Capital Watch June 2011

w w w. ca p i ta l- wat c h . c o m

CapitalWatch VOL. 4 NO. 6

inside Property tax fund losing interest PAGE 3 House Democratic Campaign Chairman resigns PAGE 4

JUNE 2011

Rick Can he break Santorum: Buchanan’s curse?

Tax bill would make it more difficult for school boards to raise taxes PAGE 6

Former Pennsylvania Sen. Rick Santorum has officially began his 2012 presidential race, carrying with him a strong record Cap could force as a social conservative and disability group a message of fiscal restraint homes to close doors that he hopes to ride into the PAGE 9 White House. But can he break the curse that has plagued FEATURE: every presidential hopeful from Shale fee or tax swap?

Pennsylvania or with PennsylPAGES 10-11 vania roots?

Even though Pennsylvania EDITORIAL: has played a huge role in the Class project history of presidential politics, masquerades as the state has failed to produce search for justice a Pennsylvanian who occupied PAGE 15 the White House since the election of James Buchanan, a Democrat, who served from 1857-1861.

It’s not like many have not thrown their hats into the ring.

Check us out online at Many have.

It’s almost like www.capital-watch.com Buchanan, who set the stage for the American Civil War, Have a news tip or story placed a curse on candidates suggestion? New hires? Births, engagements, sightings? Got a better from the Keystone state who aspired to become president idea? Know of an interesting state after he left office. or local government program that After Buchanan, there was addresses a real need or solves Winfield Scott Hancock, who a problem in an innovative — was nominated in 1880. Hanand widely replicable — way? cock, a bona fide Civil War hero Know of a study, report, guidebook, website or other resource and a veteran of Gettysburg, that would be helpful to your peers was defeated by James Garfield in the closest popular vote in in state or local government? presidential election history Tell us about it.

U.S. Senator Philander C. E-mail the information to Knox was a Republican candigoodwinpin@comcast.net. date in 1908. In 1920, GoverAnonymity is assured. nor William Sproul had some support at the GOP conven-

Former U.S. Senator Rick Santorum announces his candidacy for President on the steps of the courthouse in Somerset, PA.

tion, as did Attorney General Mitchell Palmer at the Democratic convention. And Governor Arthur James was a dark horse candidate at the Republican Convention in 1940. All four were Pennsylvania natives and unsuccessful candidates.

In addition, there have been unsuccessful runs by Pennsylvanians born in other states.

Governor William Scranton who was born in Connecticut, ran for the GOP nomination in 1964. In the 1970s, Governor Milton Shapp who was born in Ohio, made a short-lived effort to capture the Democratic nomination, and former Senator Arlen Specter, who was born in Kansas, launched a bid for the Republican nomination

in the 1990s.

Numerous native Pennsylvanians ran for President from their adopted states, including Ron Paul current Texas congressman (born in Pittsburgh), Joe Biden then U. S. Senator from Delaware (born in Scranton), and Tom Vilsack, former governor of Iowa (born in Pittsburgh).

Let’s not forget Orin Hatch, U.S. senator from Utah (born in Pittsburgh), Alf Landon, governor of Kansas (born in Mercer County), and James G. Blaine, U.S. senator from Maine (born in West Brownsville Borough).

All six failed in their election bids to become president.

John Heinz, before his tragic death in 1991, was believed by

many to be a future presidential candidate. Former Governor Dick Thornburgh came very close to being named to the national GOP ticket as George H.W. Bush’s running mate. Similarly, former Governor Tom Ridge was on many short lists for vice president.

President Buchanan is Pennsylvania’s first and only president. While Vice President Joe Biden has come close, unless Santorum, who was actually born in Virginia, Ron Paul or Newt Gingrich, major candidates for the Republican nomination, can break the curse, then Buchanan will continue to hold the record as the one and only President with Pennsylvania roots. CW

Capitolwire com a service of GovNetPA, Inc.

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.

PRSRT STD U.S.POSTAGE PAID PERMIT 280 LANC., PA 17604

Say NO to state budget cuts to cost-saving Home & Community Based Services (HCBS) and supports. The House budget restores 24 million dollars to nursing homes while cutting less expensive Home and Community Based Services by over 27 million dollars. Pennsylvania’s seniors and people with disabilities want Home and Community Based Services so they can live independently in their own homes instead of in segregated, expensive nursing homes.

Please contact your state legislators and Governor Corbett at (717) 787-2500 and tell them to fully fund home care services.

You can find your representatives at: www.legis.state.pa.us.

www.libertyresources.org

news 3

JUNE 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 Chris Comisac Peter L. DeCoursey Sari Heidenreich Deena C. Malley Cate McKissick 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.

(717) 233-0109, ext. 114

McCord says property tax fund losing interest as casinos ignore debt

By Cate McKissick, Capitolwire

Pennsylvania’s Treasurer has announced a proposal for the state’s 10 casinos to begin repayment of $63.9 million in loans to the Property Tax Relief Reserve Fund starting next month.

Treasurer Robert McCord said repayment of this loan, starting July 1, was necessary to avoid the loss of “millions” of dollars in investment income for property tax relief.

In his plan, McCord urged legislators to amend the state’s Fiscal Code to require the 10 casinos to begin repayment.

Michael Smith, spokesman for the Treasury Department, said the department’s proposal would generate just over $9.5 million in investment income by the end of 10 years.

The state’s Gaming Control Board started borrowing money in 2004 to finance its operations from the reserve fund.

State law requires the board to adopt a repayment plan by June 30, but casinos are not required to begin making payments until there are 11 facilities with operating slot machines.

McCord said there is sufficient doubt when the 11th facility, Valley Forge

Robert McCord

Convention Center, would be operational, and waiting for it to be operational before repayment begins foregoes additional interest income.

Richard McGarvey, spokesman for the Gaming Control Board, said the Valley Forge facility is scheduled to open next year, but there is no exact date.

A 12th gaming license was awarded to Nemacolin Resort in Fayette County but is still in the licensing and appeal phase.

McCord’s plan calls for each casino to pay its proportion of the state’s gross terminal revenue, multiplied by the outstanding amount of the loan, over 10 years.

McCord said that any repayment plan that does not assess each facility an

annual proportionate amount of consistently-sized payments would be contrary to the Fiscal Code.

McGarvey said the board has received seven repayment plans, including the Treasury’s, since asking for comments at its December meeting.

Harrah’s, Hollywood Casino and Sands each submitted a repayment plan proposal.

Law firms Eckert Semans, Levine Staller and Ballard Spahr submitted plans on behalf of their respective clients: Mohegan Sun and Parx Casino; Rivers Casino and Sugarhouse; and Valley Forge Convention Center.

McGarvey said the board was reviewing the repayment proposals and would probably make a decision at one of its June meetings.

The Gaming Control Board will meet on June 8 and June 28.

According to state law, $570 million is the threshold amount in the property tax relief reserve fund to trigger relief for the state’s homeowners.

In April, Secretary of the Budget, Charles Zogby, certified there would be $595 million available in the fund by October 15 for property tax relief. CW

Senate plans to address abortion legislation A bill that would ban elective abortions from the soon-to-exist, federally mandated insurance exchange will be addressed in early June, according to a Senate spokesman.

Senate Bill 3, introduced by Sen. Don White, R-Indiana, would place restrictions on the new state health insurance exchange system - created by the new federal healthcare law – that would prohibit insurers participating in the exchanges from providing coverage for elective abortions.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, said the Senate plans to address the bill in early June. He said the bill should have bi-partisan support, based on the committee votes in Appropriations (19-6) and the Banking and Insurance (12-2).

The federal Patient Protection and Affordable Care Act requires states to create health insurance exchanges to act as a marketplace where small businesses and individuals could purchase health insurance.

“The intent of SB 3 is simple – to ensure taxpayer dollars are not used to pay for elective abortions through the state insurance exchange to be established under the current Federal health care law,” White stated. “The public overwhelmingly believes taxpayer dollars should not be used to pay for elective abortions.” CW

4

NEWS

JUNE 2011 CAPITAL WATCH

Senate legislation would give municipalities a share of Clean Air fines

By Sari Heidenreich, Capitolwire

Next time the state imposes a large fine on a business or factory for air pollution, a portion of that money could end up paying for a municipal park, trail or open space. $4.7 million in fines have been levied against the Sunoco refinery in Marcus Hook, Pennsylvania since 2000. Borough Manager, Scott Swichar, said he would like to have been able to use some of that money to add play equipment to the borough’s parks or even fund an outdoor summer program for children.

“Something to keep the kids off the streets and involved in recreation” would “certainly help,” he said.

In the past, all the money from these fines have gone to the Department of Environmental Protection’s (DEP) Clean Air Fund, established with the Air Pollution Control Act in 1992.

Primarily, this fund pays for the operation of the DEP’s Bureau of Air Quality.

Senate Bill 151 which passed unanimously in the Senate on Monday, would send 25 percent of the fines over $50,000

back to the municipality where the violation occurred.

To receive the money, the municipality would have to submit a project proposal within 180 days of being notified of the fine that would deal with parks, recreation, trails, open space, or with eliminating or reducing air pollution.

In the event that a proposed project would cost more than the amount the municipality is entitled to, the department could choose to award extra money.

This benefit would not be available to municipalities if less than $1.85 million in fines were collected the previous year. According to a press release from the bill’s author, Senate Majority Leader Dominic Pileggi, R-Delaware, the fund contained an average of $4.5 million in 2009 and 2010.

Municipalities would also not be eligible to receive a portion of the fine if it was levied jointly with the U.S. Environmental Protection Agency.

If this bill would have been in effect in the past two fiscal years, 18 municipali-

ties would have been eligible to receive $651,000 for projects. In 2010, an abnormally large fine of $4 million was issued against Erie Coke Corp. This figure was left out of these calculations. But if the fine would have been in effect, would have been eligible to propose a $1 million project for funding.

This benefit would not be available to municipalities if less than $1.85 million in fines were collected the previous year.

According Pileggi, the fund contained an average of $4.5 million in 2009 and 2010.

Ron Grutza, Assistant Director of Government Affairs for the Pennsylvania State Association of Boroughs, said that while the amount of money municipalities would receive is not “huge” he thinks “it would properly compensate for those violations.”

“The community is oftentimes hosting a major facility and there is some risk there,” he said. “We do recognize that the majority of [the fines] do belong with the state fund … but I think that having a portion of that money returned back to

Central Pennsylvania Youth Ballet presents

A one-night-only, world-class performance featuring renowned international stars of dance

Stars of CPYB 2011 Saturday, July 2 | 7:30 p.m.

