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CapitalWatch VOL. 5 NO. 2

inside Higher Education cut $212 million; Pre-K-12 fares better PAGE 4 Gov. Corbett launches initiative to improve public safety PAGE 6 DPW announces food stamp asset test limits PAGE 9 First-ever Marcellus Shale legislation passed; sent to governor for signature PAGE 12 Federal judge rejects GOP appeals; says use 2001 districts for 2012 elections PAGE 13 Check us out online at www.capital-watch.com Have a news tip or story suggestion? New hires? Births, engagements, sightings? Got a better idea? Know of an interesting state or local government program that addresses a real need or solves a problem in an innovative — and widely replicable — way? Know of a study, report, guidebook, website or other resource that would be helpful to your peers in state or local government? Tell us about it. E-mail the information to goodwinpin@comcast.net. Anonymity is assured.

FEBRUARY 2012

DeWeese found guilty on five counts A jury in Harrisubrg has found Former Pennsylvania House speaker Rep. William DeWeese quilty of three of four counts of theft and one count of conspiracy, relating to allegations that he required taxpayer-paid staff members to work on his election campaigns as part of their jobs. A native of Greene County, DeWeese has served the 50th District in the Pennsylvania House of Representatives since 1976. He was part of the House Democratic Caucus Leadership Team from 1988-2009, including a term as Speaker of the House in the 1993-94 session. He was the Democratic leader of the state House when he was accused of using public resources for campaign purposes. He is still a sitting member of the House. DeWeese’s lawyer vowed to appeal the verdict, and a defiant DeWeese said afterward that he would seek re-election. “I believe that in the court of public opinion, I shall be favorably received to some substantial degree,” he told reporters. “That’s up to the voters. But I will certainly continue to run for renomination and

After the verdict was read, Rep. William DeWeese vowed to stay in the legislature. He also volunteered to escort Gov. Corbett to the dais during the governor’s annual budget address.

re-election.” But prosecutor Ken Brown thinks the verdict will send a different message: “The jury clearly listened to the Commonwealth’s evidence, and they found the defendant to be what the Commonwealth said he was from the moment these charges were filed: that he’s common criminal,” Brown said. DeWeese would be required

to give up his House seat upon sentencing. The former Democratic House leader was one of the last to be charged among the 25 people connected to the House Democratic and Republican caucuses who were arrested in a five-year-old state corruption investigation begun by thenattorney general (now governor) Tom Corbett. Brown, the prosecutor, says

sentencing guidelines suggest a minimum of nine to 16 months in prison for each guilty count. DeWeese holds the distinction of being the only sitting legislator to go to trial. A fiery orator and floor debater, the former United States Marine Corps officer’s command and use of the English language and his passion for Pennsylvania are his trademarks.. CW

Gov. Corbett’s proposed budget is lean and mean Gov. Tom Corbett unveiled his “lean and demanding” $27.14 billion state budget Feb. 8, promising to spend $20 million less than is proposed for the current year. “We will not spend more than we have,” he said in his

budget address. “We will not raise taxes. There is no talking around these limits.” Corbett drew applause 17 times in a 35-minute speech. But the opposition towards what even Senate President Pro Tem Joe Scarnati, R-Jefferson,

predicted would be a “drastic” and “painful” budget started before Corbett unveiled its contents. A group organized by Occupy Pittsburgh and various unions made the halls of the state Capitol a hostile gauntlet for Budget

Secretary Charles Zogby and other top administration officials. After Zogby briefed the media on the budget, the protestors hundreds of people in t-shirts asking Corbett to remember the continued on page 2

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FEBRUARY 2012 CAPITAL WATCH

CapitalWatch www.capital-watch.com PUBLISHER/AD DIRECTOR Jim Laverty (717) 233-0109, ext. 122 EDITORIAL Editor-in-chief Jacqueline G. Goodwin, Ed.D. goodwinpin@comcast.net (717) 418-3366 Contributing Writers Peter L. DeCoursey Kevin Zwick News Service Capitolwire Graphic Design Lisette Magaro Production Shawn Skvarna Capital Watch is published every month. Reproduction of this publication in whole or part is prohibited except with the written permission of the publisher. Capital Watch is non ideological and nonpartisan.

