service, or whether dollars are even making it to the classroom.” In an interview, Zogby said, “It’s inconceivable to me that we can’t have
a system – or move to a system – based on real-time data, on how many students are in a district, at the beginning of the year, and every two or three months, as they do in Florida.” Zogby said that as an education consultant during the eight years between his term as Gov. Tom Ridge’s education secretary and his new job as Corbett’s budget chief, he worked in Florida. He said that in Florida, they collect and immediately transmit to the Education Department student population data four times a year. Zogby said it would be great if this type of data collection were in place for next year’s budget, “but let’s move towards making these billion-dollar decisions of school funding, partly based on enrollment, with real-time data, not old, out-of-date numbers,” he said. “In my experience, Florida does this routinely. If they can do it, we can do it.” Senate President Pro Tem Joe Scarnati, R-Jefferson, said: “Charles is a renowned knowledgeable person on education and if he is saying we are using two-year-old data and there is no reason we can’t have more modern data, I would support taking a look at that. And if school districts say it is too difficult, or too costly, we will hear what they have to say, but I would support taking a look at it.” CW
U.S. Treasury economist to lead Independent Fiscal Office By Kevin Zwick, Capitolwire
A committee of state lawmakers has tapped a U.S. Treasury Department senior economist to head-up the state’s Independent Fiscal Office. Matthew Knittel, a senior economist with . the U.S. Treasury, was chosen to be the first director of the IFO, lawmakers announced Aug. 30. “I do think this is a great idea and I do think this will pay dividends. I would view it as an investment,” Knittel said during a phone conference. This year’s budget set aside $1.9 million to fund the office after it was created two years ago, but never received funding. And with the budget cuts this year, it was a challenge to convince Legislators to approve funding for another Legislative office. However, this office will provide an independent look at the state’s money, much like the federal Congressional Budget Office, Knittel said. Knittel said his ability to hire staff will
help the office retain its independence, as well as his lack of having “any preexisting connections to the Legislature.” “I’m a big advocate of transparency and I’m very comfortable with that,” said Knittel, a self-described strong advocate for open government. But he also said he would also compare and consult with the governor’s office and legislative appropriations staff. “I don’t view this as running in a vacuum,” he said. “It would be short-sighted not to consult with staff ” to compare numbers. He also said he will communicate with the State Treasurer’s Office. Duties of the IFO include: • Preparing annual revenue estimates; • Providing an annual assessment, by Nov. 15 of each year, of the state’s fiscal condition; • Developing performance measures for executive-level programs and departments;
• Providing an analysis of all tax and revenue proposals made by the Governor or the Office of the Budget; • Studying and analyzing the existing sales and use tax law and making recommendations for change; and • Establishing a website for the agency. The IFO is the brainchild of Sen. Pat Browne, R-Lehigh, who pushed for the creation of the office in 2010. Browne said that looking over Knittel’s qualifications, he believes he will bring “a level of independence” a process most important in state government. Knittel holds undergraduate degrees from Hope College and a doctorate in economics from Michigan State University. Knittel was one of 19 who applied for the position, which pays a salary of $130,000 a year, with six-year terms. The Selection and Organization Com-
mittee, comprised of all House and Senate leaders and the majority and minority members of the House and Senate Appropriations Committees, appointed Knittel. Knittel said the office would not be fully staffed for a year, and Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, said the office probably wouldn’t reach the first November deadline. “We’re running about three months behind – certainly understandable if there’s a bit of a delay on the Nov. 15 deadline,” Arneson said, adding that the statutory requirements for the IFO called for the appointment to be completed in May. Nate Benefield, policy director for the conservative Commonwealth Foundation, said he hopes the office is able to provide more reliable revenue estimates and assumes a role similar to the CBO. CW
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SEPTEMBER 2011 CAPITAL WATCH
Bill calls for politically appointed charter school commission
A bill aimed at revamping the current charter school law would create a sevenmember administrative commission consisting of political appointees, funded through fees from charter schools. Senate Education Chairman Jeffery Piccola, R-Dauphin, introduced the proposed legislation, Senate Bill 904, to update the state’s 1997 charter school law. Minority Chairman Andrew Dinniman, D-Chester, a co-sponsor of the bill, touted the bi-partisanship behind the bill, but fellow Senate Democrat Jim Ferlo, of Allegheny County, said the bill “doesn’t cut it.” “This is a work in progress,” Ferlo said. Citing goals of creating fiscal transparency, academic accountability, coherent teacher evaluations and individual school reform, Dinniman said “anything we do needs to be in support of traditional public schools.” “Public schools – if we do this right – will be at the center of innovation,” he added. Under the current law, a local school district board of directors is the initial authorizer of a brick-and-mortar charter and the Pennsylvania Department of Education in the case of a cyber charter school, according to Education Department Deputy Secretary Amy Morton. Under Piccola’s bill, a seven-member commission would be responsible for the oversight of charter and cyber charter schools. The governor would appoint three members to the commission, subject to Senate approval. These members would include a member of the State Board of Education, a faculty or administrative employee of an institution of higher learning, and a school board member. The other four members would also serve four-year terms, and would be appointed by the leaders of the four legislative caucuses. Sen. Daylin Leach, D-Montgomery, said with a politically appointed panel, whether charter schools are approved would rely on the ideological leanings of the panel’s majority. “These appointments are made for political causes or ideological purposes. (Currently) it would be stacked 5 to 2 in favor of the governor,” he said. Gov. Tom Corbett is a strong proponent of charter schools, and Leach said how many charter schools are approved would rely on which political party controls the majority of commission members. Larry Jones, President of the Pennsylvania Coalition for Public Charter Schools, said a politically motivated commission would taint efforts to expand charter schools in the state, regardless of whether the majority of the commission was for or against charter schools. An “assessment fund” would also be created to fund the commission, and fees would be imposed on charter and cyber charter schools. The fees would be based on a sliding scale: • $2,500 for schools with between 1 to 399 students; • $5,000 for schools with between 400 to 999 students;
• $10,000 for schools with between 1,000 to 4,999 students; and • $15,000 for schools with more than 5,000 students. The commission would also be required to file a proposed budget annually with the House and Senate Education and Appropriations Committees. If the revenues generated do not support the commission, it may levy additional fees subject to approval by the Independent Regulatory Review Commission, according to the bill. Under Piccola’s legislation, the Senate Majority Leader would appoint an administrator or board of trustee member of a charter school or cyber charter school. The Senate Minority Leader would appoint a certified teacher actively employed in a public school, including a charter school or cyber charter school. On the House side, the Majority Leader would appoint a member of the business community, while the Minority Leader would appoint a parent of a school-aged child currently enrolled in a charter or cyber charter school. That member would only be able to serve as long as their child is attending the charter or cyber charter school. The commission would choose an executive director who will take over the duties and responsibilities the Secretary
of Education played in the original law. The executive director would be the only commission member to receive compensation, which would be determined by the commission members, according to the bill text. According to a bill summary, the commission would be tasked with: • setting and developing regulations; • disseminating best practices and providing technical support for charter and cyber charter schools; • developing standardized forms for the application and renewal process and annual reports; and • making referrals to law enforcement if the commission receives information about a law violation. Under Piccola’s bill, the commission would also be tasked with authorizing the charter and cyber charter schools, while also acting as an appeals board in the event a dispute arises between a charter school and their local school board or governing board of higher education. School board of directors and institutes of higher education will also act as authorizers, but only for brickand-mortar charter schools. Alison Consoletti, Director of Research at The Center for Education Reform, said the legislation is a good start, but
structural changes to the authorizing commission should be made. “With changes to this bill as to how the authorizer system would be structured could ensure that true independent authorizers will exist in Pennsylvania and create high-quality charter schools,” she said. She said the Washington D.C. Public Charter School Board best represents the independent commission path. This board also consists of political appointees, made by the mayor. Consoletti said the assessment fee structure is a “bad formula that aggregates funding in a way that is not fair to either the school or the commission.” “The best practice model is a per-pupil fee, based on enrollment of the school,” she said. Most charter schools on average would only send between $2,500 and $5,000 to the independent authorizers based on the proposed sliding scale, she added. Thomas Gentzel, executive director of the Pennsylvania School Boards Association, said the fee scale proposed in Piccola’s bill creates a conflict of interest “since it creates a financial incentive for the commission to approve more charter applications in order to fund itself.” Gentzel said the duties of the commission “extend far beyond considering charter school applications.” CW
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12 OPINION
SEPTEMBER 2011 CAPITAL WATCH
Inside Pennsylvania Senate reapportionment
By Peter L. DeCoursey, Capitolwire
The First Rule of Pennsylvania Reapportionment is that since 1980, only the state Senate redistricting maps have been anything other than the voter’s dog. A whole lot of ink gets spilled every decade about the U.S. House and state House reapportionments of their respective bodies, and their secret political intent, but essentially, none of those plans were worth watching. In the last 40 years, lots of Democrats get elected to the U.S. and state Houses if it’s a good Democratic year, lots of Republicans get elected to both if the voters fall in love with elephant ties that year. On the other hand, Senate Republicans have etch-a-sketched the state map their way to 30-20 chamber dominance for nearly a decade by redistricting very skillfully. So yeah, we will look at the U.S. House plan before they draw it up for good, and the state House plan too, but the last four decades have taught us clearly: those plans don’t matter; those chambers swing when voters do, usually about twice a decade or so. So we will get back to those redistricting negotiations, but basically, no one has managed to create swing-resistant congressional or state House seats in the last 40 years. On the other hand, Senate Republicans, in the last 30 years, have controlled their chamber for more than 28 and a half of those years. Sure, that required former Sen. Milton Street
specifics, other than to say he was talking a lot to his Senate GOP colleagues, and that state population demographics did suggest one or two seats should move from the west. And that the Legislature probably, going by the numbers, should have moved a seat last time, when they declined to do so. Fortunately, others involved in the process are not as tight with info as Pileggi is – few this side of the grave are as blurt-averse as Pileggi – so sources say the GOP plan is relatively clear. They are currently planning to open with a request to McEwen to move two Senate Democratic seats from western Pennsylvania, those of Sens. John Wozniak, D-Johnstown, and Jim Brewster, D-Allegheny. One seat will go to Chester and Lancaster counties, another to the Poconos, centered in Monroe County. Basically, the redistricters moved one seat from the west to Chester County in 1991, and either the Senate GOP or neutral chairman Judge Frank Montemuro – some say both – refused to do so in 2001. But voters kept voting with their feet and deserting western Pennsylvania, while populations went up the last 20 years in the Philadelphia suburbs, Lancaster-Dauphin-York-Adams-Franklin counties, and the Poconos. So now, if a math professor were doing state Senate reapportionment as an academic project, two seats would move from the west to south-central or eastern
end of 2012 - decides to stick around. But Pileggi wants a Democratic seat moved from the west, and moved to Chester County, with some population added from Lancaster County. Why? Because that will not only turn a Democratic seat into a Republican seat, if McEwen allows it, but the right kind of Republican: a Chester County Republican is more likely to be a southeastern moderate – or at least what passes as a GOP moderate nowadays – than if the new seat were forged in Lancaster, York or western Pennsylvania. And if a Republican seat is going to be created, McEwen is more likely to make it a country club/business conservative GOP seat, as Pileggi proposes and McEwen reportedly favors, than a Tea Partypalooza. Also, while Pileggi says moving no seats will change the composition of current districts about as much as moving two seats west to east would, much of his caucus disagrees. Many of his colleagues in the Senate GOP think that without moving seats, they can keep the districts they have now and add some more voters to their east, maybe changing their districts 10 to 20 percent. Those same senators and some demographers believe moving two districts west to east would change incumbent’s districts by up to 40 percent, and that is well outside of their comfort level. Ultimately Pileggi has to get his caucus to agree to his plan, and if