Whitaker Center, Harrisburg, Pennsylvania Tickets: 717.214.ARTS (2787) CPYB.org

the community where that violation took place will help the community.”

Elam Herr, Assistant Executive Director of the Pennsylvania Association of Township Supervisors said this money could inspire municipalities and townships to create parks, trails, and open space projects.

He said money for these projects would be especially helpful since many municipalities had put such schemes on hold during the recession in order to focus on mandatory ones, such as road maintenance.

Herr and Swichar said they hope the House considers the bill soon and can get a copy to the governor in the near future.

“We understand that this money goes to the states but hopefully it can come back to our citizens,” Swichar said.

Steve Miskin, spokesman for the House Republicans said he did not know if the bill would be considered within the next year.

The DEP declined to comment on the Senate passage of the bill. CW

House Democratic Campaign Chairman resigns After an election cycle where the House Democratic Campaign Committee set spending records but lost 13 net seats, its 2010 chairman, Mike Gerber, is leaving that post.

In a letter co-signed by Gerber and House Minority Leader Frank Dermody, Gerber wrote: “It has been a great honor to serve in this capacity and I have enjoyed working with all of you over the last six years as a member of the HDCC team.

As many of you know, it is an intense, time-consuming endeavor that takes an extraordinary amount of time away from our legislative work and family. While I look forward to spending more time with my family and focusing on legislative work, I will remain committed to the cause advanced by HDCC, electing Democrats, and look forward to the 2012 cycle.”

Former Gov. Ed Rendell, a mentor and ally to Gerber, said: “Mike was one of my strongest legislative partners during my tenure as Governor and he worked extremely hard to help his colleagues as Chair of the HDCC. I know him well and know he’s looking forward to spending more time on his legislative work, and CONTINUED ON PAGE 8

NEWS 5

JUNE WATCH June2011 2011CAPITAL CAPITAL WATCH

news 5

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.

CW: What are your major services?

William Lehr, Jr. Chairman & CEO Capital Blue Cross

William Lehr, Jr. is Chief Executive Officer of Capital BlueCross and has served as Chairman of the Board since 2004, and as president from 2008-2010. He has been a member of the Board of Directors of Capital BlueCross for 20 years and currently also serves as a director of the Blue Cross and Blue Shield Association.

During his tenure as Chairman, Capital BlueCross has grown to be the region’s leading full service health insurer. Mr. Lehr previously served as Senior Vice President, Secretary, and Treasurer of Hershey Foods Corporation where he had a 28-year career. Mr. Lehr also served as the Lead Director of Hersha Hospitality Trust, a publicly traded REIT. Mr. Lehr is a respected leader in the Central PA community and has worked with and supported many of the region’s leading nonprofit organizations. Currently, he is a Trustee Emeritus of Lebanon Valley College where previously he served as Board Chair for six years; and he is a director of The Foundation for Enhancing Communities, where previously he served as Board Chair for nine years. He serves on the Advisory Board of The University of Notre Dame’s Center for Ethics and Religious Values in Business.

He is also a member of the PA Early Learning Investment Commission, a member of the Management Committee of the Susquehanna Art Museum, and a member of the Arts and Education Advisory Committee of the PA Education Policy and Leadership Center.

Mr. Lehr’s service to the community extends to other areas of the public sector. He has served as Chair of the PA HealthCare Cost Containment Council, as a member of Gov. Ed Rendell’s Arts and Culture Transition Team, as a member of the Civil Justice Reform Act Advisory Group to the United States District Court for the Middle District of PA, and as Chair of the Task Force on the Department of Labor and Industry for the PA IMPACCT Commission.

Mr. Lehr holds a Bachelor’s Degree in Business Administration from the University of Notre Dame, where he graduated cum laude, and received his law degree from Georgetown University Law Center. He is a graduate of the Stanford Executive Program and has completed The Governing for Nonprofit Excellence course at Harvard University’s Graduate School of Business Administration. Mr. Lehr lives in Palmyra, PA. with his wife, Beverlee, an accomplished ceramicist.

LW: As the region’s leading health insurer, Capital BlueCross provides a full portfolio of health insurance coverage and clinical services to groups and individuals in Central PA and the Lehigh Valley. These offerings include an array of group, individual, and governmentsponsored insurance plans and designs. More specifically, through Capital BlueCross and its subsidiaries and partners, we offer traditional, preferred provider organization, managed care and consumer-directed health insurance products and related services, including medical, pharmacy, dental, vision, group life and disability, and short term major medical.

We constantly strive to bring innovation to the region to help meet the evolving needs of our members and business partners. One prime example of our innovative efforts is a recent partnership we launched with Heritage Medical Group on May 1, 2011 called an Accountable Care Arrangement.

This pilot brings expanded medical value to the members of our community and represents a groundbreaking way in which health care will be delivered.

Heritage Medical Group primary care practices and Capital BlueCross share claims and medical record data on a real time basis in order to identify Capital BlueCross members who can benefit from stronger outreach efforts designed to monitor and coordinate the patient’s total spectrum of medical care.

By working together, this new agreement will provide a more comprehensive, accountable approach to the delivery of medical services. It follows as an extension of other recent innovative provider arrangements by Capital BlueCross, including the successful implementations of Patient-Centered Medical Home pilots in 2010. We plan to expand this Accountable Care Arrangement program throughout the region.

CW: When did you join the firm?

Under what circumstances?

WL: I have served as CEO since 2008, having replaced the former CEO who resigned. I have also served as chairman of the board since 2004. Previously, I enjoyed a 28-year career at Hershey Foods Corporation.

CW: What are your goals for the firm?

WL: For Capital BlueCross, our first priority and immediate goal is always to

serve our members and show them that we are doing more to improve their health and the health of the community.

Long-term, we are focused on continuously broadening our product portfolio, exploring new technologies and evolving with the ever-changing needs and desires of our members. Essentially, we strive to remain the insurer that community members turn to for all of their health insurance needs.

CW: Where are your customers?

Where do you have operations?

WL: Our members are primarily located throughout our 21-county service area of central PA and the Lehigh Valley.

Though, we also provide coverage to members throughout the country who work for a company that is based locally in our service area. In addition to our headquarters building in Harrisburg, we have an office building in Harrisburg’s TecPort Business Center, one in Lemoyne and one in Allentown.

CW: Would you invest more in this region of PA? What would you do to improve PA’s business climate?

WL: Capital BlueCross does most certainly invest in PA and we strongly advocate that others do, too. We take great pride in being a locally operated company – one that is engrained in the communities we serve. From our incorporation in 1938, the company and its employees have worked to make the region a better place to live, work and raise a family. Hundreds of company employees volunteer thousands of hours annually in support of community activities and organizations. Corporately, Capital BlueCross provides support to more than 100 organizations representing education, human services, the arts, entertainment, and professional sports.

Something that would improve the area’s competitive environment is for everyone to make a concerted effort to maintain our best and brightest. Too often our most skilled young workers are educated and trained in this region, but leave for the bigger cities in hopes of better opportunity. There is tremendous opportunity right here. We all just need to continue focusing on making Central PA an attractive place to live and work by growing business and showcasing our fine offerings of culture, arts, dining, advanced education, and entertainment.

CW: Are there public policy changes your firm is advocating?

WL: We support Tort Reform as one avenue to help reduce health care costs. We also look forward to working with the Administration and the Legislature on state issues related to federal health care legislation.

Naturally, we are concerned with a number of bills under consideration that would mandate benefits. Mandates only add to the cost of health care resulting in higher premium rates.

Instead, we need to look at what is driving health care costs to rise and find solutions to those problems.

CW: How are you dealing with the Patient Protection and Affordable Care Act (health care reform)?

WL: On March 23, 2010 President Barack Obama signed into law a more than 2,000-page bill on health care reform called the Patient Protection and Affordable Care Act, or PPACA. The law is intended to make health insurance coverage available to more Americans. As a nonprofit community based health plan, Capital BlueCross has most certainly welcomed this aspect of the law as it is consistent with our more than 70-year mission. However, PPACA does not adequately address the real danger of rapidly rising health care costs in a delivery system that lacks coordination.

Regardless, we saw an opportunity right away to step in as educators and experts as our customers and the public at large began wrestling with the confusion that accompanied the new law. Within days of the enactment, Capital BlueCross formed a Health Care Reform Core Team made up of 21 employees from all the major departments throughout the company.

One of this team’s first tasks was to explore the many ways we could reach out and educate our communities. The team accomplished this through the use of corporate advertising, a content-rich dedicated Web portal, dozens of public speaking engagements, distribution of thousands of copies of press materials and collaterals, and multiple media interviews.

The public’s thirst for information today is actually greater, not less, than a year ago and Capital BlueCross is proud to be viewed as a primary source for health care reform information in the region.

6 NEWS

JUNE 2011 CAPITAL WATCH

Tax bill would make it more difficult for school boards to raise taxes If an amendment to the Taxpayer Relief Act is signed into law, it would be much harder for school boards to raise necessary revenue, school business officials said this week.

“We could create severe short term and long term chaos,” said Jay Hynes, Executive Director of the Pennsylvania Association of School Business Officials (PASBO).

Without raising taxes above inflation, “over 90 percent of school districts could not raise enough additional property tax revenue to pay their pensions” in the 2013-2014 year, he said.

The bill, which would require school boards to conduct a voter referendum if they wanted to raise taxes above inflation, should be considered in early to mid-June according to House and Senate Republican leaders.

Under current law, school boards are only allowed to raise taxes above inflation if they apply for an exemption from the Department of Education or hold a voter referendum. The department grants exemptions for the costs of healthcare benefit, construction and maintenance as well as mandated expenses, such as pension payments and special education costs.

According to Pennsylvania State

Education Association and PASBO data from the 2010-2011 and 2011-2012 years, schools most commonly apply for exemptions to help cover rising pension and special education expenses.

Citing the fact that only one out of fourteen referendums to raise taxes has been approved since 2006, Hynes said he was concerned that “a base line of voting ‘no’ for Act 1 questions” has been established.

If this bill passes and the pattern of voting ‘no’ continues, school districts would not be able to raise taxes above inflation.

Chris Wakeley, Executive Director of the Democratic House Education Committee said if this bill passes it “is going to hurt school districts.”