(717) 233-0109, ext. 114

Gov. Corbett’s proposed budget is lean and mean continued from page 1

99 percent pointed - jeered and yelled “SHAME! SHAME! SHAME!” at Zogby, following him with taunts and yelling as he walked about 100 yards back to his office. Republican legislative leaders agreed with Corbett that the state will not raise taxes and had to live with current revenues. “We have to work within those parameters, that is what we have to work with,” said Senate President Pro Tem Joe Scarnati, R-Jefferson. The Senate GOP last year pushed the governor and House GOP to increase the governor’s proposed state spending. In education and welfare, Corbett proposes to eliminate several budget lines and combine funding into block grants he says will give counties and school districts greater flexibility, and produce savings and efficiencies. Both of those plans were hailed by GOP legislative leaders, including House Majority Leader Mike Turzai, R-Allegheny. The budget is the first in several years to propose welfare and corrections spending at the same or less funding compared to the previous year.

While Gov. Corbett’s budget did not address the growing problem of the state’s deteriorating highways and bridges, he promised to work on a solution in the months ahead.

In the current budget, Corbett cut overall state funding for K-12 public education by over $500 million in the current budget, a total of $1.1 billion including un-replaced federal funding. He said this year he was combining a group of funds into an education

block grant of $6.5 billion, a $20 million increase. But $100 million inserted into the 2010-2011 budget for spending in the current budget year for the education block grant program, is again not recommended by Corbett. Overall K-12 funding, compared to what the state gave school districts to spend this year, is down $80 million, a 1.3 percent decrease. While Democrats demanded more spending on education, Republicans said there are no easy answers. But Senate Appropriations Committee Chairman Jake Corman, R-Centre, noted that last year, revenues rose above estimate and lawmakers slashed the welfare increase by more than $400 million. Neither of those options are likely to be available this year, he said. Higher education funding was cut sharply. The state’s biggest universities, Temple, Pittsburgh and Penn State each are proposed for a 30 percent reduction, while the 14-state-owned universities of the State System of Higher Education are slated for a 20-percent cut. Most other maor state higher education funding programs are cut by 5 percent. Unlike last year’s state budget, this year Corbett has proposed a cut to the state’s spending on public welfare. The nearly $30 million reduction – from $10.56 billion to $10.53 billion – comes as the Corbett administration proposes eliminating a solelystate-funded cash assistance program, affecting about 60,000 Pennsylvanians, and repackaging nearly $850 million in county grants into a block grant. But that block grant is cut by 20 percent, $168 million, compared to the current budget. continued on page 4


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NEWS

FEBRUARY 2012 CAPITAL WATCH

Higher Education cut $212 million; Pre-K-12 fares better Higher education was cut by more than $200 million by Gov. Tom Corbett’s proposed 2012-2013 state budget while statewide K-12 public school funding fared better. The state’s biggest universities - Temple, Pittsburgh and Penn State - each are set for a 30 percent reduction, while the 14-state-owned universities of the State System of Higher Education are slated for a 20-percent cut. Those cuts total $185 million. The Pennsylvania Higher Education Assistance Agency was cut by 5 percent, and community colleges are cut by 3.8 percent, another $26 million in reductions Senate Appropriations Committee Chairman Jake Corman, R-Centre, said he hoped to reduce the higher education cuts, and praised Corbett for having a panel led by former Sen. Rob Wonderling report on higher education funding in November. But Sen. Andy Dinniman, D-Chester, noted that will come after “the colleges have to raise their tuitions to deal with these terrible cuts. This budget also guarantees a tuition increase that many families cannot afford.” State Education Secretary Ron Tomalis said the governor values the universities but these are tough budgetary times. “Since taking office, Governor Corbett has taken every opportunity to decrease funding for our universities,” said Dr. Steve Hicks, president of APSCUF, the union representing 6,000 faculty and coaches at state system universities. “We understand that these are challenging economic times, but our students and their families are already struggling to make ends meet. Additional budget cuts are going to put the college dream out of reach for many Pennsylvanians.” These and other tough decisions to cut spending, Tomalis said, arose from rising pension costs. The state contribution to the school employees retirement fund