Pileggi, who makes Eagles Coach Andy Reid seem like a bubbling fountain of information, is, surprise, surprise, keeping his plan close to the vest. to switch parties in 1981 to start that streak. But they have enjoyed nearsupermajorities for a decade and a half. Of course, the 1980, 1990 and 2000 Senate reapportionments were overseen by former Senate President Pro Tem Robert C. Jubelirer, who is no longer in office. So we will see how Senate Majority Leader Dominic Pileggi, R-Delaware, who is ramrodding this project, does. Jubelirer, working with different staff quarterbacks – Glenn Reber, Mike Long and others – is the Bill Walsh of reapportionment. We’ll see if Pileggi is the Mike Shanahan or George Seifert of redistricting – the double-Super-Bowlwinning Walsh disciples - or the Ray Rhodes – great coaching lineage, lousy results - of political demographics. Pileggi, who makes Eagles Coach Andy Reid seem like a bubbling fountain of information, is, surprise, surprise, keeping his plan close to the vest. He says he doesn’t know when it will be shown to the deciding vote on the state reapportionment commission by Superior Court Senior Judge Stephen McEwen, a former Delaware County Republican district attorney. Pileggi also declined to discuss most
Pennsylvania, because that is where the population has gone. But math and populations are the servants, not the masters of these processes. Especially when the top leader in each caucus in each chamber comes from the west: Senate President Pro Tem Joe Scarnati and House Speaker Sam Smith are both from Jefferson County and House Minority Leader Frank Dermody, Senate Minority Leader Jay Costa and House Majority Leader Mike Turzai are all from Allegheny. Of the top six, only Pileggi is not required by law to think of The Pittsburgh “Stillers” every six minutes. Pileggi, who is very smart, knows this, so why is he starting out by asking McEwen to move two seats? Because at least one needs to be moved, and many lawmakers believe only one will be moved. But the potential retirements of White and Wozniak, and the legal travails of Sen. Jane Orie, R-Allegheny, make them the most likely seats to be moved. Brewster was just elected last year. That and the fact that Allegheny County, as the Pittsburgh Post-Gazette reported, is hemorrhaging people, puts him on that list as well, especially if Wozniak - a mere 55 despite 32 years in office at the
he is right that “shove all the seats east a bit until you get to Eagles fans” plan will uproot their districts as much as a “move two districts east” plan, he has a caucus sales job ahead of him. So with this likely opening offer, what will the Democrats do? Like Pileggi, Costa is keeping mum at this point. But other sources close to the talks said the Democrats will push back by asking no seats be moved, or if one gets moved since they are creating a GOP seat, move a GOP seat, such as White’s or Orie’s. At that point McEwen, a former Delaware County War Machine district attorney, but one with a commendable record as a state jurist, will decide. Here is where the test of Pileggi and Costa will be. The reasons the Senate GOP has dominated that chamber for 30 years are multiple: great candidate recruitment, great fund-raising, sound demographics during redistricting, four year terms. But there is one simple reason: Nobody worked the redistricting referees the last four years better than Bob Jubelirer. He was and is great at making fair-minded people side with him in disputes, whether that audience was the Senate GOP caucus, the last three neutral appointees
to state redistricting or the deciding vote on where to go to dinner. Of course, for much of that time he was matched against former Senate Minority Leader Bob Mellow, D-Lackawanna, but even when former Sen. Vince Fumo, D-Philadelphia, was involved, Jubelirer won the reapportionment battles. So this is a battle between Costa and Pileggi about who McEwen finds more reasonable. Except that Costa is appealing to a guy who has had the same allies and career-mentors as Pileggi for the last 30 years. Don’t expect public pressure and editorials to sway McEwen much. He comes from Delaware County GOP politics, where telling Democrats, the media and others who disagree with you to “bite me” is hailed as the essence of courtesy. Even if McEwen issues a stunning defeat to Pileggi, say, moving only one district and declining to kill a Democratic district to create a Republican one, Pileggi still ends up moving a conservative western GOP district to a more moderate eastern GOP district, which Charlie Sheen would say was winning. And that’s if Pileggi loses the McEwen Bowl. While insiders consider a “one-seatmoves and it’s probably Wozniak’s” scenario as most likely, the other conceivable McEwen responses are: 1) moving White or Orie’s seat to Chester/Lancaster; 2) moving one of their seats there, and moving Wozniak or Brewster’s seat to the Poconos. That second plan would move a Democratic seat that is hemorrhaging population to Monroe County, where it would be a toss-up or leans GOP seat. Of course, once McEwen decrees whether a seat will be moved, Democrats will argue any seat their party loses from a safe district in the west should be moved to create a safe Democratic district in the east. That could mean a new Montgomery County district, with some tentacles perhaps going into Bucks. Also, look for a pitched battle over the shape of Sen. Richard Kasunic’s seat in Fayette County and the southwestern corner of the state. The GOP feels it can win that seat after Kasunic retires, especially if they export some of his Democrats to shore up the districts of Costa and the other Allegheny Democrats. Don’t be surprised if the Senate GOP also tries to change the district of Sen. Tim Solobay, D-Washington, whom they targeted in 2010, a loss that still stings. If Wozniak’s district gets carved, look for a lot of those Democrats to be given to Sen. John Eichelberger, R-Blair, who defeated Jubelirer in 2006, to make his district more competitive in the fall, and, potentially, in a GOP primary. So there is a look at what the only folks whose redistricting intentions usually become reality will likely try to achieve. If anyone is good at reading McEwen’s mind, give me a call, because his brain is the real battlefield of this reapportionment. CW
OPINION
SEPTEMBER 2011 CAPITAL WATCH
13
Corbett budget document calls for review, standardizing of state daycare funding
By Peter L. DeCoursey, Capitolwire
Gov. Tom Corbett’s administration wants to review and may consolidate the programs it funds to pay for daycare, his new budget policy and program guidelines state. The state’s current daycare programs vary how much income families can have to qualify, and make some poorer families pay part of the cost, while paying the full cost for some better-off families, said Budget Secretary Charles Zogby, a former state secretary of education. Child care advocates say a review of all programs is fine, but the goal should be to lift the educational quality of child-care programs, not reduce the state subsidies for current high-qualityeducational programs. The budget policy and program document, which gives Corbett’s cabinet agencies homework as they prepare for the 2012-13 state budget, states: “ The commonwealth manages a number of early childhood programs: Pre-K Counts, Head Start (Supplemental Assistance),” and two welfare programs: “Child Care Services and Child Care Assistance. Each is intended to serve the early childhood needs of Pennsylvania’s children. Yet each has different eligibility requirements, standards of performance, and costs. The departments of Education and Public Welfare should assess the issues and identify the most pressing needs, evaluate existing programs and rationalize the spectrum of early childhood programs. The intent should be to meet the needs of our most vulnerable citizens in the most cost-effective manner.” In the current budget, Pre-K Counts is funded at $82.7 million, Head Start Supplemental Assistance at $37.3 million, and the other programs at $326 million. That total of $446 million is down from $492 million enacted in the previous budget. Reviewing the programs was hailed as a reasonable idea by legislative leaders in both parties. Senate President Pro Tem Joe Scarnati, R-Jefferson, said: “Obviously this governor in education is looking to change the landscape. I haven’t had any discussions with the people involved in these programs. “Let’s talk about how we can spend our money best for kids. We gotta decide where to put it, and with these groups and the governor at the table, I think we can get there. That is a good discussion to have, with everyone.” House Minority Leader Frank Dermody, D-Allegheny, agreed, but was unclear about the need for any significant changes. “Let’s discuss it, talk about how successful the programs have been and what they have done,” Dermody said. “I don’t mind evaluating programs, the programs are clearly working, test scores are going up, if we can make it better, absolutely let’s look at it and discuss it. Sometimes I think they get upset just because Gov. Rendell did it. But Head Start and Pre-K Counts are working. If they can find a way to make it more effective, more
efficient, why not? So let’s discuss it, but look at the results, too, because they are clear and impressive.” Asked what kind of ‘rationalization’ or changes were sought, Zogy said: “PreK Counts is $7,500 per child, with an income limit of $65,000 and no co-pay. But we have other programs with lower income limits that have co-pays. How do you say to a family making $35,000 a year, you have a co-pay, but if you make $36,000, and go into this other program, no co-pay? “We need to recognize some of the inconsistencies like this, take a look and see if there is a way to make these programs more consistent and fair. I would like to see some greater consistency among all our programs, so we allot our resources fairly among those who need them, and you don’t have these inconsistencies.” The higher stipend per child for Pre-K Counts was intentional, said advocates, including Gov. Ed Rendell’s former budget secretary, Mary Soderberg. “Educational programs cost more than daycare,” without a strong education component, Soderberg wrote in an e-mail. “Unlike our day care programs and Headstart, our investment in Pre-K Counts is designed to expand the num-
ber of 3- and 4-year-old children participating in high quality educational programs. The ultimate goal is to ensure that more students succeed in school as evidenced by the improvements in our student achievement. Pennsylvania was recognized by the Center on Education Policy last year as the only state in the nation making significant progress in boosting achievement across the board as evidenced by in the percentage of students improving their test scores.” Joan Benso of Pennsylvania Partnerships for Children, an early childhood advocacy group, said consolidating programs may be a mistake, writing in an e-mail “it is critical to remember that individual programs are often designed with complimentary yet different goals. A large portion of the funding for child care assistance and child care services
is used to provide a subsidy to TANF and other low-income working parents to purchase child care so they can work. “An important outcome of this investment has been that children attending child care programs funded with these investments also benefit from some early learning opportunities. Many of these child care programs don’t meet the rigorous program standards contained in Pre-K Counts that has the sole purpose of improving the school readiness of atrisk children. This single focus requires a higher level of staff credentials and a related higher cost per child which are appropriate as the increased investment saves the Commonwealth funds in the years to come. “Last academic year, more than half of children enrolled in Pre-K Counts have at least two risk factors that seriously compromised the likelihood they would enter school ready to learn. The program results are so successful that nearly every child (99 percent) showed ageappropriate or emerging age-appropriate proficiency in literacy, numeracy, and social skills after attending the Pre-K Counts program. Benso responded: “Pre-K Counts is an education program and it is much more like kindergarten than child care.” CW
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14 OPINION
SEPTEMBER 2011 CAPITAL WATCH
Editorial
Don’t just sit there talking. Do something. About the only thing more depressing than the new Franklin and Marshall University poll about what Pennsylvanians think about their lot in life is reading in the Bible about what God did to Job. Most Pennsylvanians, according to the F&M analysis of interviews with some 525 individuals, agree that the economy sucks and pretty much nothing else matters. An unprecedented 38 percent of Pennsylvanians say the “most important problem facing Pennsylvania today” is unemployment and their personal finances. When you factor in another 9 percent who just generally identified “the economy” as the No. 1 problem and another 5 percent who said “taxes,” you have 52 percent agreeing on the same problem. Another 11 percent had moved beyond the simple issue and identified a cause as the most important problem: “government and politicians.” This consensus was reinforced by the generally abysmal approval ratings given to most politicians from President to Governor to U.S. Senators. Fewer than one in three surveyed gave “good”
or “excellent” job performance ratings to Barack Obama, Tom Corbett, Bob Casey or Pat Toomey. Only 41 percent said the believe Obama “deserves” re-election. But before Republican die-hards break out the champagne too soon, it was also apparent that while many might not believe the President had earned re-election, they weren’t that impressed with any of the GOP front-runners in the Presidential sweepstakes. Obama was beating Michelle Bachmann, Rick Santorum, Rick Perry and Mitt Romney in one-to-one matchups with Romney coming closest (Obama 36 to Romney’s 30 percent). There is a political wake up call here which most elected officials have yet to heed. People are hurting. Lower income families are hurting and the rise in social safety net reliance is an indicator that things could be even worse. The middle class is hurting and, as unemployment benefits and savings run out, the pain is likely to worsen. Government’s response thus far has been to make things worse. We live in a consumer economy. Most Americans
realize implicitly that they have two full time jobs. First, we have to consume goods and services. Unless we consume – the more the better, even if it means waste – the stronger our economy and the more benefits trickle down for all. Second, we have to work to have the funds to consume. Seriously, you think a significant portion of the work force loves their jobs? More likely they love the benefits that come from a decent paycheck. When government cuts spending it means reduced payroll and reduced government purchases from the private sector. Those laid off government employees buy less; those cuts in government purchases means reduced sales for the private sector. Most people understand how this works in relationship to the Department of Defense. Less war, fewer munitions consumed, lower quartermaster spending, fewer jobs in the supply chain. Now that state governments are cutting budgets (like Pennsylvania) we see the same economic rules apply across the board. According to the Center for American Progress in Washington (full disclosure:
U.S. Needs to Let More Workers In With Congress’ battered Democratic majority needing a base-energizing success to take into the fall elections — and with climate-change legislation stumbling badly out of the gate — party leaders suggested that they may bring immigration reform in from the cold this year after all. It would be a good choice for Democrats. If a few Republicans can be persuaded to consider immigration reform on its merits — and not through the xenophobic lens of a noisy minority within their base — President Obama could score a legislative victory in a filibuster-free walk. The evidence favoring immigration reform is stark in a way that ought to appeal to Republicans. A robust temporaryworker program would reduce illegal immigration and add billions of dollars in productivity to the U.S. economy. The key to reducing illegal immigration will be a strong temporaryworker program. Without immigration reform, the problem of illegal immigration will only grow worse as the U.S. labor market slowly recovers from the recession. The number of illegal immigrants in the United States has dropped to 11 million from its peak in 2007, but it will likely begin to grow again as demand for less-skilled workers picks up with the economy.
By Daniel Griswold
IMMIGRATION The economic and demographic realities that have fueled illegal immigration are still in place. In normal years, the U.S. economy produces hundreds of thousands of new jobs in retail, landscaping, food preparation and service, and home and commercial cleaning, all of which attract immigrants with limited job skills. At the same time, the number of nativeborn Americans satisfied with such jobs continues to decline as the population becomes older and better-educated. The
yes, a liberal think tank), a 10 percent reduction in government spending in analyses conducted from 2007 through 2010, resulted in an average .4 percent increase in state unemployment. It’s always dangerous to try to extrapolate from fragmentary data but it seems relatively clear that elected officials of every stripe and at every level of government can expect some level of punishment from the voters for ‘failing to act” in the face of a clear and present disaster. Campaign managers James Carville and Paul Begala famously observed in Bill Clinton’s first successful Presidential campaign, “It’s the economy, stupid.” Elected officials could update that: “It’s jobs, jobs, jobs, stupid.” The real challenge, though, for the average politician, is to understand just how deeply voters feel about their alienation from government. If there is one lesson we can take away from the impact of the Tea Party movement, it is that people are looking for results, not words. They still believe in the consumer economy. They want their family-sustaining jobs so they can participate. CW
number of adult Americans without a high school diploma is expected to drop by another two to three million over the next decade. Yet our immigration system offers no means for a sufficient number of foreign-born workers to enter the country legally and fill that gap. So they enter illegally. The key to reducing illegal immigration will be a strong temporaryworker program. This has been the missing ingredient of past efforts. The 1986 Immigration Reform and
Control Act legalized almost three million illegal immigrants. It also ramped up enforcement through increased border patrols and sanctions against those employing illegal workers. Yet it contained no provision for expanding legal immigration. Today, everybody agrees the act was a failure. We know from experience that expanding opportunities for legal immigration can sharply reduce illegal immigration. In the 1950s, Congress dramatically expanded the number of temporary-worker visas through the Bracero Program. The result was a 95 percent drop in arrests at the border. If Mexican and Central American workers know they can enter the country legally to fill jobs, they will be far less likely to enter illegally. A workable temporary-visa program would allow border agents to concentrate their efforts on intercepting real criminals and terrorists at the border. It would also reduce the temptation to hire illegal workers, in turn reducing the need to raid workplaces and impose national ID cards, employment verification systems, and other burdens on American citizens CW Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute and the author of Mad About Trade: Why Main Street America Should Embrace Globalization.
OPINION 15
SEPTEMBER 2011 CAPITAL WATCH
Think Green, Go Green, Save Green We’ve all heard the old adage: “You have to spend money to make money.” Unless you inherited from a sudden tragedy, won the mega millions lottery, or got lucky from the various stimulus programs, the aforementioned phrase probably might leave you scratching your head, wondering where the money will come from. The universal principle remains the same over time, yet the underlying question remains buried in the scope of business: Spend money on what? It can depend on what industry you do business in. The list could have an indefinite amount of answers if you spend enough time thinking about it. Fortunately, there is a more obvious conclusion for any industry: alternative energy. Yes, I know – almost everyone has heard this buzz term recently. We have constantly been told we “need to buy hybrid cars, solar panels, and save the environment.” At this rate, this stereotype will never go away. Most of us think that “renewable energies might help us in the long run but won’t help us now,” or “benefits from what we hear in the media aren’t ever what its worked up to be.” Both arguments may be correct. However, if you are looking at it from
a financial viewpoint, the Net Present Value of your company will always benefit from saving money sooner and purchasing tangible, energy producing assets. Reasoning can vary, but opportunities do not. Here’s what you may or may not know about gaining access to capital to fund renewable energies projects: 1. Grants. We all know these exist, but how do you obtain them? For starters, the Department of Energy, United States Department of Agriculture or the US Treasury Department all provides opportunities for them. While often tedious, when paired with grants in various governmental departments, you could pay for the majority of the cost of the project. Depending on the state, the industry and the geographical area, you could be paying for next to nothing for alternative energy hardware. 2. Incentives. You can earn cash from installing renewable energies. Not only will installing systems allow you to provide energy to your own facilities, but the excess energy gained by your equipment can be sold to someone else for cash. The government will also provide cash incen-
By Bill Hawthorne
tives for how much excess power your panels generate. 3. Loans. Government guarantees allow bank loans to be amortized longer than traditional equipment loans meaning smaller monthly payments and lower interest rates available. 4. Grants aren’t just related to solar. Wind, Geothermal, Biomass, Ocean Thermal, Micro turbines, Hydroelectric, Hydrogen and Tidal Energy projects all have access to governmental grants as well. 5. Supply is up, demand is down and nobody controls the market. In a competitive market that has an increasing number of competitors, price cheapens dramatically. An overcrowded amount of competitors will in turn decrease a region’s demand capacity. This is a perfect example of the current solar market. With countless amounts of smaller companies offering solar as an extension to their current business models, the price of solar continues to dip due to the increasing amount of supply. When these same
players later drop out of the market down the road, look for prices to increase again. 6. Do your homework, save money. Energy consulting firms can help you with this. Ask them about supply chains, and manufacturers. Most importantly, make sure you get a quote and a cost benefit analysis done and figure out how much you’ll save. Transparency, while not necessary, is ideal in any business transaction. The purpose of any business transaction is to increase value. Regardless of your motivation, alternative energies help you do this. The key is to spend money, to make money. There are government programs set in place allow you to increase value for whatever asset you choose. Some of these programs end in October, some end in December, and some are planned for years down the road. Spending a minimum of 5 percent of a renewable energies project before Dec. 31 can allow you to get 30 percent of your cash back after installation of your renewable energy project. Awesome, now you have yourself thinking about the opportunities. Think green; go green; save green. You’re already one-third of the way there. CW
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