“We elect school board members to make decisions about their budgets. If we are going to mandate they to do certain things we need to give them the means to do so,” he said.

Rep. Paul Clymer, R-Bucks, chairman of the House Education Committee, said he supports the “main steering” of the bill but is “open to discussion.”

“We have 500 school districts. One size doesn’t fit all,” he said.

He said the state is trying to help the school districts “operate more efficiently” by seeking to remove mandates

and obligations that take extra time and money. He hopes this would make it easier for school districts to operate without having to raise taxes above inflation.

Chairman of the Senate Appropriations Committee Jay Corman, R-Centre, said this bill “empowers the voters.”

Rep. Seth Grove, R-York, who wrote the House version of the bill (HB 1326), said he believes the bill will be up for second consideration after the Memorial Day recess, on or around June 6.

Steve Miskin, spokesman for House Majority Leader Mike Turazi, said he expects bill to be up for a vote a bit later,

in mid-June.

The Senate version of the bill (SB 911), which Hynes said is no different than the House version, was re-referred to the Appropriations Committee after second consideration on the Senate floor in April.

Corman said the bill could be “passed this fall as well as in June and it wouldn’t make any difference timing-wise,” since he said it would not affect school budgets this year.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, said he expects the “issue” to come up in June, when there will be “discussion regarding which [bill] to advance.” CW

White is a color of many shades. Champagne, for example.

Although it’s easy to categorize wine simply by color, take a step further and learn more about each winemaker's unique blend of grapes, region and age. Enhance your experience with the resources at FineWineAndGoodSpirits.com, where you’ll find everything you need to know about wine, spirits and entertaining. Our products and expertise are also available at PA Wine & Spirits Stores. Where we celebrate the differences. So you can sip them.

www.FineWineAndGoodSpirits.com

Please enjoy responsibly.

PA Wine & Spirits Stores

news 7

JUNE 2011 CAPITAL WATCH

sponsored by pcua

PA Credit Union Growth Continues To Outperform Nation F

or the past two years, Pennsylvania credit unions have outpaced the nation’s credit unions in growth of assets, loans, savings, and members. The Fourth Quarter 2010 edition of Pennsylvania Profile produced by the Pennsylvania Credit Union Association shows improved operating performance for the state’s credit unions.

decline. Home prices are expected to continue to decline this year before stabilizing in 2012. Roughly 10 percent of all mortgages are currently at risk of foreclosure.

Pennsylvania credit unions ended 2010 with a strong net worth of 10.7 percent. Over 96 percent of credit unions ended the year with a net worth above the 7 percent well-capitalized requirement.

Membership growth remains steady, a tribute to the successful statewide advocacy campaign, iBelong.

Membership increased 2.1 percent in 2010, bringing the total number of credit union members in Pennsylvania to nearly 3.6 million, and almost 92 million in the United States.

“Pennsylvania credit unions are well-capitalized and are in a strong position to serve their members with loans and other financial needs,” said Jim McCormack, Pennsylvania Credit Union Association President/CEO. Credit unions continue to struggle with weak loan demands, but economists expect loan growth to pick up in 2011. Loan balances rose 3 percent in 2010, better than the national average of -1.2 percent, but far below the 2009 growth rate of more than 9 percent. Member business loans continued strong growth at 30 percent in Pennsylvania during 2010, far ahead of the national 6.2 percent average.

Share deposits grew 9.9 percent in 2010, resulting in a three-year growth of more than 26 percent. Money market shares grew at 10.5 percent, a drop from 26.6 percent in 2009.

At the end of 2010, there were 541 credit unions in Pennsylvania, with total assets of $33.7 billion. The median asset size of PA credit unions is $10 million dollars; while the median asset size of all U.S. credit unions is $17.6 million dollars.

Mortgage growth in 2010 was 12.3 percent, far above the 2.7 percent national growth. Pennsylvania home prices fell 2.4 percent in 2010, resulting in a three-year

To find a credit union to join, visit www.ibelong.org.

Study shows $875 million impact of Pennsylvania Race Horse Development Fund Enhanced horse breeding programs, higher purses, and impressive venues have created an attractive environment for raising and racing horses A new study released by the Pennsylvania Racing Equine Industry shows that Act 71, which created the Pennsylvania Race Horse Development Fund, has fueled the growth of the horse racing industry in Pennsylvania, making it one of the top thoroughbred and harness racing states in the nation. That growth has created substantial economic benefits for Pennsylvania residents, including the creation of 4,930 construction related jobs and 8,760 ongoing jobs related to the equine racing industry for a total economic impact of more than $875 million through the end of 2009.

The study also found that 89 percent or $167.6 million of funds directed from the Pennsylvania Race Horse Development

Fund to racing operations is expended in the Pennsylvania economy. The study found that even out of state owners expend the large majority of purse winnings in Pennsylvania to pay local jockeys or drivers, trainers, veterinarians, black smiths and trainer day fees.

The study, which was prepared by The Innovation Group of Colorado, provides the most detailed assessment to date of the positive impacts that Act 71, known as the Race Horse Development and Gaming Act and signed into law on July 5, 2004, has had on the equine racing industry in Pennsylvania.

“Prior to the Pennsylvania legislature passage of Act 71, the horse racing industry was on life support,” said Salvatore M. DeBunda, Esquire, President of the Pennsylvania Thoroughbred Horseman’s Association, which represents the horsemen who race at Parx

Racetrack in Bensalem, Pa. “Act 71 not only saved horseracing in Pennsylvania, it has proven to be a tremendous boon to the Pennsylvania economy due to the boost it provided to the equine racing industry.”

“Today, more than 8,760 ongoing Pennsylvania jobs are directly or indirectly related to equine racing, and we expect that number to grow as we con-

tinue to attract new owners, trainers, and investment in Pennsylvania racing,” said Todd Mosteller, Executive Director of the Pennsylvania Horsemen’s Benevolent and Protective Association. “The industry is now a substantial economic driver in Pennsylvania and it will only continue to grow with time.”

The report found that the ongoing direct impact of horse racing relates to the operation of businesses associated with the industry in Pennsylvania, such as racetracks, horsemen racing operations, and horse breeding operations.

These operations result in direct spending in the form of hiring workers and buying goods and services. The report found that every $1 in direct spending within the racing industry equates to $2.13 in total spending, resulting in an annual economic impact of $490 million in 2009. CW

8 news

april 2011 CAPITAL WATCH

PHEFA advisory board postpones vote on rescinding prevailing wage financing requirement

By Cate McKissick, Capitolwire

A financing authority with semi-state affiliation was ready to drop its prevailing wage requirement for some universities, until top state officials asked for more information.

Auditor General Jack Wagner and Treasurer Rob McCord, requested the Pennsylvania Higher Education Facilities Authority postpone its decision until it hands over specific information.

Wagner and McCord are both members of its advisory board.

In their letter to its acting executive director, Robert Baccon, Wagner and McCord base their request on the grounds they received no notice prior to the arrival of Authority’s May 25 meeting agenda that the policy would be voted on; no previous discussion about the policy was ever held by the board; no draft copy of the resolution was ever reviewed by the board and no supporting documentation for repealing the policy was provided with the agenda.

Their letter also states board members received their agendas less than five business days before the meeting date, “a dramatic contravention of both state law and the established policy of the Authority.”

“There have been claims that the existing Prevailing Wage Policy has prevented smaller colleges and universities from financing projects through the Authority, but there has been no documentation or record in support of this assertion.”

Wagner and McCord requested PHEFA Acting Executive Director Robert Baccon to provide documentation of the impact to independent colleges by mandating its use.

“I’m always disappointed when something comes out of left field and ends up on the agenda with no explanation,” Wagner said. “It raises a lot of questions: Who was proposing it and what is their rational for proposing it?”

Baccon said the policy of mandating prevailing wage was implemented by the previous board of advisors during Gov. Ed Rendell’s administration.

He added that since its implementa-

tion, the Authority has financed very few private institutions.

“It’s strictly a board policy,” he said after the board meeting. “We thought it best to rescind it.”

“I wish [Baccon] would put forth the same courtesy and explain to the board why he’s proposing rescinding it,” Wagner said. “Every board member is entitled to that.

“I’m not that difficult to reach, and my representative [on the board] is not either.”

Most members of the board say they were unaware they would be voting to rescind the policy until they received their agendas, five business days prior to the meeting.

Eileen Flynn, representative to the board for Sen. Andy Dinnimin, D-Chester, said there was no supporting documentation with her agenda regarding the resolution, “only one paragraph about it under the new business item.”

“I arrived at the meeting fully expecting very lively discussion and debate,” she said.

Postponing the vote, she said, was the right decision for an issue of “that magnitude.”

date was not breaking the law because private schools are not subject to the prevailing wage law.

“I don’t see how [dropping the mandate] hurts anyone.”

Bear said he was interested in the prevailing wage issue, but he did not request the resolution be put on the agenda and he did not know who did.

Christopher Craig, general counsel for the Department of Treasury and McCord’s representative on the board, said Authority staff members at prior meetings had told “anecdotal stories” regarding some private colleges not able to afford using the Authority for their financing.

“There was no indication at any particular board meeting that there was going to be a concerted effort to remove the prevailing wage,” he said.

“We were surprised there would be an effort to remove the prevailing wage without any substantive discussion by the board.”

Craig said he even questioned the legality of the board removing the mandate.

The Prevailing Wage Act requires all commonwealth entities, to use the prevailing wage in all its construction projects over $25,000.

Between 2007 and 2010, PHEFA provided financing for 35 different universities.

Rep. Anthony DeLuca, D-Allegheny, said he was unaware who put the resolution on the agenda or why.

“I think it’s the beginning of trying to chip away at the prevailing wage for all projects,” he added.

Rep. John Bear, R-Lancaster, said he disagreed with several points in Wagner’s and McCord’s letter, calling it “blurring and misleading.”

He said projects financed through the Authority are not backed by the taxpayers of the commonwealth; therefore, projects are not “publicly financed.”

He also said dropping the policy man-

That includes the state-owned universities, Craig said. The state-related universities, Penn State, University of Pittsburgh, Temple and Lincoln, are required to use the prevailing wage if they use state funding, Craig said.

The prevailing wage is determined for each county by the Department of Labor and Industry.

Opponents of the act say it increases costs by 10 to 15 percent.

Rep. Ron Marsico, R-Dauphin, has introduced a measure into the House Labor Relations Committee that would put let the voters of each county decide

House Democratic Campaign Chairman resigns with his wife, Jessica, and their kids.”