was $280 million in the 2010-11 budget, is $600 million now, and will rise to $916 million in the coming budget, Tomalis said. That was a big factor in the education budget, he said. K-12 public education and pre-K fared better in this budget, but teachers and school board groups deplored the budget. Tomalis said no district will get less next year than it did this year. But teachers’ groups said that means they are still stuck at 2008-2009 levels of state education funding, which is clearly insufficient. In the current budget, Corbett cut overall state funding for K-12 public education. He sliced $429 million in 2010-11 state funding for block grants, charter school reimbursement and tutoring, in addition to $1 billion in unreplaced federal funding. He said this year he was combining a group of funds into an education block grant of $6.5 billion, a $20 million increase over what the same funds got last year. But $100 million inserted by legislators last June for the current budget year, but funded in the 2010-2011 budget for the Education Accountability Block Grant program is gone. As with last year, Gov. Corbett seeks to eliminate it. So overall K-12 funding, compared to what the state gave school districts to spend this year, is down $80 million, a 1.3 percent decrease, according to administration figures. The largest state teachers union, the Pennsylvania State Education Association (PSEA), and the Pennsylvania School Boards Association say the cut is actually $94 million, since they say the administration cut an additional $14 million in school employee Social Security payments. Senate Education Committee Minority Chairman Andy Dinniman, D-Chester, said the problem is that schools cannot

pay bills now with the same state funding they had four years ago. “We are expecting schools to pay bills in 2012 based on 2008 state funding levels,” said Dinniman. “That is not realistic or fair or the best way to ensure our schools do their job of educating our children. This budget guarantees a property tax increase.” Tomalis said that with the bad economy, under-performing state revenues and the rising state payment for teacher pensions, this was the funding the governor recommended. Corbett and GOP lawmakers said school boards and administrators have been asking for more flexibility and less paperwork for years. School officials said they feared that with fixed costs for transportation to non-public schools and for Social Security payments, that their only flexibility would be to cut instructional funds. Tomalis responded: “They negotiate the teacher contracts. They control what the Social Security payments will be when they do the contracts. This will help them realize that and give them an opportunity to do something about it. And they do have flexibility. They could work with another school district” to share transportation costs. PSEA spokesman Wythe Keever said that the governor’s education block grant is “a shell game, an accounting gimmick, to create the appearance of an increase. It combines previously existing line items for employee Social Security contributions and transportation costs in an attempt to create the appearance of an increase in the state’s main basic education subsidy.” Nina Esposito-Visigits, President of the Pittsburgh Federation of Teachers commented: “The release of funds to counties and school districts has the danger of being siphoned away to other projects without redress. ... block grants

have been studied by the Urban Institute and they offered the following conclusions: (1) funding gradually declines; (2) flexibility is reduced; (3) only work when state administrative capacities exist. ... The Governor should not just hand over responsibility to districts to go-atit-alone.” While Democrats demanded more spending on education, Republicans said there are no easy answers. Corman said last year, revenues rose above estimate by the passage of the budget in June. Also, lawmakers slashed the welfare increase in this budget by more than $400 million. Neither of those options are likely to be available this year, he said. Senate Majority Leader Dominic Pileggi, R-Delaware, said he and others were not committing to restoring any cuts until they could carefully review and prioritize programs. Because with only these sums to work with, Pileggi said, “We don’t have the option of restoring one thing without cutting something else. That is the discussion we will have.” Early childhood education, which got $317 million in the current budget, is proposed to receive $320 million this year, a 1 percent increase. The budget also includes: • $15 million for educator evaluations. Tomalis and Corbett are working hard to get the House and Senate to pass a bill basing half of teacher evaluations on student performance, and the funding is key to this major Corbett initiative; • $471,000 for better school report cards so parents can gauge the effectiveness of their school and district; • $1.7 million for real-time data on student enrollment; and • $1.02 billion for special education, the same as this year. CW

Gov. Corbett’s proposed budget is lean and mean continued from page 3

Although the department’s funding does go down slightly, spending continues to increase on health care and longterm care. Spending for the Medical Assistance Program, also known as Medicaid, increases by about 4.2 percent, or approximately $209 million. The department’s long-term living expenditures are scheduled to go up by $4.7 million. But while Medicaid spending again will increase, the planned 4.2-percent hike is smaller than the nearly 5.5-percent increase in spending during the current budget year.

Those increases are subsidized by $319 million from eliminating components of General Assistance, a program that offers cash assistance and other benefits to those who do not qualify for federal Other programs are also cut or eliminated within the welfare department. Corbett proposes cutting another 0.89 mills from the Capital Stock and Franchise Tax in January of 2013 and eliminating that levy entirely in January of 2014. Senate Minority Leader Jay Costa, D-Allegheny, said that phase-out should be slowed down to spend that money

on education, transportation and other pressing state needs. Corbett also proposed to streamline business incentive programs in the JOBSFirst PA program, which he said would be detailed in coming weeks. The budget also presumes tough economic times for the rest of this year, but improving next year. Zogby said the state is expecting to have a $719 million or 2.6 percent revenue shortfall. But Independent Fiscal Office Director Matthew Knittel believes the shortfall will be short of that, “in the $500 million range.”

Zogby said the state’s revenues are expected to rise by 3.8 percent. The budget also revives proposals Corbett backed but did not get the Legislature to create last year which include: • Getting rid of research funding for future projects backed by the state Tobacco lawsuit settlement fund; • Consolidating several loan funds into the Liberty Financing Agency, overseen by the Department of Community and Economic Development CW


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FEBRUARY 2012 CAPITAL WATCH

February 2012 CAPITAL WATCH advertorial

Policy Roundtable Spotlight The PBC Policy Roundtable, like its national counterpart in Washington, is a forum in which CEOs meet on a peer-to-peer basis to formulate public policy proposals to the most pressing issues of competitiveness. The Policy Roundtable provides senior managers the opportunity to interact extensively with policymakers, policy experts, media, and other stakeholders; participate in policy evaluation; decide upon long-term public policy strategy; and guide policy education/advocacy efforts. Corporate Chairpersons, CEOs, COOs, CFOs, and Presidents are invited to become members of the PBC Policy Roundtable. For more, see: www.pabusinesscouncil.org.

CW: What are your major services?

Michael G. Zanic Practice Area Leader,

Energy, Infrastructure and Resources

K & L Gates

Mr. Zanic joined K&L Gates in 1989 and became a partner in 1997. Since 2000, he has served on the firm’s Management Committee, from 2000 to 2004 as Practice Area LeaderLitigation and from 2005 to 2011 as the Administrative Partner of the Pittsburgh office. Effective August 1, 2011, Mr. Zanic became the Practice Area Leader of the firm’s global Energy, Infrastructure and Resources Practice. Beginning in 2010, he also has served on the firm's Executive Committee. Mr. Zanic has focused his practice on providing strategic advice to energy, manufacturing and construction corporations, including in the areas of insurance coverage and innovative solutions to toxic-tort-related problems. Mr. Zanic has litigated major environmental, asbestos, product liability, property damage and business interruption insurance coverage cases, under property and general liability insurance policies, in the courts of CA, CT, DE, FL, MA, NJ, OH, PA, Puerto Rico, TN, TX and WA. The policyholders that Mr. Zanic has represented have recovered in excess of $1.75 billion on their insurance coverage claims. Mr. