w w w. ca p i ta l- wat c h . c o m
CapitalWatch VOL. 4 NO. 12
inside Specialty wines, liquors can now be ordered over the web PAGE 3 PA voters overwhelmingly support public education PAGE 6 DEP urges EPA to again revise federal interstate air pollution rule PAGE 10 What’s up with redistricting? PAGE 12 EDITORIAL: ‘Tis the season PAGE 13
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DECEMBER 2011
Voucher group presses for House action on teacher evaluation By Peter L. DeCoursey, Capitolwire
The Students First Institute in Washington, D.C., is airing a new radio ad to try to move forward Gov. Tom Corbett’s education agenda, especially Corbett’s teacher evaluation reforms. In the ad, a women’s voice says: “Now is the time for education reform in Pennsylvania. With fewer than half of the students in our state scoring proficient in reading and math, it’s clear we need to reform our schools now. “This week, our lawmakers have an opportunity to put an effective teacher in every classroom and to give parents and students the choices they deserve to attend a great school. Tell your representative in Harrisburg that Pennsylvania children have waited long enough. The time for education reform in our state is now. Paid for by Students First Institute.” The problem with that ad, apart from those who think that vouchers and more taxreduction for those who give private scholarships are not the best solution, is that there never has been a school, much less a state with an effective teacher in every classroom. The claim that any bill will “put an effective teacher in every classroom” is silly. It is a worthy goal to raise the number and percentage of effective teachers in every classroom. And the House may debate this week a bill to make student performance 50 percent of the teacher evaluation process, although the administration’s pilot program is still ongoing. The administration is already vote-counting the measure, but getting the House and Senate
Govenor Tom Corbett pushes vouchers during Philly school visit.
to actually swallow it may take months. And all the House is willing to admit to doing on vouchers is discussing them in caucus this week and pushing the Educational Improvement Tax Credit and charter school reforms. Of course, both sides in this debate stretch the facts. Educator’s groups say Corbett just wants to cut school budgets and do vouchers and tries to look away and whistle when it comes to improving teacher evaluations or charter reform. And remember, the current evaluation system says half the kids aren’t proficient at reading and math but 98 percent of the teachers are fine. So it needs fixed. But the dramatic change proposed by Corbett is not going to be approved quickly.
Students First proponents say their ad is aimed at a future House education reform bill since the House won’t pass the Senate bill. It clearly is hoping to influence the House caucus on these issues this week. And remember, there are two different groups here: Students First PA and allied groups put $7 million into the 2010 elections and favor all of Corbett’s education reforms, but prioritize vouchers for poor kinds in bad schools. Students First national, which has the same name and goals, but different funders and priorities, says it values teacher evaluation reform most. The House is looking for a different approach than the Students First PA/Senate/ Corbett voucher approach,
because it doesn’t want to have to swallow Senate Bill 1’s voucher program to get the EITC increase and charter school oversight reform. But remember, the Senate voucher proposal is essentially a Students First PA plan, drawn up to deal with the concerns of the Students First PA funders that vouchers are a major civil rights issue of our time. In addressing that concern, and others, Senate Bill 1, in the form it will likely be in if it ever wins House approval and is signed by the governor, essentially does three things: • Gives vouchers a few thousand poor kids in terrible schools, maybe, over a few years, eventually up to 10,000 poor kids in terrible schools, continued on page 14
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Pennsylvania’s #1 Online Source for Political, Legislative and Public Policy News For a free trial subscription, please visit our web site at www.capitolwire.com.
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More than 3,400 children in the Harrisburg area are at risk of being forgotten this holiday season… unless you and I do something. Just one gift…and a Christmas meal. Is that too much for a poor child to ask for? In some parts of the world, perhaps. But not in our community.
We have a strong tradition of taking care of our own – especially at Christmas.
Will you help The Salvation Army Harrisburg deliver new toys, food and clothing to needy children this holiday season? We promise to stretch your contribution to do the most good - and let the children know they haven’t been forgotten. At The Salvation Army Harrisburg, 89 cents of every dollar raised goes directly to support programs and services that benefit 20,000 people annually within our service area of Dauphin, Cumberland and Perry Counties.
YES! Here is my Christmas Campaign gift to bring food, toys and clothing to needy children:
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The Salvation Army Harrisburg • P.O. Box 61798 • Harrisburg, PA 17106 (717) 233-6755 • www.salvationarmyharrisburg.org
The Salvation Army Harrisburg Capital City Region (717) 233-6755 • www.salvationarmyharrisburg.org • P.O. Box 61798 • Harrisburg, PA 17106
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DECEMBER 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 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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Specialty wines, liquors can now be ordered over the web, shipped via UPS The state Liquor Control Board (LCB) has begun allowing people who order specialty wines and liquors from its website to have them shipped via UPS. Until Nov. 21, customers who ordered the products had to pick them up at a state store. Under the pilot program, people can now order the product online and pay shipping costs of $14 for one to three bottles and an extra dollar for each additional bottle. An adult 21 or older must sign for the alcohol and produce valid identification. Third-party orders have to be picked up in stores. LCB officials say if the pilot program proves successful during the next few months, it could expand to include other products. “We don’t need the LCB being the middleman,” State House Majority Leader Mike Turzai said, pointing to additional costs and markups, including the regular 6 percent sales tax and the 18 percent Johnstown Flood Tax. Previously, only wineries that did not sell more than 200,000 gallons of alcoholic ciders, wines and wine coolers annually could ship directly to homes.
Speciality wines and liquors can now be ordered over the web.
The products affected by the change are those in the state stores’ inventory but not found on shelves. LCB spokesperson Stacey Witalek said customers ordered 663 bottles of alcohol through the website on Cyber Monday which fell on Nov. 28.
“That’s triple last year’s total, when only store pickup was available,” said Witalek. Rep. Turzai, who is pushing the state to privatize the state liquor store system, said he’s in favor of producers being able to ship products directly to their customers. Turzai’s bill has lost some steam since it was announced in July, lawmakers have said, and Senate GOP leaders remain skeptical it can pass their chamber. Some House Liquor Control Committee lawmakers said they have concerns about totally privatizing the liquor system and worry about potential adverse affects on the beer industry. Turzai spokesman Steve Miskin believes the bill will get voted out of committee this month and the House “will take up the bill when it’s ready to.” Unlike the governor’s other highprofile commissions on Marcellus Shale and Transportation Funding, the privatization panel does not have a deadline. Corbett spokesman Gary Miller said the panel is still in the formative stages and the first meeting has not been scheduled. Over the summer, Corbett also used a veto threat to hold up Marcellus Shale legislation until after his commission produced a report. If that’s the case, Miskin says the House won’t wait for the commission to reveal its findings on liquor privatization. “Privatization has been vetted. The governor has made his position abundantly clear – Pennsylvania should not be in the business of selling booze,” he said. “Government should be in the business of serving the people, not serving them alcohol.” Miskin said Turzai’s bill is going through the committee process and probably will get amended and voted out of committee. “That’s how the process works,” he added. CW
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DECEMBER 2011 CAPITAL WATCH
Rafferty officially announces bid for Attorney General As the self-proclaimed “chief law enforcement legislator,” Sen. John Rafferty officially announced his campaign for Attorney General on Nov. 30. “I have, since a senator in the Pennsylvania Senate, been the chief law enforcement legislator in the Senate of Pennsylvania, if not the entire General Assembly,” said Rafferty, a Montgomery County Republican and former Deputy Attorney General, who touted endorsements from the Pennsylvania Fraternal Order of Police and the Pennsylvania Professional Firefighters Association. Rafferty, who is currently the chairman of the Senate Transportation Committee and former chairman of the Senate Law and Justice Committee, said he has “first and foremost, been a law and order advocate.” “And if you look at my record, I have I think a unique blend for the office of Attorney General,” he said. Rafferty is the first Republican to officially announce his campaign, although it’s been known for sometime that he had intentions to run.
Another Republican, Cumberland County District Attorney David Freed has been mulling over a jumping into the race and said on Nov. 29 he plans to soon make a decision about running. Dauphin County District Attorney Edward Marsico is also considered possible, though unlikely, as a candidate. Freed and Marsico have said only of the two would run. Rafferty said he had a “brief conversation” with the former Attorney General, Gov. Tom Corbett, about the election and a possible endorsement. Along with the FOP and Fire Fighters Association endorsement, Rafferty recently received an endorsement from Bob Asher, a fellow Montgomery County resident and National Republican Committeeman. “John Rafferty has focused, most especially, on enacting laws to prevent child abuse, including sexual assault on minors,” Asher wrote in a letter. “John is a tough, hard-working candidate who will make a great Attorney General.” Democratic Party spokesman Mark Nicastre called Rafferty “a typical
Sen. John Rafferty is the first Republican to officially announce his bid for Pennsylvania Attorney General.
Harrisburg politician who puts special interests ahead of Pennsylvania families.” Rafferty also defended then-Attorney General Corbett against criticism of his handling of the Penn State University scandal. “The Grand Jury system takes time,” Rafferty said, noting that Corbett used the AG office’s resources “effectively
and efficiently.” During his stump speech, Rafferty highlighted his plan to use the Grand Jury system for sexual abuse cases, political corruption, Medicaid and insurance fraud, and white-collar crimes. “I have zero tolerance for political corruption and zero tolerance for abusing our children,” he said. Rafferty said he expects the Democratic side of the Attorney General election “to be a real slugfest.” Three Democrats have announced they’re running for the office: Former Congressman Patrick Murphy, an Iraq War veteran from Bucks County; Dan McCaffery, a former prosecutor from Philadelphia and brother to state Supreme Court Justice Seamus McCaffery; and Assistant District Attorney Kathleen Kane from Lackawanna County. McCaffery and Murphy have picked up some hefty Democratic endorsements. Philadelphia County Democratic Chairman and U.S. Rep. Bob Brady, D-1, endorsed McCaffery, while Murphy received an endorsement from former Gov. Ed Rendell. CW
Freed joins Attorney General race Cumberland County District Attorney David Freed has announced that he will join the 2012 state attorney general’s race. Freed, a Republican, joins Sen. John Rafferty, R-Montgomery County, in the race to win the state Republican Party Committee’s nomination. However, Freed, a Camp Hill native, told the Patriot News that while he will compete for the party’s endorsement, he will likely not continue the race to the April 24 primary if the committee endorses someone else. “Any Republican seeking to do this knows that we start out with a major disadvantage in the number of registered voters,” said Freed. “So we need to have the strongest candidate we can have, and a major part of that is getting the party’s endorsement.” Republican strategist Charlie Gerow also told the Patriot News, “It’s going to be an interesting race because both candidates have very different stories and very different bases of support, but they both have good stories and bases of support.” Gerow, a veteran GOP strategist has not taken sides in the attorney general’s race. Freed’s father-in-law is LeRoy Zimmerman, Pennsylvania’s first elected attorney general who took office in 1980.
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DECEMBER WATCH December2011 2011CAPITAL CAPITAL WATCH advertorial
Policy Roundtable Spotlight The PBC Policy Roundtable, like its national counterpart in Washington, is a forum in which CEOs meet on a peer-to-peer basis to formulate public policy proposals to the most pressing issues of competitiveness. The Policy Roundtable provides senior managers the opportunity to interact extensively with policymakers, policy experts, media, and other stakeholders; participate in policy evaluation; decide upon long-term public policy strategy; and guide policy education/advocacy efforts. Corporate Chairpersons, CEOs, COOs, CFOs, and Presidents are invited to become members of the PBC Policy Roundtable. For more, see: www.pabusinesscouncil.org.
Douglas S. Elliott
President, Pennsylvania Operations FirstEnergy Corp. Douglas S. Elliott is president of Pennsylvania Operations, which includes Met-Ed, Penelec and Penn Power, electric utility operating companies of FirstEnergy Corp. Mr. Elliott joined the Company in 1977 as an accountant for Pennsylvania Power, a subsidiary of Ohio Edison. Mr. Elliott was appointed superintendent of Accounting, Credits and Collections in Ohio Edison’s Akron Division in 1984, and was named manager of Customer Accounts in 1990. In 1993, he was named Youngstown Division manager and in 1996 became Eastern Region manager. He was promoted to manager of Sales, Marketing & Energy Services at Ohio Edison in August 1997 and appointed vice president in November 1997 when Ohio Edison merged with Centerior Energy Corp. to form FirstEnergy. In November 2001, he was named senior vice president for Retail Operations for FirstEnergy Solutions, a subsidiary of FirstEnergy Corp., and president of Facilities Services Group (FSG), a subsidiary of FirstEnergy Solutions. Mr. Elliott was named senior vice president of the Customer Service and Service Area Development Group in June 2004 and named to his current position in December 2005. Mr. Elliott received a bachelor of science degree in business administration from Clarion University. He also attended Pennsylvania State University and completed its Executive Program and completed the Edison Electric Institute’s (EEI) Senior Middle Management Program. Mr. Elliott was involved in numerous charitable and community organization in Ohio. He was named YWCA Man of the Year for Youngstown in 1996 and received the SME of Akron 2001 Distinguished Sales and Marketing Award. Mr. Elliott is currently a member of the board of directors for Team Pennsylvania Foundation, the Pennsylvania Chamber of Business and Industry, and the Clarion University Foundation. He is also a board member for the United Way of Berks County. He is a member of the Pennsylvania Business Council Policy Roundtable.
CW: What are your firm’s major products/services?
CW: What are your near-term and long-term goals for the firm?
DSE: Met-Ed, Penelec, Penn Power and West Penn Power are part of the FirstEnergy family of companies that serve the electricity needs of six million customers from the OhioIndiana border to the New Jersey shore. Our companies have 3,200 employees and many more retirees in the Commonwealth. They also pay nearly $300 million annually in state and local taxes.
DSE: Among other goals, the companies are committed to ensuring customers know how to save money by choosing an alternative supplier for electric generation. During these tough economic times, our customers are looking for every opportunity to stretch their household budgets. And one of the best ways for them to save money is by taking advantage of special offers on electric generation. We want to make sure customers have all the information they need to make the right energy decisions. Toward that end, we provide educational messages through advertising and other channels that direct them to helpful resources – both within our companies and at the state level – that can make this process both easy and rewarding.
Our employees are dedicated to giving back to the communities we serve. In 2010 alone, our PA employees provided more than $500,000 in support to United Way agencies in PA. We’re also one of the Commonwealth’s largest supporters of Harvest for Hunger and Habitat for Humanity. And our employees provide countless hours of volunteer service to hundreds of community-based organizations.
CW: Are your customers local, regional, national or global?
As part of our efforts to promote the wise use of our product, our PA utilities offer a wide range of energy efficiency and demand response programs to residential and business customers. These programs range from rebates on Energy Star appliances to incentives that help businesses install more energy-efficient equipment and lighting.
DSE: We’re proud to serve two million customers within 32,000 square miles of PA. In fact, our PA utilities comprise the largest electric system in the Commonwealth, based on customers served as well as total square miles.
CW: When did you join the firm?
DSE: In PA, we have a major presence in communities such as Erie, Altoona, Johnstown, New Castle, Greensburg, Reading and Easton, among others.
DSE: I joined Penn Power in 1977 as an accountant after working at Burroughs Corporation (now Unisys Corp) in Pittsburgh as a computer programmer. I graduated from Clarion University with a BS in Business Administration, and even gained some hard-earned utility experience reading meters for Penn Power as a summer job during college! Much of my career has been spent in customer relations, and I also headed our competitive retail operations at FirstEnergy Solutions for seven years before being named to my current position.
CW: Where else does the firm have business locations?
CW: Would you invest more in PA? DSE: Our PA utilities continue to make significant investments in our electric system – from basic equipment upgrades to new technologies that can help improve future reliability. In 2010 alone, we spent more than $500 million on the operation and maintenance of our electric system. In addition, as part of our merger with Allegheny Energy, we agreed to maintain the company’s
former headquarters as the regional headquarters of West Penn Power, and to build on the company’s support of economic development, community initiatives and linemen training programs. I’m especially proud of our efforts to promote economic development throughout our PA service area. For example, in 2010 we provided support to 58 projects that generated nearly $360 million in capital investments while creating or retaining more than 4,500 jobs. These and other efforts reflect our companies’ long-standing ties to the communities and customers we’re privileged to serve. By helping businesses throughout PA grow and thrive, we help ensure the continued success of our own company while making a strong and sustained investment in the future of this entire region. CW: Are there any public policy changes your firm is advocating? DSE: We’re currently advocating for the passage of House Bill 1294, which would streamline the recovery of utility investments in PA’s electric infrastructure. Under the existing regulatory framework, electric utilities can only recover greater investments in system upgrades and other improvements by filing a request with the PA Public Utility Commission to increase base rates. Among other drawbacks, rate cases are expensive to litigate and take almost a year to complete. The resulting “regulatory lag” in cost recovery makes it far more difficult for electric utilities to secure the financing necessary for capital projects that help ensure the long-term reliability of the electric system. By providing a more timely and effective process for cost recovery, H.B. 1294 would help create jobs, improve service reliability and better meet the future energy needs of Pennsylvanians.
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DECEMBER 2011 CAPITAL WATCH
Onorato endorses Rep. Eugene DePasquale for auditor general By Peter L. DeCoursey, Capitolwire
Former Allegheny County Executive Dan Onorato has endorsed the auditor general campaign of state Rep. Gene DePasquale, D-York, giving the House Democrat a big boost. While DePasquale was the first Democrat to campaign for the office, Onorato and Rep. Josh Shapiro, D-Montgomery, both friends and allies of DePasquale, also looked at the race. Shapiro ran for Montgomery County Commissioner instead and won the majority there, while Onorato’s future political plans remain unclear. But a top Democrat who knows all three well said: “I checked and there are no other real candidates at this point for auditor general on our side, and with Dan endorsing Gene, that is a big deal and good news for Gene.”
De Pasquale said, “Obviously I am excited that Dan, the gubernatorial nominee of our party, and someone who has great qualifications for this office, is saying that I am the best candidate for auditor general. That helps politically and it helps with people who know Dan and his background as an accountant and fiscal watchdog.” DePasquale spoke as he awaited Onorato’s arrival in the Boilermakers Hall in Pittsburgh, where the endorsement was made Nov. 30. DePasquale’s campaign released a statement in which Onorato said: ““Eugene is clearly a bold reformer who will aggressively identify waste and inefficiency in the government. He helped pass one of the strongest
open records laws in the country, and was the first legislator to post his expenses online.” Sources said this did not take Onorato out of the running for a rematch against Gov. Tom Corbett in 2014. DePasquale is the grandson of former Pittsburgh City Councilman Jeep DePasquale, who left council just as Onorato joined it, 20 years ago. “Our families have known each other for 20 years,” said DePasquale. At least three Republican candidates are seeking support for the GOP nomination for auditor general: Rep. John Maher, R-Allegheny, Chester County Treasurer Ann Duke, and former Lt. Gov. hopeful Joe Watkins, a vouchers and charter schools advocate from southeastern Pennsylvania. CW
Former Allegheny County Executive Dan Onorato’s endorsement gives Rep. Eugene DePasquale’s campaign a boost.
Will Sen. Pileggi run for Casey’s seat? Senate Majority Leader Dominic Pileggi has hinted that he might throw in his hat to the crowded Republican field of aspiring challengers to Democrat Bob Casey’s re-election bid for U.S. Senate. “The candidacy of Sen. Pileggi offers the Republican Party in Pennsylvania a very positive option as a candidate for the U.S. Senate,” Bob Asher told the Associated Press. Asher is the Republican National Committee member from Pennsylvania. In a posting on his Facebook page, Pileggi, who is from Delaware County, wrote, “I have been approached by a number of people about the possibility of running for U.S. Senate. I’m flattered by the question, and I have deep concerns about the direction our nation is taking in many areas, including historically high levels of unemployment, the spiraling
national debt, and the federal government’s attempt to take over health care. I have made no decision but will continue to listen regarding how I can best serve our Commonwealth and our country.” Pileggi, a lawyer and former Chester mayor, is in his fifth year as the state Senate majority leader. He has served nine years in the state Senate and is up for re-election next year. So far, at least nine others have said they will seek the Republican nomination to take on Casey. They include entrepreneurs Tim Burns and Steve Welch; manufacturing executive David Christian; tea party activist Laureen Cummings; pharmacist John Kensinger; former state Rep. Sam Rohrer; lawyer Marc Scaringi; former coal industry executive Tom Smith; and retired U.S. Army Col. John Vernon.
Senate Majority Leader Dominic Pileggi has hinted he might run for Sen. Bob Casey’s seat.
Many in the party seemed surprised by Pileggi’s announcement. Alan Novak, a Pileggi supporter and former state party chairman, told AP he believes Pileggi has fielded entreaties for perhaps a couple of months but hadn’t taken them seriously until recently. The first day for candidates to circulate nomination petitions is Jan. 24, and the deadline to file them with the state is Feb. 14. The Republican State Committee holds its winter meeting Jan. 27-28, when it traditionally endorses candidates in the spring primary races. The AP reported that Smith, who has considerable personal wealth to draw on, and Rohrer plan to stay in the race through the primary, with or without the party endorsement, according to their aides. CW
PA voters overwhelmingly support public education Pennsylvania voters like public education. A lot. And they want to see their taxes going towards providing quality opportunities for all students. A new poll released by the Education Policy and Leadership Center found that the overwhelming majority of Pennsylvania voters value public education, with 93 percent of them agreeing that “high quality public schools are vital for the success of Pennsylvania’s economy.” “The results show great concern for the economy, as well as the notion that stronger schools strengthen the economy,” said EPLC President Ron Cowell. “It is clear to us that voters understand the critical link between
public education and the well-being of the economy, the Commonwealth, and their local communities.” Moreover, poll results showed a bipartisan support for increased state funding for public schools, particularly for poorer schools to combat resource disparities. And while opinions were more mixed about charter schools, 67 percent of voters said they opposed using taxpayer funds to support voucher programs. Most voters express strong support for increasing state funding for public schools, even in light of difficult budget times and at the expense of cutting other state programs and/or raising some state taxes. In addition, this support for higher state funding trumps other
issues competing for lawmakers’ time and consideration in Harrisburg. The poll also found that Pennsylvanians support more choices for parents within the public school system (including public charter schools), but oppose public funds for non-public schools. Pennsylvanians support maximizing choices for both parents and children within the public school system including public charter school, as well as other important options for children like arts education and opportunities to enroll in advanced placement courses, foreign language courses and college-level courses. However, most oppose the use of public funds for non-public schools. This poll was commissioned by The
Education Policy and Leadership Center and conducted by Susquehanna Polling and Research. Completed interviews were conducted October 24 -31 with 800 registered voters.
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DECEMBER 2011 CAPITAL WATCH
Credit Union Organizations Provide $195,000 In Disaster Relief Grants To PA Flood Victims
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early $195,000 in flood disaster aid was distributed by the Pennsylvania Credit Union Association (PCUA) and the Pennsylvania Credit Union Foundation (PCUF) to 239 credit union employees and members from 35 Pennsylvania credit unions. The grants were made possible through a combined effort of the credit union movement’s National Credit Union Foundation’s CUAid Emergency Relief program, which began in the aftermath of the Hurricane Katrina Disaster in 2006, the PCUA and the PCUF. In support of the effort, the PCUA contributed $50,000; the PCUF, $100,000; and the NCUF’s CUAid Disaster Relief Fund, $45,000. PCUA President/CEO Jim McCormack praised the Association and Foundation Boards for their “generous support to alleviate the suffering of our credit union employees and members.” McCormack also spoke about “the terrible destruction of homes along a 250 mile path of the Susquehanna River where credit unions are located
from small towns like Troy, Athens, and Towanda in the North, through metropolitan areas — Scranton, Pittston, Wilkes-Barre, Williamsport, and Harrisburg — and areas as far South as Lebanon, Lancaster, York, and Marietta.” PCUF Executive Director Joe Wambach praised both the efforts of the credit unions that acted on behalf of employees and their members, as well as the strong partnership among the Association, the NCUF, and the PCUF. “That all of us were able to process so many grants in such a short period of time and to get funds to the victims of the disaster was remarkable,” Wambach said. He also noted that “while the amount distributed cannot completely fill the needs of credit union employees and members, it does represent the PCUF’s profound concern for them, as well as our hope that the funds are a first step in their recovery.” Note: All of the funds have been depleted, therefore, no additional grant applications are being accepted.
November’s state tax collections come up short Pennsylvania’s revenue situation is starting to sound like a broken record: tax collections continue to come in below expectations. According to the state Department of Revenue, November’s collections were $63.3 million less than anticipated. That puts the commonwealth $345.3 million in the red for the fiscal year, at least with regard to predicted collections. Leading the way in underperforming revenue streams again was the state’s corporation tax. The levy’s $39.4 million in collections were $24.2 million less than expected for the month. Year-todate corporation tax collections total $750.7 million, which is $167 million below estimate. The monthly breakout also reported less-than-anticipated collections through sales and use taxes and the
inheritance tax. Sales tax revenues totaled $708.3 million, $10.3 million below estimate, while inheritance tax revenue for the month was $52.8 million, $15.9 million below estimate. The year-to-date sales tax collections are $3.6 billion, which is $18.9 million below estimate, and inheritance tax revenues are lagging $18 million behind expectations for the year at a total collection of $321 million. The state’s personal income tax (PIT) collection total was one of the bright spots for the month, yielding $769.2 million for November, $5.4 million above estimate. November’s better-than-expected performance was nowhere near enough to put sales tax collections even with yearly expectations, though: year-to-date collections total $3.8 billion, which is
$129.2 million less than anticipated. In a news release, House Minority Appropriations Chairman Joe Markosek, D-Allegheny, continued, but in a more subtle way, to question the validity of the predictions made by the state Budget Office. The Corbett administration argue are responsible assumptions based on the uncertain economic climate. Markosek concedes that “While collections continue to fall behind the official estimate for the current fiscal year, collections are up compared with the same five months in the last fiscal year,” said Markosek, adding that the commonwealth ended the last fiscal year $785 million ahead of projected revenues. The state’s current year-to-date collections, which are $9.4 billion, are running about $200 million ahead of the $9.2 billion in year-to-
date revenue collections reported in November 2010. But there is one thing on which Markosek and state Revenue Secretary Dan Meuser do seem to agree: things aren’t likely to get much better on the revenue side for the state anytime soon. “With the uncertainty in the national and world economy, the House Appropriations Committee (D) maintains a guarded outlook on revenue for the foreseeable future,” said Markosek. When asked if he thought things might improve in the coming months, Meuser said, “Unfortunately, there’s no data or indicators giving us any objective reason to believe the revenues will improve in any significant way. …no we don’t think there’s going to be any improvements this fiscal year anyway.” CW
DECEMBER 2011 CAPITAL WATCH
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DECEMBER 2011 CAPITAL WATCH
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DECEMBER 2011 CAPITAL WATCH
Physicians lobby to turn class-action agreement provisions into law By Kevin Zwick, Capitolwire
Physicians and representatives from the four Blue Cross/Blue Shield health insurers have offered opposing views on a bill that would put provisions of a class action settlement into law. The settlement, known as the “Thomas/Love Settlement,” involved roughly 900,000 physicians nationwide, the. Blue Cross/Blue Shield Association, and 23 Blue Cross/Blue Shield plans, including the Pennsylvania’s four Blues. The agreement, which dealt with claims processing and provider contracts, was only to last for four years, but physician organizations lobbied on Nov. 29 before the House Insurance Committee in support of a bill that would codify portions of the settlement agreement. Michael Wolfe, senior counsel for Capital Blue Cross said the bill “heavily favors the physicians and would be unfair to the Blues.” The bill, introduced by Rep. Nick Miccarelli, R-Delaware, would establish the “Fair Health Care Provider Contracting Act.”
“Despite the title of Fair Contracting legislation, the bill is one-sided and not fairly balanced,” said Wolfe. “…This bill does not include many of the exclusions and exceptions that were contained in the settlement agreements, and it does not include any requirements on the physicians that were included in the agreements.” “In Pennsylvania, where health plans have market dominance or a monopsony over the provider community, they force physicians into ‘take it or leave it’ contracts,” said Marilyn Heine, president of the Pennsylvania Medical Society. Greg Gallant, of the Pennsylvania Orthopaedic Society, said the Blues’ market dominance – about 60-80 percent of the market share in various regions of the state – means physicians have little choice to sign onto contracts with the Blues and “hope that their compensation was adequate to cover their practice expenses and provide some level of profit.” “To do otherwise would risk losing the vast majority of our patients,” Gallant added.
Wolfe noted that a Florida federal court dismissed the class action lawsuit against the 10 Blue plans that opted out of the settlement in 2009. “If the other Blue plans had not chosen to settle, it is likely that the claims against them also would have been dismissed with prejudice in 2009,” he said. Wolfe also said the proposed legislation could interfere with current law and changes that are required under the new Patient Protection and
Affordable Care Act. The bill could infringe on the right of private parties to contract without government interference, he said. Both the Pennsylvania Department of Health (DOH) and Pennsylvania Insurance Department (PID) issued a joint statement opposing the legislation: “Both the DOH and PID understand and appreciate the subtle but yet complicated issues that exist between health insurers and health care providers. The provisions of House Bill 1763 seek to address some of these technical issues surrounding contracting and reimbursement. However, the DOH and PID have a number of concerns with seeking a legislative remedy to business process issues between private parties. “It is the firm belief of both the DOH and PID that the Commonwealth should not seek to codify specific business operations or practices as this will limit innovation of the private sector in advancing new approaches to improve quality and control costs.” CW
DEP urges EPA to again revise federal interstate air pollution rule The Department of Environmental Protection (DEP) is urging the U.S. Environmental Protection Agency (EPA) to again revise the federal Interstate “Transport Rule,” which, as currently written, will stress electricity markets, will cause waste coal-fired electrical generation to be less costeffective, and will constitute a violation of the states’ rights to govern within their borders. The final rule was issued during the summer, but EPA discovered errors in it and proposed additional revisions in October. DEP has submitted comments on the rule overall, as opposed to focusing only on the proposed revisions. DEP’s comments noted that EPA’s rush
but in others as well,” DEP Secretary Mike Krancer said. “EPA fails to understand or fully analyze the potential effect of its onslaught of new rules on the reliability of the electric grid.” The Interstate Transport Rule, which replaces the Clean Air Interstate Rule (CAIR) requirements for sulfur dioxide and nitrogen oxides emissions from electric generating units, will go into effect Jan. 1, 2012. Waste coal-fired power plants, which utilize decades-old piles of discarded coal that was once deemed to have too low of a potential heat content to be used by power plants, will especially be affected. The units remove from the environment piles of waste coal, which have the
air quality, as these plants have minimal effect on downwind areas’ abilities to attain federal ambient air quality standards. Operators, who have combined to reclaim nearly 3,400 acres of abandoned mine lands at no cost to taxpayers, may simply retire the facilities if it becomes too cost-prohibitive to operate them. In its comments, DEP asserted that EPA has very likely overstepped its legal boundaries under the cooperative federalism mandates of the Clean Air Act. DEP supports EPA’s change of the effective date of certain penalty provision back to 2014, which was the date in the proposed version of the rule. Without explanation, EPA had changed that date to 2012 in the final rule.
In its comments, DEP asserted that EPA has very likely overstepped its legal boundaries under the cooperative federalism mandates of the Clean Air Act. to judgment is causing scientific and technical errors. “It is not surprising that EPA’s continued rush to judgment on all fronts, which is driven by litigation deadlines instead of science, is causing an assortment of errors like what we see not just in this instance,
potential to produce acid mine drainage because of acid-bearing material in the piles, in order to generate electricity. As currently structured, the transport rule would require such plants to be equipped with costly add-on controls by 2014 that would do little to improve
“It is ironic and troublesome that EPA, in this rule, continues to ignore the substantial environmental and health benefits that waste coal-fired or ‘coal refuse-fired’ electric generating units provide to the citizens of Pennsylvania,” Krancer said. “We recommended that EPA
fully exclude those units from the rule. “DEP decided we should comment on the rule as a whole since we did not get the chance to do so when the rule was in its proposed form back in October 2010,” Krancer said. DEP noted in its comments that this rule, combined with other EPA regulations, could cause strains on the electric grid because of electric generating plant retirements. The agency requested that EPA consult with the Federal Energy Regulatory Commission; regional transmission organizations, such as the PennsylvaniaNew Jersey-Maryland Interconnection; and independent systems operators to address the concern. DEP also made clear the need for nonelectrical generating emissions sources, such as stationary combustion engines and cement kilns, to be able to use nitrogen oxide emission allowances to meet compliance obligations in the most cost-effective fashion. “Our comments support EPA’s proposal to go back to its original approach of not imposing ‘assurance penalty provisions’ until 2014,” Krancer said. “Postponing the provisions will promote market liquidity and facilitate the creation of robust Transport Rule allowance markets.” CW
news 11
DECEMBER 2011 CAPITAL WATCH
U.S. Senate bill prompts renewed call for internet sales tax By Kevin Zwick, Capitolwire
As the start of the holiday shopping season begins, some advocacy groups continue their nationwide push for “a level playing field” between brick-andmortar stores and online-only retailers. In Pennsylvania, out-of-state online retailers do not charge a sales tax on goods, giving them a competitive advantage over brick-and-mortar stores, one advocacy group claims. “Just level the playing field,” said Dan Hayward, spokesman for the Pennsylvania chapter of the Alliance for Main Street Fairness, a national organization supporting Internet sales tax collection. But a coalition of online-only retailers, lead by dot-com companies eBay, StubHub and PayPal, oppose collecting the Internet sales tax. “This is certainly not the time to impose a major new tax burden on Internet vendors working to implement successful new business models, nor is it wise macro-economic policy to impose what is effectively a tax increase on American consumers,” according to the coalition’s policy paper. The Corbett administration is looking
Capitol Watch_AddABow_Halfpage_12.2011_OUTLINES.indd 1
into “new strategies” for sales and use tax collections, a Department of Revenue spokeswoman said. “We are looking for new strategies for pursuing sales and use tax collections, recognizing that the online arena continues to prove a challenge,” said Elizabeth Brassell, spokeswoman for the state Department of Revenue. “Looking ahead, we will be exploring all viable options for equitable tax collection, for sales and use tax, and all tax types.” Pennsylvania could lose between $254 million and $410 million in uncollected Internet transaction revenue in 2012, according to a study conducted by Robert Strauss, professor of economics and public policy at Carnegie Mellon University in Pittsburgh. “In addition to this uncollected revenue and its obvious impact on the Commonwealth’s finances, the noncollection of sales taxes by some internet retailers shifts sales away from taxcollecting retailers, which importantly includes in-state brick-and-mortar stores,” Strauss wrote. One step the Revenue Department has taken is to include a line on tax returns
for residents to remit their own taxes from Internet sales. “A first step is the addition of the use tax line on the 2011 PA-40, where individuals will be able to easily report and pay use tax annually on items and services for which sales tax was not collected,” Brassell said. But the tax, although a legal obligation for customers to report sales and taxes to the department, is not paid and is difficult to enforce because the department has no way to know about cross-border purchases over the internet, Strauss wrote. Hayward said the Alliance is more interested in a “business-to-business
e-fairness” approach that would have online retailers remit taxes, not the consumers. The report also says that Pennsylvania is not able to compel those Internet businesses without a physical presence in the state to collect and remit Pennsylvania Use Tax on taxable items that are sold to Pennsylvania customers. And online-only retailers have the backing of a 1992 U.S. Supreme Court ruling that says a business must have a physical presence in a state to be required to collect and remit a sales tax to that state. In Quill Corp. v. North Dakota, the majority opinion ruled that North Dakota could not require the Delawarebased to collect and remit sales tax for its office equipment sales. Customers ordered products from Quill Corp. through catalogues, telephone and by mail, and the products were shipped from an out-of-state location. Because the company did not have a physical presence, or “a substantial nexus” in North Dakota, the court ruled under the Commerce Clause that the state could not require Quill to collect and remit a sales tax. CW
11/21/2011 1:02:07 PM
12 OPINION
DECEMBER 2011 CAPITAL WATCH
There has to be a better way The contemporary civil rights era began with the 1954 Brown v. the Board of Education, Topeka, Kansas. It put an end to the “separate but equal” doctrine in education and other areas of American life. The following year Pennsylvania became one of the first states to enact a Fair Employment Practices Act. The state also established the Fair Employment Practices Commission (FEPC). The new law, signed by then Governor George M. Leader, was over twenty years in the making and prohibited “practices of discrimination in employment because of race, color, religious creed, ancestry, age, or national origin.” Its main support came from a coalition of Democrats, moderate Republicans, African Americans, Jews, labor unions, and community-based fair employment advocates. In 1961 the act was amended to prohibit discrimination in schools, public accommodations and housing and FEPC became the Pennsylvania Humans Relations Commission.
process that was adjudicative in nature. The Commission would provide a way for victims to obtain rapid “access to justice.” If only that were true now. It is no secret that the Commission is under turmoil. This past summer the Commission was under siege during its attempts to hire a new Executive Director. The dust was settled when Jo Ann Edwards was named to the top post in August. Hopefully, she can get a handle of what needs to be done with the large number of outstanding cases and do what is needed to reduce the severe backlog. One Commission employee told me that most of the staff work hard but they are expected to carry an unbelievable caseload, do research for cases, contact complainants and companies, hold fact finding hearings, collect and verify data, make sure each charge has been answered, write it up, make a recommendation all the while dealing with being assigned an overabundance of new
By Jacqueline G. Goodwin, Ed.D.
frustrated Pennsylvanians who aren’t privy to what’s going on behind the scenes. These are the same folks who cannot understand why their human rights complaints haven’t been settled yet. In some instances, complaints have taken years, not months, to grind through the system. And under the system, either party has the right to appeal a decision, which means the case may be sent back for a re-hearing. And so the merry-go-round goes around and around. How does a process that must seem Kafkaesque to at least some victims of discrimination represent “access to justice?” Some folks say they’ve been waiting for their decision for almost two years. One woman told me it’s been over three years since she filed her complaint. Another man told me he’s been waiting for four years. Whatever the reasons – lack of leadership, insufficient staff, administrative inefficiencies – anecdotal evidence sug-
And so the merry-go-round goes around and around. How does a process that must seem Kafkaesque to at least some victims of discrimination represent “access to justice?” When the Commission was created, legislators set in motion a process purportedly designed with the aim of efficient and fair resolution to complaints of discrimination. Persons alleging they had suffered discrimination in employment, accommodation or services customarily available to the public, because of a disability, ethnicity, or gender for example, were able to have access to a complaint
cases, working their own caseload, dealing with the caseloads that were left from coworkers who left and were not replaced, and being required to meet quotas of closed cases monthly. This same employee admitted that morale was low. And no wonder. It’s a no brainer that more work minus less workers equals chaos. Unfortunately, there are hundreds of
gests that some legitimate complainants see their cases proceed at glacial speed through a system that is supposed to be fair and expeditious. How sadly ironic that victims of discrimination based on race, gender, sexual orientation, disability are frustrated through systemic gridlock by the very system whose mandate is, as its defenders like to argue, to provide access to justice.
What’s up with redistricting? What happened to state legislative reapportionment? As of Dec. 1 last week, the 5-member commission, made up of the four caucus leaders and former Superior Court President Judge Stephen McEwen, could have met any day to finalize the map for state House and Senate districts. But McEwen said he wanted to finalize the plan the week of Dec. 12, so that is what happened. Part of the wait, of course, is that up until Nov. 30, public comment was being received, and McEwen, as a former president judge, wants to at least look like he is assimilating and weighing the public input. And he actually may be, in terms of the 15th Senatorial District, now held by Sen. Jeffrey Piccola, R-Dauphin. There were basically three big nexuses of public criticism of the prelimi-
nary plan the former Delaware County Republican district attorney joined the two Republican legislative leaders to approve on a party-line vote: • That Piccola’s district, which looks like a PAC-Man with piranha teeth, does not need to circle around Harrisburg and add a lower jaw to make it two-thirds Republican in performance; • That Delaware County House and Senate seats were manipulated to help the GOP keep seats, helping them keep the majority in both chambers; • That the Senate Republicans should not be allowed to move a Democratic western Senate seat to Monroe County, to a district that could swing either way but will likely elect a Republican in 2012.
Jacqueline G. Goodwin, Ed.D.
Maybe there is a better way. Why not remove the complaint process from the Human Rights Commission, set up a specialized Human Rights Court staffed by real judges, and hire qualified legal advocates to prosecute cases for folks whose complaints have been vetted by investigators with a legal background and the discretion to reject complaints that do not have arguable merit. One thing that can’t be disputed. Currently, PHRC is not a well-run agency. It needs leadership to make it operate more efficiently and to catch up on its severe backlog of cases now, not later. Let’s hope that with a new Executive Director’s guidance, cases that have been in the pipeline for years can be expedited and decisions reached. Maybe then victims of discrimination can get on with their lives instead of waiting for decisions that are years overdue. CW
By Peter L. DeCoursey, Capitolwire
Since McEwen’s political bloodlines are deep Red Republican, and he is from Delaware County, he isn’t going to mess with the new Senate seat or the Delco districts. Which means if he wants to look like anything other than a dutiful servant of the Republican leaders, his options are basically just un-messing-up the Piccola district. The other districts go through various permutations and elongations for a political purpose. The 15th District goes through the second-worst permutations in the state, largely unnecessarily. What is the worst district? That of Sen. Lisa Baker, R-Luzerne. If the 15th is a “C” around the Capitol region’s heartland, Baker’s is a lower case “n” surrounding the city of Scranton on both sides and on top.
McEwen has pushed the various mapketeers to submit potential ways to make the 15th less egregiously embarrassing. And it seems likely that district will change shapes by Dec. 12 when the final map is voted upon. In the House, there are rumors of some major move, but no one is sure what it is, and many sources believe it does not exist. A more modest move is possible: relocating the Lackawanna County district of Democratic Rep. Ed Staback to Monroe County. If he puts Harrisburg back in the 15th district and keeps most of Dauphin County in the district, then he is enforcing his will on the Senate GOP and messing up their plan, otherwise it’s just a new arrangement of deck chairs. CW
news 13
DECEMBER 2011 CAPITAL WATCH
Editorial
‘Tis the season One of the traditions of newspapers of general circulation is to dutifully publish an appropriate “holiday season” editorial. The historical root is Francis P. Church’s editorial in the New York Sun in 1897, opining, “Yes, Virginia, there is a Santa Claus.” This is our contribution. We say “holiday season” to be politically inclusive of all who celebrate some sort of festive event between Dec. 1 and New Years whether it be Hanukkah, Kwanzaa, Christmas or the pagan pre-cursor to Christmas, Saturnalia. That disclaimer out of the way, let’s focus on the ironies of the current, well, Christmas season. A casual review of the popular media suggests that Christmas coverage this year is a financial story. The sad state of the national economy is mixed in with the “season of giving,” stirred vigorously and then divined to determine if the “Christmas spirit” has triumphed, leading to higher seasonal sales and an improved business climate. (Sorry, Jesus. If those Three Wise Men try to regift last year’s myrrh, the stock market’s going to tumble.) In the current political climate, it’s a wonder that people send gifts to anyone else. Polling suggests that people are so grumpy they want to put coal in everyone else’s stockings primarily because of the pollutant value. While Abraham Lincoln proclaimed that America’s heritage was
“government of the people, by the people and for the people,” most voters today are encouraged to think of “government” as someone else other than them – namely an oppressor. Conventional wisdom suggests that the average person is general excluded as a beneficiary of government – and that this very same average person has no say in how the pie is divvied (or, indeed, how big the pie or the slices should be). If you’re really a Scrooge (oh, let’s not forget that useful word), you question whether there should be a publiclyfunded or publicly-managed pie at all. In coffee shops and bar rooms, it seems there is always someone wailing about the “welfare state” and suggesting that we either already have one or are very nearly becoming one. In truth, it’s not a useful term. And, if we do have something akin to a “welfare state,” well, we have only the Founding Fathers – the framers of the Constitution – to blame for it. Think for a moment about the Preamble to the U.S. Constitution … in order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general welfare, and secure the Blessings of Liberty …” etc. Think about it: some 225 years ago, they spelled out pretty much a formula
for the work of our current national government. But it seems that a lot of us aren’t happy that the federal government and the government of Pennsylvania are doing their jobs. In the spirit of the holiday season, let’s examine what editor Church had to say about Santa Claus. Yes, Virginia, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! How dreary would be the world if there were no Santa Claus! … There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight.” Notwithstanding Frank Church’s assertions, there is no Santa Claus. But it does not follow that the other values he cited do not exist. Nor does it follow that government, acting on the wishes of the governed, cannot and should not “promote the general welfare.” Ebenezer Scrooge achieved folklore status as the symbol of selfishness run amok. Historians say Charles Dickens created Scrooge and the ghosts of Christmas Past, Christmas Present and Christmas Yet to Come in the wake of mid-19th Century changes to the British welfare system which required welfare
applicants to work on treadmills. To be sure, poverty today for the vast majority of Americans is a far cry from London in the 1850s or even other parts of today’s world. (But no American would willingly volunteer to try to survive on income below the poverty line – about $11,000 a year for a single person.) It’s that time of year, folks. Let’s take a moment to observe that if we love our Founding Fathers, we have to consider all of their wishes including the one that exhorts us to “promote the general welfare.” We also ought to take note that the December “season of giving” actually pre-dates Christianity which makes an even more powerful argument that humans have a need and a responsibility to look after each other. It’s okay. Celebrate it. Cut your government at all levels a little slack. Happy Hanukkah, Merry Christmas, Bountiful Kwanzaa. Be of good cheer. See you next year. CW
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14 NEWS
DECEMBER 2011 CAPITAL WATCH
Voucher group presses for House action on teacher evaluation continued from page 1
including thousands now attending private school; • Puts $50 million more annually, and then increases that amount, for tax credits for privately-awarded scholarships for poor and middle-class kids, helping maybe 10,000 or more additional kids; • Reforms charter schools, which could help tens of thousands of other kids of all incomes, and make charter schools more prevalent, and hopefully, better. Senate Bill 1 won’t “...give parents and students the choices they deserve to attend a great school.” It will give SOME very poor families trapped in very bad schools an option. But most families will have no more choices than they do now. The fact is that great schools, by definition, are a fairly small minority. And Senate Bill 1’s vouchers and EITC and charter reforms are not about getting students into great schools: It is about letting them escape persistentlyfailing, often unsafe schools and get them at least to mediocre ones, hopefully putting some into good schools.
The education reforms in Senate Bill 1 help a small but trapped group of poor students in terrible schools. Ultimately, the ad is an attempt to use some exaggeration to deal with education reform’s big problem in the House: House Republicans will have to supply most of the votes to pass it, and they generally represent better school districts which are not perceived as problematic in student performance. And the Senate Bill and Students First Pa are asking them to go to war with the teachers, principals and other professionals in their community who do a good job to rescue kids in bad schools in Philadelphia, Chester, Harrisburg and other places they don’t represent. Most of the folks who do represent those failing, dangerous schools aren’t for the bill either, with some exceptions like Sen. Anthony Williams and Rep. Tony Payton, both D-Philadelphia. Williams even got Sen. Andy Dinniman, D-Chester, to back this bill, because, the liberal Dinniman notes: “we have to help kids trapped in the worst schools.”
But of course, the problem there is legislative Republicans spend their whole career being told unless they send more money to Philadelphia, the world will end. And they ignore that wailing as a matter of course. And now, when vouchers depend on the House GOP, they think it is
Philadelphia crying wolf again, with the governor and Senate GOP providing the chorus. Which is why they are looking for a proposal again, and starting to move the teacher evaluation bill as another sign they are working on this issue. CW
Senate Democrats present child protection bills By Kevin Zwick, Capitolwire
Senate Democrats announced more than a dozen bills to address shortcomings in the state’s child protection laws on Dec. 7. “Our best past efforts have fallen way short in protecting children in Pennsylvania,” said Sen. Judy Schwank, D-Berks. “In the effort to respond to protect children, our standard must be zero tolerance for shortcomings or failure on the law.” Senate Minority Leader Jay Costa, D-Allegheny, said the bills would focus on “responsibility, accountability and reporting.” Schwank’s bill would mirror a federal bill proposed by U.S. Sen. Bob Casey, D-Scranton, to require colleges and universities to provide policies on domestic violence, dating violence, sexual assault and stalking. Under another bill, from Sen. John Blake, D-Lackawanna, the Right-ToKnow law would be expanded to records of state-related institutions, which are currently exempt under the law. Sen. Lisa Boscola, D-Northampton, proposed two bills that would eliminate
State Senators Lisa Boscola, Kim Ward, Judy Schwank and John Blake have introduced legislation that addresses shortcomings in Pennsylvania’s child protection laws.
the statute of limitations on sexual abuse crimes for criminal and civil actions. Senate Republicans have also introduced or passed several bills dealing with child protection laws, said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware. Sen. Kim Ward, R-Westmoreland, introduced two bills that would expand mandated reporting for child abuse to institutions of higher education, as well
as increase penalties for those who fail to report child abuse. The scandal at Penn State University caused a number of lawmakers and advocates to call for a closer look at the state’s child protection laws. Jerry Sandusky, a former assistance football coach, was charged with numerous criminal counts of alleged sexual abuse of minors. A preliminary hearing is scheduled for Dec. 13 in Centre County
Court. As the scandal spurred concerns over the strength of the state’s child protection laws, legislative leaders announced last month the formation of a bi-cameral legislative committee that will investigate and look for ways to enhance the laws. Arneson said he anticipates legislation to create the task force will be considered and approved next week. CW
OPINION 15
DECEMBER 2011 CAPITAL WATCH
Marcellus Shale oversight: look past opponents’ misinformation campaign By Lesley Smith
As lawmakers debate legislation to ensure that Pennsylvania remains a competitive Marcellus Shale drilling state, opponents continue their orchestrated campaign of misinformation designed to discredit the industry. While the proposal on the table balances important protections for public health and the environment with the opportunity for news jobs and additional revenue for the Commonwealth, its detractors are only serving to cloud a very complex but important discussion about the industry’s responsible growth. Last year, one radical environmental group praised the Rendell administration for passage of two “key” regulations designed to protect drinking water and rivers and streams from drilling waste water – rules that now hold drillers to a much higher standard for Total Dissolved Solids pollution than any other industry, and that require waste water to be treated to drinking water standards. This group also applauded the prior administration for increasing Department of Environmental Protection staff in order to beef up drill site regulation and inspection. (The oil and gas program now has 202 employees, up from 100 in 2008.) Effective oversight of the industry continued with the Corbett administration. Earlier this year, DEP Secretary Mike Krancer stopped
the practice of taking waste water to facilities that were grandfathered in to state regulations sharply restricting salty discharges; levied the largest fine in Pennsylvania history against a Marcellus Shale drilling company; and spearheaded the reorganization of an entire agency to better meet the increased responsibilities of overseeing the industry. Yet in a recent missive against House Bill 1950 – a well-thought-out and carefully crafted oversight bill that would increase civil fines and penalties for violations; provide revenue to address local impacts from drilling; and establish reasonable setback distances between well pads and private wells and waterways – this environmental group still tried to claim that the industry is getting a “free pass.” The actions of two administrations demonstrate this is not true. The purposely used but misleading “free pass” rhetoric also carries over to the subject of taxation, as evidenced by organized labor’s recent radio spots, which claim that “many of the companies don’t pay any taxes.” Denying that the Marcellus Shale industry is in fact paying its “fair share,” opponents compare Pennsylvania to other drilling states in arguing for a severance tax on natural gas. The problem is that comparing proposed severance tax/ impact fee rates in Pennsylvania with tax
rates in other drilling states is apples to oranges because overall business climates, all applicable taxes and tax rates vary. Any industry fee or tax that is ultimately decided on here would be on top of a Corporate Net Income tax rate that is effectively the highest in the nation at nearly 10 percent (Pennsylvania is the only state that assesses both a CNI tax and a tax on business assets). According to the Department of Revenue, tax collections from mining, which includes natural gas drilling, increased by a staggering 592 percent over two years, while other industries’ tax payments increased by a mere 1 percent. The department has also reported that the industry has paid $1.2 billion in taxes since 2006, and through August 2011, these companies had already paid $306.9 million in corporate, personal income, sales and employee withholding taxes, more than all of 2010. An additional revenue source from drillers is the cost of permit fees, which totaled $12.5 million in fiscal year 201011 and is expected to be $15.4 million in for the current fiscal year. In addition, Pennsylvania receives revenue for state forest land leases associated with Marcellus Shale natural gas production. Since 2008, the lease of 138,866 acres generated $413 million in
Lesley Smith
revenue for the state. Natural gas companies are paying their “fair share.” And impact fees being considered in H.B. 1950 would bring in more revenue, ensuring that local municipalities receive adequate funds to address impacts from drilling operations taking place within their borders. Yet, this is not enough for opponents. The crux of their entire campaign against one of the most positive economic developments in the Commonwealth in recent memory is that no amount of oversight will suffice unless the industry is taxed at a level only they deem appropriate and the revenue is deposited into the General Fund to pay for any number of big government programs. In this regard, opponents’ message is very clear. CW Lesley Smith is Director of Communications for the Pennsylvania Chamber of Business and Industry.