Former House Appropriations Committee Chairman Dwight Evans, D-Philadelphia, said: “Mike did an amazing job raising all that money in a very tough year. He has a lot of talent and ability and there will be better years. Mike has a very bright future in politics.”

Gerber led the HDCC when the committee raised $7.1 million for the

2010 cycle, said in his letter to House Democrats, that he leaves the committee with money in the bank and debt-free, with better technology and apparatus than he inherited two years ago.

Gerber raised and contributed more than $750,000 from his own PAC for HDCC, an amount comparable to that of most of the leaders he worked with, and more than that contributed by the cur-

if they wanted their school districts to be subject to the Prevailing Wage Act. Marsico has called mandating the use of prevailing wage “archaic.”

Don Francis, president of the Association of Independent Colleges and Universities in Pennsylvania, said most smaller, private colleges cannot afford to add the costs of the prevailing wage into their capital projects.

He said that prior to 2007, AICUP ran a program that “bundled” groups of smaller schools together to present to PHEFA for financing, but after the prevailing wage was made mandatory, they stopped.

“Certainly, some schools choose to pay the prevailing wage and the larger ones can afford to,” Francis said.

PHEFA is a quasi-state organization that provides colleges and universities in the state with tax exempt financing.

It does not receive any money from the commonwealth, although its advisory board is headed by the governor, who also appoints the members.

According to PHEFA’s financial statements, the authority issued $1.12 billion in debt to 10 colleges or universities in 2009 and 2010; half of those schools are private.

Between 2007 and 2010, PHEFA provided financing for 35 different universities. Of those, 13 are private schools.

The University of Pennsylvania was the largest, with an endowment of $5.68 billion; and Holy Family University in Philadelphia the smallest at $8.9 million.

In comparison, between 2003 and 2006, PHEFA provided financing for 54 schools; 34 are private.

PHEFA is funded by administrative fees charged to participating schools.

There is an initial fee of $10,000 per bond issue, plus an annual fee, over the term of the bond, of .0375 percent of the dollar amount, capped at $25,000.

The Authority has roughly $6 billion in outstanding financed debt.

PHEFA generated $1.24 million in operating revenues for 2010 and $1.25 million in 2009. CW

CONTINUED FROM PAGE 4

rent House Democratic leaders.

He also increased national contributions to the committee: The national Legislative Democratic Campaign Committee contributed just under $450,000 to HDCC from 2000 to 2006. Once Gerber went on the board of the group, serving as treasurer, it gave $1 million since 2007.

Gerber allies said he believed he could target his fund-raising more directly

towards allies if he left that group.

Potential runs for other office are also possible, allies said.

No new head of the committee has yet been named, and the letter says Dermody will pick Gerber’s successor by the end of the month.

So far this year, the majority House Republicans have far out-stripped the HDCC in fund-raising. CW

news 9

JUNE 2011 CAPITAL WATCH

Advocates say a cap could force disability group homes to close their doors

By Sari Heidenreich, Capitolwire

If a budget cap on group homes is not repealed, many homes may have to close their doors after its passage, a disability rights advocate said.

“The thing that is really concerning is that even if it all gets worked out in the end…, it’s going to put clients, families…through an innumerable amount of stress,” said Ilene Shane, CEO of the Disability Rights Network of Pennsylvania.

She said the potential cap has already started affecting people “because providers have said ‘we cannot develop homes [for individuals waiting for them] under these conditions.’”

Michael Stoll, spokesman for Chairman of the Appropriations Committee, Rep. William Adolph, R-Delaware, said the cap is an effort to increase efficiency in the program and is coming at a time when the program is losing $153 million in federal stimulus money.

Shane said she believes, in the end, the cap will get “worked out” since the closure of many group homes could result in a significant amount of intellectually disabled person being placed in state institutions.

This, she said, would be in violation of an American Disabilities Act stipulation that a person lives in the most integrated living setting appropriate to their needs.

This setting is provided by about 6,000 group homes serving 16,000 Pennsylvanians with intellectual disabilities. Under the new budget, funding to these homes, whose costs average over $16,000 per person per year, would be capped at $13,000 per person per year.

“We need to find more efficient ways to deliver those services. That was a theme across the budget,” Stoll said.

“There are providers that are able to deliver those services for that amount, and that is where the efficiency factor comes in.”

United Cerebral Palsy of Central Pennsylvania runs six group homes.

While noting that this might not be the case in some rural areas of the state, President Jeff Cooper said high housing costs makes it impossible for his homes to operate under the cap.

“I would imagine that those homes that are [operating] under the cap have already paid off their mortgage or paid off their lease,” he said. “We can’t’ move all of our homes into a rural or blighted area. The whole idea and the concept is that people live in a community and they are a part of their community.”

Four of Cooper’s homes have a mortgage on them and two are under a lease.

“For my homes, the proposed cap would cause me to lose $60,000 a year,” he said. “If we have to take a loss of $60,000 a year it would be difficult for us to continue providing that particular

service. And I think that may be true for a lot of other providers, especially those who have newer homes that still have mortgages or they have a lease.”

Even once homes are purchased and paid off, they still incur many unique expenses, Cooper said. In addition to being required to meet unique fire safety standards, most homes must be modified to meet the residents’ needs.

“You can’t really buy a home that is wheel chair accessible; you either build one or spend thousands of dollars modifying one.”

Shane said available data was ignored and the cap was set without regards to how much the homes actually cost.

According to Beth Balaban, Senior Policy Analyst for the Democratic Chair of the Appropriations Committee, an additional $27 million would need to be added to this $846 million line item if the cap were removed.

“These are expensive service that we’re paying for... That’s why they’re trying to reign in some of the costs,” she said.

Testifying at a Democratic Policy

The

Committee hearing, Shane said these cuts were based on information from a survey conducted by former deputy secretary for Developmental Programs Kevin Casey.

The Casey survey found that the costs of group home in other states were significantly less than in Pennsylvania.

Shane said these findings were inaccurate, since other states allocate money to group homes through bonds and other methods, which were not looked at as part of this survey.

Gabrielle Sedor, Communications Director for the Pennsylvania Association of Resources, said “I think we all understand that the department is looking for efficiencies. We get the budget reality, but this isn’t the right way to approach it…let’s work together…let’s not rush into a bad policy that has the potential of affecting people’s lives.”

Sedor said her organization, which represents intellectual disability service providers and group home, is open to working with the Department of Welfare “to think of new ways of doing things. We’re not fighting for the status

quo but we want to work in a way that doesn’t affect the health and safety of people.”

“Providers have looked me in the eye and told me that they can’t continue operating,” Shane said, emphasizing that the potential cap has already started affecting people “because providers have said we cannot develop homes [for individuals waiting for them] under these conditions.”

Stating that she does not know how many homes could close because of this, Sedor said her organization thinks “it’s bad policy to move forward with this cap not knowing how many people will be affected. It’s just a huge unknown that feel very risky for us.”

House Republican spokesman Steve Miskin said the budget was in the Senate’s hands now but his party would “be working with the senate and the governor putting together a final budget to be voted on.”

He added that “Democrats had many opportunities to craft their own amendment...They chose to do nothing but criticize.” CW

Ascent & Elegance

June 11-12, 2011

at Hershey

The Hotel Hershey Hershey, PA

The Ascent • Saturday

the elegance • Sunday

Join us and watch 35+ vintage race cars winding up the historic hill climb course. get a ride in a race car! vendors! and more!

A world class, invitation only car show featuring the rarest, most spectacular collector cars on the manicured grounds of The Hotel Hershey.

time - 8:00am - 5:00Pm Donation $5.00 per person

Time - 10:00am - 4:00pm Donation $20.00 per person

www.Theeleganceathershey.com • Tickets AVAilable at 717-534-1910

10 feature

JUNE 2011 CAPITAL WATCH

, shale fee Tax swap Industry proposes

By Peter L. DeCoursey

Pileggi proposes shale/property

Marcellus Shale insiders propose impact fee: $50,000 per well the first year, $30,000 per well the second year, $10,000 per well the third year and no fee thereafter. Senate Majority Leader Dominic Pileggi, R-Delaware, proposes to tax natural gas extraction to freeze property taxes for senior citizens. Senate President Pro Tem Joe Scarnati critiques industry plan, opposes Pileggi bill. House Majority Leader Mike Turzai, R-Allegheny, said none of the taxes or fees will pass by June 30.

Marcellus Shale industry insiders, Senate Majority Leader Dominic Pileggi and others joined the ranks of those proposing natural gas extraction taxes or fees, House Majority Leader Mike Turzai, R-Allegheny, said no such plan will pass by June 30.

“You don’t have the governor on board and a significant group in the House and Senate are against any tax increase, and the folks that want it can’t agree on how to do it,” Turzai said. “That’s why I don’t think it gets done.”

Senate President Pro Tem Joe Scarnati, R-Jefferson, said a natural gas extraction fee plan will succeed: “If I can get 26 votes in the Senate for a

or should, as the House and Senate ready their Monday return for the 24 days leading to the June 30 state budget deadline.

Gov. Tom Corbett also continues to say he wants to wait until fall to resolve the impact fee issue, after his Marcellus Shale Commission reports in July.

Competing tax and fee proposals • Scarnati has proposed a sliding fee on natural gas extraction, which he says will rise from $10,000 per well annually to $35,000 per well annually, depending on the price of natural gas and the amount each well produces. Industry analysts say it will rise to $50,000 per

• Sen. John Yudichak, D-Luzerne, has proposed a shale tax plan based on one supported by former Gov. Ed Rendell, but at a lower initial-years rate. Corbett has said he would veto any plan similar to Yudichak’s or a plan from Rep. Kate Harper, R-Montgomery; • The members of the Marcellus Shale Coalition are pushing a straight fee proposal. It has been presented to legislative leaders and the governor after a lengthy internal discussion about how to present it to state officials. Coalition officials declined to confirm or discuss the offer. Corbett has indicated he will accept only a fee on natural gas extraction for local impacts, not a tax. The industry proposal is $50,000 a well the first year it is drilled, when local impacts are greatest, $30,000 per well the second year, and $10,000 per well the third year. Those involved with the proposal say

Dominic Pileggi

Mike Turzai

Kathryn Klaber

Joe Scarnati

reasonable impact fee, one that doesn’t reduce investment but does deal with the impacts, I am going to get it done. Then, we will send it to the House and they can see what they are going to do.

“This is an issue that isn’t going to go away. I want to figure out a way to get this through the Senate and give the House reasonable time to act before we get to June 30th. That’s my goal.”

But while predicting a fee bill will pass, Scarnati said it won’t be the proposal of Pileggi, R-Delaware, to impose a shale tax to cut senior citizen property taxes.

Scarnati said there were better ways to achieve both goals than Pileggi’s bill.

Pileggi staff said he looked forward to working with Scarnati on the issue.

Many lobbyists and lawmakers believe a fee or tax on natural gas extraction may pass, and are debating which one could

well in early years, and depending on the price of natural gas, could remain there. Sixty percent of the funds go to local impacts, with the rest going to various state police, environmental and statewide impacts. He said amendments will likely be proposed to his bill by Sen. Mary Jo White, R-Venango, whose Senate committee holds jurisdiction over the bill. “She wants to put her imprint on the bill and I believe that will put it closer to 26 votes in the Senate,” he said.

Scarnati declined to discuss any changes, but industry sources said her imprint is expected to involve changes in the tax-like rate structure of Scarnati’s bill, although how significant the changes will be, sources declined to say. Her staff said this week it didn’t know when they would deal with the bill or what approach would be taken.

it will out-pace the Scarnati bill in revenue, but Scarnati says he has yet to see evidence of that claim. Legislative leaders say the lack of a fee after the third year of drilling is a problem and that any bill based on this proposal will add a fee in future years. The industry responded that after the third year, direct local impacts diminish. They said a proposal like Scarnati’s which keeps the $10,000 per well fee after the 15th or 20th year of operation, will cause them to shut down wells once their production is down. Scarnati said he is willing to discuss that issue, and resolve it to avoid any disincentives to companies: “We want them to invest here and keep investing here.”

Several GOP senators have expressed concerns about Scarnati’s fee being based on the wholesale price of natural gas and the rate of production. As the bill moves forward, it is expected to end up as a

by the state property tax and rent rebate program. Pileggi has said he supports Scarnati’s bill to take care of local impacts and that his would be in addition to that.

He wrote in a letter seeking co-sponsors that he believes the natural gas extraction industry can afford a tax better than senior citizens facing rising property taxes; • Rep. Nick Miccarelli, R-Delaware, is proposing a bill apparently similar to Pileggi’s, but Miccarelli’s bill uses the gas tax to cut the state’s personal income tax.

That bill would would levy a tax of three percent on Marcellus Shale drillers. “The money would go directly to reducing the personal income tax from 3.07 percent to 2.99 percent,” explained Miccarelli in a press release. The tax rate would quickly rise to 5 percent, and then, Miccarelli asserted: “would generate, by fiscal year 2015, $1.1 billion.”

compromise between the industry proposal and Scarnati’s.

Kathryn Klaber, president of the shale coalition, responded only with a written statement: “As a host of proposals regarding American natural gas production from the Commonwealth’s Marcellus Shale formation are considered in Harrisburg, our industry remains focused on continuing to be an active partner with policymakers in the Capitol and on the Governor’s Marcellus Shale Commission. As the Commission’s work progresses, with the aim of crafting common sense solutions, more policy specifics will certainly develop and take shape.”

• Pileggi has proposed a $250 million per year natural gas extraction tax, with the proceeds used to freeze the school property taxes of senior citizens who have owned a homestead for five years and do not get that levy reduced or eliminated

feature 11

JUNE 2011 CAPITAL WATCH

The plans and the pledge Legislative leaders noted that both Miccarelli’s and Pileggi’s bills would, unlike Scarnati’s and Yudichak’s, not run afoul of the Americans for Tax Reform pledge signed by Corbett and some lawmakers in each chamber.

The ATR pledge, championed over the years by the group’s founder, Grover Norquist, does not ban tax increases that use all revenues from a tax hike to reduce another tax. Pileggi and Miccarelli both say their bill does that.

As currently drafted, Scarnati’s bill does not have a tax cut to offset the fee revenues.

Meeting the terms of the ATR pledge could make it easier for Corbett to sign a bill, some House GOP leaders believe.

One Marcellus industry lobbyist said of the Pileggi and Miccarelli bills: “Those socalled ‘revenue-neutral’, Grover Norquist proposals aren’t likely to get any support from rural, Marcellus Republicans whose constituents and regional economic activity would bear 100 percent of a tax from which a vast majority of any resulting funds would flow to Suburban Philadelphia and Pittsburgh. Could you face your constituents after such a vote?”

And industry sources have said the governor has told them he will not sign Scarnati’s current plan into law.

“The governor has yet to tell me he does not support my plan or he supports it,” Scarnati reacted.

Turzai: Lack of agreement on how to tax; how much to tax; how much to tax or how to spend the revenues will doom tax.

Polls have shown seven state voters in 10 support a natural gas extraction tax.

Scarnati and Democratic legislative leaders have said they doubt a state budget can pass without a tax passing with it.

But Turzai said the group supporting a tax has reached no consensus beyond that broad conclusion.

“There is a sizable group in the House that does not want any tax at all,” he said.

“And even among those that would want or live with it, there is just so much disagreement among them: how much to tax, how to tax and where to send the money?”

Analysts have said the polls show that rural Pennsylvanians in the areas where the drilling is taking place want a tax to repair the effects of drilling on their roads, regions and environment. The same polls show southeasterners want a tax to help pay for programs that help their region.

Said Turzai: “There are reasons that when former Gov. Rendell, and Senate and House majorities all agreed to put it in the fiscal code that they would pass a severance tax last year, they could not: they don’t agree on anything but that they all want a tax. When you get into the details, they all go their separate ways.

“That’s why I just don’t see it getting done by June 30. And I think the Legislature will end up not seeing this as a tax issue, but as a regulatory issue: how do we make sure the environment is safe, the impacts are dealt with, and the jobs keep coming? Passing a tax is not what we have been charged to do in the last election, it is not what we have in front of us.”

Scarnati disagreed, saying consensus was building, and if confronted with a bill the Senate passed, he believed the House would approve it as well.

Pileggi spokesman Erik Arneson responded to Turzai: “We look forward to ongoing discussions with the House and the governor’s office.”

Scarnati differs with Pileggi on shale tax, property tax cuts.

Corbett has remained publicly quiet about Scarnati’s proposal, but his staff has suggested he has concerns about its statewide impact funding, its distribution systems and plan, and other provisions.

But while Pileggi touts his plan as not being a net tax hike, Scarnati says he opposes it.

“Dominic’s plan is clearly a tax the governor won’t support and if you layer it on top of mine it would be the highest tax in the nation,” Scarnati said. “I don’t think that is what we should be doing. I am glad he supports my fee, but clearly I don’t support Dominic’s plan. Mine is one that will get to the governor, it’s a fair and reasonable fee and I still think it has the best prospects of getting something to the governor that he will sign.

“If we want to do something about property taxes, let’s enact a real backend referendum and do something for everybody with property taxes, not pass the highest tax in the nation, if you layer Dominic’s on top of mine. What does

that get us if it goes to the governor?

Nothing!”

Arneson responded: “We very much look forward to working with Senator Scarnati and other members of our caucus on the issues of Marcellus Shale and property taxes.”

Scarnati willing to negotiate on industry plan, discusses issues with it and with his plan.

Asked about the industry plan, Scarnati said: “I know the industry has worked on various proposals, I am open to negotiations, it is just that negotiations have changed a bit, we have a chairwoman who has some views on this, and she is now part of this process.”

Backers of the industry plan say it will raise more per year than the $100 million to $170 million annual revenues predicted by Scarnati for his plan in the next several years.

Scarnati said that range is “the sweet spot we have to hit with some annual dollars flowing back to the communities.

My goal is not only to hit a sweet spot for revenues to help the impacted communities, but also a sweet spot for bringing investment and jobs into the state.

“I am not so sure their scenario gets us to that sweet spot in terms of revenue, I am

not saying it doesn’t, I have not seen a side by side comparison to show that to me.”

Scarnati and House GOP leaders agreed that the industry proposal to not tax wells after three years of production would not be part of any final fee legislation passed by both chambers.

“That three-year limit is not realistic,” Scarnati said. “The method that they’re using to frack these wells, eventually that sand they are pumping in, eventually that diminishes and re-fracking will be a major option for these companies, when they are going back to these wells for Marcellus or Utica shale. When we’re talking about fees and impacts, they are not just walking away from these wells and not playing with them again.”

Scarnati does agree with the industry’s critique of a provision in his bill that would assess a well at least $10,000 per year even after year 15 or 20, when production drops sharply.

Scarnati said he is willing to deal with that issue if production drops, but wants to retain a higher fee if a company goes back to drill the same well and gets new, higher production from a different shale formation.

“At the point where they are not collecting much, and might plug a well because of the fee, that is a discussion I am willing to have. Our goal is not to diminish investment in this commonwealth.” CW

Thank you … to our many dedicated employees who responded to the emergency call heading into a holiday weekend and helped rebuild electric facilities to restore power so many rely upon. … to nearly 800 other utility linemen and tree trimming specialists from near and far who helped out when we needed an extra hand. … to the local emergency responders and volunteers who helped everyone stay safe and supported their neighbors in a time of need. … and, to each of our 175,000 customers who were affected by the recent tornadoes and storms for your patience and understanding.

The power to make a difference. www.pplelectric.com

We won’t thank Mother Nature for wreaking havoc and knocking out power to so many. From the Susquehanna Valley to the Poconos, we faced a massive cleanup and reconstruction of utility poles, power lines and other facilities. We mobilized as many skilled personnel as we could and coordinated work around the clock until the job was done.

We realize being without power isn’t just an inconvenience for you. It can be a hardship at times, too. We take pride in serving you well, delivering power at the flip of a switch when you want it. Let’s hope our summer ahead will be calmer!

opinion 13

JUNE 2011 CAPITAL WATCH

Guaranteed financing: Helping banks and businesses since 1972

By Bill Hawthorn

You’re a business owner, big or small.

You have a great business model, a solid staff and your business is on the cusp of doing great things. You need a large sum of capital to expand, and although your cash flows are strong, they aren’t high enough to self-sustain. What do you do?

Most likely, you apply for a loan.

Amid one of the worst recessions of our generation, lending restrictions on financial institutions are neighboring on an alltime high. As a business owner, approvals for loans just are not what they used to be. For every ten businesses who apply for a standard bank loan, you’ll probably only find one or two firms lucky enough to qualify. Finding rates and terms that are affordable for those lucky businesses are an entirely different story.

These restrictions aren’t confined to the local community banks either – national banks are in the public spotlight and are being forced to decline minimal risk loans. Collateral requirements are stricter, leaving smaller businesses forced to provide one, two or even three additional guarantors. Cash flow projections now need to be wholly supported on historical statements. Big banks will most likely refuse to offer cash to any

corporation, LLC or proprietorship that has been chartered within the last eighteen months, regardless of their previous cash flow statements and the amount of the company’s liquid collateral. Can you blame them? They were just humiliated with accepting billions of dollars in federal aid a little over two years ago. The first thing any good banking CEO would

framework, or they fail to know such programs exist.

It’s called guaranteed financing, and its “guaranteed” by the US government via USDA. Almost any type of business qualifies, and there are formal equity and collateral requirements permanently established. Banks issue the loan, and the government guarantees up to 80% of the

I believe this program has the ability to fuel the economy. It allows banks to issue money for more qualified businesses with longer amortizations and lower interest rates. do: take measures to prevent mistakes that caused the need for bailout funds.

That’s to say make smarter loans by mitigating risk.

Most of us did not have the opportunity to indulge into the proceeds of the American Recovery and Reinvestment Act of 2009. Fortunately for business owners, there are still opportunities circulating around Washington. Most of which conventional banks won’t tell you about either because of its tedious

funds provided to the business. I believe this program has the ability to fuel the economy. It allows banks to issue money for more qualified businesses with longer amortizations and lower interest rates.

As a bank underwriter in a harsh economic market, it makes sense to loosen lending restrictions if you were able to hedge your risk. This program allows that.

The USDA Business and Industry Loan Guarantee Program (B&I) is mainly dictated by business type and location.

Businesses in the areas of manufacturing, real estate, marketing, energy, technology, financing, retail, and wholesale are ideal borrowers while many other industries qualify as well. Townships and cities under 50,000 residents would be eligible, conveniently allowing all businesses around Dover to reap the benefits.

The fact is, the B&I program has been around since the Nixon administration, and is available for businesses borrowing up to $25MM. It’s been neglected, sitting on a government shelf somewhere in Washington waiting to be utilized by fresh businesses. I strongly believe banks should start lending through this forgotten program and soften its restrictions. Wasn’t this the point of the stimulus; to reduce fear and keep American businesses afloat?

It’s a solution to a problem that should have been resolved in 2009, and banks can start providing it. We can show them how through over sixteen years of navigating the USDA maze. In an economic climate such as ours, as businesses, we need access to capital – our country depends on it. CW Bill Hawthorn is an Underwriter and Business Development Officer for BVFR & Associates, LLC in Lemoyne, PA.

& present the

Join the PA Breast Cancer Coalition & the PA Association of Community Bankers for the 4th Annual Home Run Derby this July!

Coming to a Stadium near You July 13th - Harrisburg Senators July 19th - Reading Phillies July 22th - York Revolution July 23rd - Lancaster Barnstormers

www.PAHomeRunDeRby.oRg

JUNE 2011 CAPITAL WATCH

14

Forced arbitration: Solution or problem?

Most Americans have a core belief that is simply a myth. They believe if they are wronged, they can go to the judicial system for justice.

What they don’t know is that their constitutional right to take a dispute to court, both in both the U.S. Constitution and the Pennsylvania Constitution, has been drastically eroded over time.

Currently, forced arbitration clauses – which are buried in the fine print of everything from credit card terms and employee handbooks to home improvement contracts – eliminate consumers’ and employees’ access to the courts and require that they submit their disputes to a private system designed by corporations to favor their interests.

The courts of this land have been complicit in this erosion of the right of access to the judicial system. In Shearson/ American Express Inc. et al. v. McMahon et al., 482 U.S. 220 (1987), which was largely responsible for the forced arbitration we have today in the securities arena, the Supreme Court justices in the majority apparently acted on the belief that businesses can be trusted to punish themselves when they break the law, and that politically appointed regulators can effectively oversee that self-regulation.

United States citizens were given the right to a jury trial in federal cases by the Seventh Amendment to the U.S. Constitution, and Pennsylvania citizens were given the right to trial by jury in civil cases within the Commonwealth by Section 6, Article I of the Pennsylvania Constitution. However, the courts now routinely hold that just by taking a job or buying a product or service, individuals can be denied access to the judicial system and will be forced to give up their right to go to court if they signed a document which included a provision requiring they go to arbitration.

There is nothing wrong with voluntary arbitration where the waiver of the right to use the judicial system is negotiated by those with equal bargaining power and where the consequences are fully disclosed. But with forced or mandatory arbitration, there is no judge, jury or right to an appeal. Arbitrators do not have to follow the law, and there is no public review of decisions to ensure they got it right. Moreover, contracts typically name the arbitration that must be used – the one preferred by the company.

An example of such monopoly is the power held by the Financial Industry Regulatory Authority (FINRA), the

official sounding, and deceptively named, self-regulating arm of the trade association for securities broker-dealers in America.

How does forced arbitration work in FINRA? Let’s say you want to open a brokerage account with a securities broker dealer to buy stock, bonds or mutual funds. You typically sign an Account Opening Agreement that includes a provision requiring all disputes to be resolved in arbitration run

by FINRA. Arbitrators are then selected

by FINRA in an opaque process which results in a “pool” of FINRA-approved arbitrators. From that list, the parties select the arbitrators to decide the case.

The entire selection process and the resolution of disputes are performed under rules written by FINRA with approval of the Securities Exchange Commission (SEC).

Another arena where forced arbitration proved to be bad new for consumers, but good news for businesses, is the National Arbitration Forum (NAF), which provided an arbitration forum for credit card and other consumer disputes.

The win/loss record of businesses arbitrating in the NAF suggests that the program was structured to create

Home 231 creates a comfortable yet Stylish restaurant that offers contemporary home-style cuisine, service, and atmosphere

b.y.o.b.

w/LIQUOR LICENSE COMING SOON

now serving brunch Brunch: sunday 11:00am-2:00pm|Lunch: mon-fri 11:00am-2:00pm dinner: mon-wed 5:00pm-10:00pm thur-sat: 5:00pm-11:00pm

Home 231|231 north street|harrisburg, pa 17101|717.232.4663

By Rob Bleecher

a profitable resolution of disputes for businesses. But when Attorney General Lori Swanson of Minnesota exposed the corrupt monopolistic arbitration system for what it was, NAF settled with the state and agreed to pull out of the credit card and consumer debt collection arbitration business.

Forced arbitration also results in harm to the little guy in employment contracts.

A case in point is one of Jamie Lee Jones, a woman who was working in Iraq for Halliburton/KBR when she was repeatedly raped and beaten by several of her fellow employees. Unfortunately for Jones, her employment contract with Halliburton/KBR included a forced arbitration provision, limiting her to arbitration for a civil remedy. Thus, her access to the judicial system was severely curtailed by that provision.

Let us not forget that forced arbitration proceeding are typically confidential, private and unreported. This private aspect of forced arbitration invites abuse.

It is an indisputable fact of life that injustice takes root and grows best in darkness.

It is time for those who profess a belief in the core principles of our founding fathers to join with those who believe in fairness and justice irrespective of who proposes it, and return the right of access to the judicial system to the people. The position of the those justices who permit forced arbitration seems to be based on a belief that businesses can be trusted to punish themselves when they break the law, and that politically appointed regulators can effectively oversee that self regulation. Such a belief, if sincerely held, is extremely naïve.

The Arbitration Fairness Act of 2009 (H.R. 1020, S. B. 931) was introduced in Congress prior to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, but has been languishing since introduced.

The proposed legislation would return consumer choice and would prevent forced arbitration. The Act has provided the SEC with the ability to review the current FINRA system and implement a change in the way FINRA operates.

Whether the SEC will act independently for the good of consumers is still an open question. A prohibition on forced arbitration, no matter what the arbitration forum, would go a long way to correcting a system that is unfair to consumers. CW Rob Bleecher is an attorney in Dauphin and Cumberland Counties. His litigation practice addresses many types of consumer fraud, including financial and investment fraud. He is a member of the Public Investor Arbitration Bar Association (PIABA) and is a FINRA arbitrator. He can be reached at 717-691-9809 or rbleecher@pechtlaw.com.

NEWS 15

JUNE 2011 CAPITAL WATCH

Editorial

Class project masquerades as search for justice You know how sometimes you are conned into going to a “blockbuster” summer action movie – or comedy – based upon what you see in the movie trailer – or preview? Only when you are into the second hour of the movie in the, thankfully, air-conditioned theater do you realize that all of the rock-em and smash-em action scenes – or the funniest gags – were all included in the trailer, sandwiched inside of an hour and 20 minutes of filler.

That’s sort of the reaction we had when we got our hands on the 102-page statewide Grand Jury report on the operations of the Pennsylvania Gaming Control Board (PGCB).

It’s not that we really expected the Grand Jury report to trumpet its actual conclusions in bold face and underlined text: Grand Jury finds no prosecutable or criminal wrong-doing at Pennsylvania Gaming Control Board after exhaustive, two-year study but does find them guilty of, gasp, politics.

It would have been a confidence builder, though, if they had said, “Whoops.

My bad. No foul.” Instead, a spokesman for the Attorney General’s office told news media that those in the Grand

Jury’s crosshairs should take no comfort in the fact that insufficient grounds were found to indict for criminal wrong-doing.

“To celebrate the fact that you didn’t get arrested today, that sets the bar very low,” was the statement quoted in several papers around the state. It tended to underscore the fact that the Grand

political, but what could you expect from a creature created by a Governor and a General Assembly that each wanted veto powers – and got it in the enabling legislation – to kill any clever ideas any other power broker might want his or her appointees to the PGCB to undertake.

The Grand Jury process abridges an individual’s rights to be accompanied by legal counsel and abrogates the right under the Fifth Amendment against self-incrimination.

Jury had utterly failed in its implicit goal which was to indict.

Instead, the Grand Jury came up with 21 recommendations for legislative action, many of which would, in a manner of speaking, make criminal offenses out of behaviors that clearly today are well within the word and letter of the law.

In other words, the Gaming Control Board followed the letter of the law as exhaustively evaluated by the Grand Jury. Well, they were pretty heavy handed from time to time about things

Thus, the Grand Jury came up with such stinging rebukes as “an independent state agency, such as the Department of the Auditor General, (should have) responsibility for annual auditing and inspecting of the PGCB to help insure adherence to the obligations of the Gaming Act.” It also called for a ban against “any person from serving as a member of the board who was an applicant for or holder of a Pennsylvania slot machine license.” That was Recommendation #5. The Grand Jury liked it so well, it also made It

Recommendation #6 – but asked that the language also be inserted in another section of the Gaming Act. And, responding to their disappointment that the political appointees on the Gaming Board acted, well, politically, on occasion, the Grand Jury asked that the board “create uniform and transparent hiring practices based upon merit alone.”

Reading the entire 102 pages of the Grand Jury report was a reminder about how anachronistic and often unfair the Grand Jury system is. Yes, it is specified as an individual protection for citizens in the Bill of Rights but, in practice, it’s frequently a tool of prosecutors to go on fishing expeditions, using subpoena power and closed-door testimony for sometimes political ends. The Grand Jury process abridges an individual’s rights to be accompanied by legal counsel and abrogates the right under the Fifth Amendment against self-incrimination.

In fact, when you read studies that show Grand Juries hand down indictments in better than two out of three cases that come before it, it’s impressive that this one came up emptyhanded. CW

JUNE 2011 CAPITAL WATCH

Editorial

Pay Less with E-ZPass Saves Time and Money New PA E-ZPass 7% Toll Discount Now in Effect!

Available at your local…

1-877-736-6727 • paturnpike.com

Looking for the perfect event venue?

Karen’s Harmony Hall just a few minutes from downtown

The Civic Club of Harrisburg walking distance from the capital

Specializing in: PAC receptions • Fundraisers • Social & Corporate Events

717.985.9300 • www.karenscatering.com

The time has come for instant replay in the courtroom We can visualize the courtroom scene as vividly in our minds as if it were an actual TV rerun. The prosecutor barks, “So please tell the jury: what did you do after you bashed the victim’s head repeatedly with the baseball bat? Did you go out for a corned beef sandwich?”

The defense attorney is on his feet: “I object, your honor! Facts not in evidence.

He’s badgering the witness. He’s prejudicing the jury.”

The judge looks at the prosecutor sternly: “That’s quite enough! Reporter, strike all that from the record. The jury will disregard.”

The prosecutor replies over his shoulder as he returns to his table, “No more questions, your honor. The state rests.”

He has a smug smile and you know that he knows that he has planted the seen of guilt firmly in the minds of the jury.

According to the trial record, the exchange and the prejudicial never happened. A lot of things “never happen” in trial transcripts. And, at most trials, jurors are not permitted to take notes.

Compare that to the National Football League where every move on the gridiron is videotaped from multiple angles. Every play, every “incident” is fully documented and available for instant replay and re-evaluation.

Game taped are catalogued and stored for future scrutiny and review by both sides – and referees – in an attempt to play the game better and improve the judging.

And yet football, while big business, is still only a game. What goes on in a courtroom should be treated with at least the same level of attention to nuance and detail.

The statue of Justice, famously, is blindfolded. But judges and jurors are not.

They see and hear everything that goes on in a courtroom. The stenographic court record, meanwhile, is devoid of that nuance – intonation, decibel level, facial tics and tells and body language of all sorts..

Pennsylvania, at this late date in the 21st Century, does not even permit still or video cameras in criminal courtrooms – although the Pennsylvania Cable Network has been televising the state’s Superior Court for a number of years. Meanwhile, the cost of technology has declined precipitously.

Only a few years ago, high quality video was only available to those who not only could afford the equipment but also the trained technical crew to operate it. Today, half the population has cell phone cameras and a significant percentage have desktop computer editing systems that would have made a professional video editor from the 1990s envious at the capabilities and picture quality available to even on entry level hardware and software.

Sure, it would cost millions – perhaps tens of millions – a year to videotape every felony trial (civil trial costs could be assessed against the involved parties) but how much appellate court work could be streamlined or avoided altogether or made more definitively fair with “instant replay?” CW

NEWS 17

JUNE 2011 CAPITAL WATCH

States’ business climate ranking drop shows need for change in public policy direction

By Lesley Smith

Pennsylvania’s slide in a recent “bestworst-states-for-business” study is proof that the Commonwealth needs to head in a new public policy direction.

The Commonwealth was highlighted as one of five states with the biggest drop in the rankings over the past five years – from a middle-of-the-road 27th in 2006 to a dismal 39th this year -- according to the Chief Executive Magazine study, which surveyed 500 nationwide CEOs. The study rated states on a number of factors that business and industry decision makers consider essential for a business-friendly environment – one that supports job creation. These include a competitive business tax climate; balanced, consistent policies and regulations that allow job creators to plan; workforce quality and labor law flexibility; and living environment. Intangible factors, such as the state’s overall attitude toward business, also matter. In addition, CEOs expressed the need for controlled government spending and debt, among other concerns.

Since these are the factors that matter to those responsible for private-sector job creation, it’s not surprising that, compared to other states, Pennsylvania is

viewed unfavorably. A lack of commonsense legal reform (Pennsylvania consistently ranks near or at the bottom in legal climate studies); having the highest effective corporate tax rate in the United States; eight years of a tax-spend-mandate approach to governing; and other drains on competitiveness have clearly taken a toll. And nowhere is the vilification of job creators more evident than in the rhetoric from government unions and other “tax-and-spend” proponents in the current state budget debate.

Pennsylvanians deserve a business climate that is conducive to economic and job growth, not a continuation of the status quo that has reinforced a negative view of the Commonwealth’s attractiveness to job creators. With the economy still on shaky ground following the recession, boosting business and job growth is more important now than ever before.

Beyond the adoption of a fiscally responsible state budget, a good place to start is restoring fairness and predictability to the state’s legal system, particularly with regard to financial liability. The state House has already passed Fair Share Act legislation, a reasonable law that would

Flash and dash This year’s budget began with an exciting, technological bang. Governor Corbett unveiled his proposal with an online dashboard where any taxpayer, anywhere in Pennsylvania could go to a website and take a look at the details by general fund, program or agency.

The rainbow colored pie charts are dazzling.

Lesley Smith

officials who understand that privatesector job creation drives the economy and economic recovery, and that Pennsylvania needs to be more welcoming to job creators and, ultimately, the economic benefits they can produce for all Pennsylvanians. CW Lesley Smith is Communications Director for the Pennsylvania Chamber of Business and Industry.

By Deena C. Malley

what is referred to by the technology community as flash and dash. Flash and dash is a generally derogatory phrase used to describe a dashboard that was created for the sole purpose of a dog and pony show presentation designed only to impress executives and make a sale.

The flash and dash is always disappointing because a big effort goes

At any given time, taxpayers could see line-by-line the differences in what is being proposed. They could do their own comparisons, draw their own conclusions, and make their own decisions.

Then there are the reports. The options are bountiful. They even come complete with historical data. They are enough to make any analyst or policy wonk drool over the blinding blizzard of numbers.

The dashboard does have a few imperfections but overall it is an admirable start at presenting data with a meaningful use. It also goes a long way toward creating a window of transparency into a process that has traditionally only been privy to an anointed few.

While it is a good first step, this dashboard is at risk for falling into

bring liability more in line with actual degree of fault in civil cases, with exceptions for the most egregious cases.

Those opposed to this commonsense legal reform do so at the continued peril of sustainable economic recovery, long-term job growth and the will of Pennsylvanians, the majority of which support the Fair Share Act, according to a statewide survey conducted by Susquehanna Polling and Research.

Interestingly, Wisconsin, a state that improved 17 positions from last year’s study – from 41st to 24th – recently enacted a number of comprehensive legal reform measures ranging from product liability concerns to frivolous lawsuits.

Additionally, common sense unemployment compensation reform that restores solvency to a UC Trust Fund that is broke and borrowing billions from the federal government, and that ensures that this safety net is there for those truly in need; regulations that balance environmental protection with economic growth; and an improved tax climate would go a long way toward improving the state’s competitive position.

The business community welcomes the opportunity to work with elected

into creating them but their usefulness quickly dissipates pretty much as soon as the sales execs get their commissions.

Not all dashboards fall prey to this sentence of being locked away in a digital archive and neither should Governor Corbett’s.

In this age of analytics and comparative analysis, dashboards play a big role.

Consumers use comparative data analysis every day. Whether it is booking an airline ticket or shopping, who does not relish at using sites such as shopzilla.com or farecompare.com to find the best deal.

Heck, even Captain Kirk is a priceline. com negotiator.

We are all bargain hunters at heart.

These sites give us data dashboards to compare leading companies so we can pick our best price.

Now that our governor has started Pennsylvania down the dashboard path, the application needs to go further and think bigger.

Be prepared. This next idea will be a boat rocker in the halls of the state capitol.

Why not have the governor and all four caucuses submit their budget proposals, including any amendments to a real-time, online dashboard.

Think about it for a second.

At any given time, taxpayers could see line-by-line the differences in what is being proposed. They could do their own comparisons, draw their own conclusions, and make their own decisions.

No more waiting for newspaper articles or press releases giving us the writer’s view and opinion of what is important. There are many budget items that are over looked and under reported year after year.

All the proposed numbers just a click away.

From a technology standpoint, it

Deena C. Malley

would be easy to do. All of these budgets are created in Excel spreadsheets or similar programs so it is just a simple data extract and comparisons of matching fields. In the world of IT, it would be a cake walk for a good programmer.

So why not do it? Why not step out of the budget box and let taxpayers have more than flash and dash. CW Deena C. Malley is a technology and business consultant with more than 20 years experience. Her website can be found at www.deenamalley.com.

JUNE 2011 CAPITAL WATCH

18

House Bill 808: an enormous gift to insurance industry

By Mark J. Kogan

Major change proposed to Workers’ Compensation Act will extend from three to six months the mandated period for an injured worker’s treatment with employer selected medical providers.

On February 24, Chief Deputy Minority Whip David Hickernell, R-Lancaster and Dauphin, led a group of Republican legislators in sponsoring House Bill 808.

These legislators, whose principal donors’ list reads like a Who’s Who of business, construction, banking, energy and pharmaceutical groups salted with some Conservative PACs (see http://e-lobbyist. com/gaits/sponsors/288639), have proposed an amendment that will further restrict the freedom of injured workers by extending from 90 to 180 days the mandatory time during which they must treat with employer-selected health care providers for work-related injuries. The bill was removed from the table on May 11 and is now eligible for eligible for a vote.

House Bill 808 is a legislative payback to business donors and an enormous gift to the insurance industry because it limits their responsibility for payment for treatment of work-related injuries unless the injured worker treats with the employer selected medical provider for the initial 180 days after a work-related injury.

For those of you may not understand laws related to workers’ compensation in Pennsylvania, if an employer provides its workers with a list of a “panel” of designated medical providers, a worker suffering a work-related injury must treat with those providers during the initial 90 days after the injury. Although an employee can also choose to treat with his or her own provider during the ini-

tial 90 days, the employer does not have to pay the related expenses unless the employee also treats with the employer’s providers. After the 90 days window, a worker is no longer required to treat with the employer-selected providers.

Employers’ legislatively given right to control the medical provider treating their employees for the first 90 days has proven to be a cost saving measure for both employers and their workers’ compensation insurers that has not necessarily been to the benefit of employee health. The employer-selected panel providers generally administer conservative care and report directly to insurers and employers, in contrast to an employee-selected provider who is in confidential relationship and reports directly to the employee.

Employer selected providers focus on providing conservative care and often delay obtaining expensive diagnostic tests such as MRIs or referring injured workers to specialists or for necessary surgery.

Insurers hire case managers who work directly with the employer-selected providers, focusing their care towards the interests of the employer and insurer in keeping wage loss indemnity costs low by keeping injured workers in the work force, rather than on the interests of the injured worker/patient in recovery from injury. The focus of the providers during the initial 90 days on the interests of the employer and insurer and not the worker often results on keeping injured workers in the same work environment that caused the injury in the first place.

Those of us who actually practice workers’ compensation law in Pennsylvania can tell you that there is significant

motivation for insurance companies and employers to lobby for the extension of the period during which they control medical care to 180 days. This can only be seen as a version of rationed care. Injured workers are being further required to surrender their rights to confidentiality, deprived of their right to select their own medical provider for treatment, and required to treat with those who have a direct pecuniary interest in maintaining their status as panel providers and as a result a primary focus not on the patient but the payor.

In today’s day and age, when many are calling for less governmental control over the rights of individuals, it is incredibly hypocritical for the Republican majority to be proposing this Bill, which only gives more bureaucratic control over the right of the citizens of Pennsylvania to choose their own medical providers. If this Bill becomes law and you are injured at work, for a period of six months your employer has no responsibility for payment for treatment by your doctors unless you treat with your employer’s doctors, therapists and specialists, whether you like them or agree with their recommendations or not, whether you are comfortable with them reporting directly to your employer, and whether or not they have your best interests as their primary focus.

Compounding this extension of the employer’s right to control its employee’s medical treatment, the Pennsylvania Workers’ Compensation Act gives immunity to employers and their worker’s compensation insurers from liability for bad faith in administration of a claim,

regardless of their actions. This means that injured workers cannot bring a tort action against an employer or workers’ compensation insurance carrier where an injured worker’s medical treatment is delayed or denied by an employer’s request for a second opinion.

As an experienced practitioner of workers’ compensation law in the State of Pennsylvania who has represented both employers and injured workers, I can honestly say that the amendment of the Workers’ Compensation Act contained in HB 808 would not be sought or approved of by the average worker.

If the general voters were advised that their right to choose a doctor would be rationed for an additional three months following a disabling injury and that medical treatment could be denied or delayed unless they treated with an employer selected provider, they would certainly voice their concern to their State Representative.

The current version of the Workers’ Compensation Act already gives the employers and insurers the right to control their workers’ medical treatment for ninety days. A vote in favor of the Amendment will send a message to Pennsylvania voters that their Representatives are more concerned with preserving their relationships with their business donors than preserving the rights of their voters. CW Mark J. Kogan, Esq. is a partner with Weinstein, Schleifer & Kupersmith, P.C. He specializes in workers’ compensation law on behalf of injured workers. Email at: mkogan@wsklawyers.com

Tolling interstate highways may provide key to transportation crisis

By Joe Kirk

Even during times of intense partisan differences, there is agreement on both sides of the aisle in Harrisburg, and in the Governor’s office, that we face an unmet transportation need of more than $3 billion per year. Governor Corbett even took the step of appointing a 35-member Transportation Funding Advisory Commission, headed by Secretary of Transportation Barry Schoch, to explore funding options and other strategies to address this transportation crisis.

This begs the question, what got us to this point? It has been 14 years since the last increase in state transportation funding and 18 years since an increase in the federal transportation funding. Highway and bridge construction and maintenance costs in the commonwealth have increased by 75 percent in the past 14 years.

Based on EPA data on fuel economy improvements during the same period, driv-

ers of new cars are now paying up to 15 percent less in fuel taxes per mile of road driven. In addition, the Federal Highway Trust Fund is broke and there is little support for increasing the federal gas tax. As a result, it is likely in the near future that Pennsylvania, along with other states, will see federal highway funding drop by 32 percent. All of these factors have combined to create woefully inadequate funding for crucial transportation projects.

While a range of actions are needed to raise additional transportation revenues in Pennsylvania, bolder strategies must also be considered. Some ideas might even sound far-fetched and politically implausible.

On May 16, I provided testimony before the Governor’s Transportation Funding Advisory Commission on potential solutions to our transportation crisis. A key point of my testimony

was that Governor Tom Corbett should explore the potential of working with fellow governors on a plan of returning the federal interstate highway system to the federal government. The second step would be to call for the federal government to implement a toll system with a “lock-box” approach that would use all toll revenues for maintenance and improvement of interstate highways and bridges. High traffic corridors would be the first priority. Tolling of interstate highways would ensure a fair, selfsustaining, user-pay system. The tolling plan would also free up federal highway funding to help to address local highway and bridge deficiencies.

The cost of equipment to implement an interstate tolling system would not be an issue. A public/private partnership could be used to entice private investment to develop and maintain a state-of-

the-art, automated, high-speed tolling system. The goal of the tolling plan would be to rehabilitate the interstate system to make it again the pride of our nation and the best in the world!

Is this a far-fetched idea, Yep! But, is there any plan in place or proposed to ensure that our now rapidly deteriorating half-a-century-plus-old interstate system is adequately maintained, Nope!

What I only ask is that this idea not be dismissed outright, nor any other innovative proposal to ensure adequate funding for our state and national transportation system. We really need bold ideas and an open discussion before our interstate and intrastate highway network further deteriorates. CW Joe Kirk is Executive Director Mon Valley Progress Council and past president of the PA Highway Information Association.

opinion 19

JUNE 2011 CAPITAL WATCH

advertorial

The Lafayette Club: fine dining • great service

By Jackie Goodwin

The building that houses the Lafayette Club in York, PA is non-descript on the outside but elegant on the inside. It’s just one of those historic looking old buildings that line many of the downtown streets. So if you’re new to the area or if don’t know about the club, then you might not have a clue that one of the best places to have a romantic dinner or business lunch is located there.

While The Lafayette Club was organized in 1858, its life as an eating, drinking and club establishment was formed in late 1898 by prominent men of the community - county judges, bankers, industrialists, and merchants - as an exclusive social club. In early 1912, the members of the Lafayette Club purchased a federal period residence one block east of Center Square at 59 East Market Street, York, PA. Although there is no record of how the members decided on the name Lafayette Club, there is reason to believe that it comes from the Conway Cabal plot to depose General George Washington. At a dinner in York given

by General Gates, who hoped to replace Washington as Commander-in-Chief, the

Marquis de Lafayette proposed a toast “to our Commander-in-Chief General Washington. May he remain at the head of the army until independence is won.”

This effectively ended any threat to General Washington.

Today, the Lafayette Club continues its tradition as the premier business club of York, offering fine food, beverage and fellowship to ladies and gentlemen in a congenial atmosphere. The four-story clubhouse offers its members and guests an outstanding facility. Features include a formal parlor, reading room, main dining room with fireplace and stained glass windows, and a rich wood paneled tavern/grille room with painted murals depicting colonial York, at the time of Lafayette’s final visit.

Adding to the mystique are rumors of Stuart’s ghost, a “gentlemen’s gentlemen” in past life—who lived and worked at the hotel upstairs. In addition to sightings of Stuart, waiters and chefs at the Lafayette Club also believe the establishment is haunted by a young girl who reportedly calls “hello” down the upstairs hallway.

While the Lafayette Club is an official club, requiring paid membership, the dinning room is available to non-members and requires a 24-hour advance reservation for two or more. Executive Chef John Stull, Chef Andrew Barnes, and General Manager Edward Lincoln, Jr. are here to fulfill all your dining needs, whether it is a hamburger or Tableside Flamé and are committed to providing

their guests with the best dining experience possible.

“We carefully selected affordable wines and spirits, and have created a diverse menu which can be paired with our wine list, “says Lincoln. “If you have any dietary restrictions or special requests, we are happy to accommodate your needs.”

The Lafayette Veal, thin slices of veal stuffed with lobster and crab salad rolled and baked, served with a golden truffled saffron buerre fondue is excellent. Paired with a glass of Domaine Trois Colombes Les Rameaux Chardonnay 2007 and you have the perfect duet.

The Lafayette Club, 59 East Market Street, York, PA 17405, (717) 848-2896, www.lafayetteclub.net

*

ANNUAL PERCENTAGE RATE. Rates reflect a .25% APR reduction for Automatic Payment Service and loan amounts up to 100% of the retail value of the vehicle. Your rate will increase if you discontinue Automatic Payment Service. PSECU will charge an additional 2% to the current interest rate when financing a vehicle for more than 100% and up to 130% of the retail value. The Manufacturer’s Suggested Retail Price determines new vehicle values; Kelley Blue Book® or other authorized guides determine used vehicle values. Minimum value is $3,000. PSECU makes all final decisions regarding vehicle value and proper rate. Loan rates are effective as of 5/26/11 and subject to change. See the LOANLINER® Credit and Security Agreement and LOANLINER Addendum at psecu.com/disclosures or call us. Kelley Blue Book® is a registered trademark of the Kelley Blue Book Co., Inc.

THIS CREDIT UNION IS FEDERALLY INSURED BY THE NATIONAL CREDIT UNION ADMINISTRATION. EQUAL OPPORTUNITY LENDER.

© PSECU 11-GNRADV-0579 05/11

Go to psecu.com/vehicles for additional rates and terms.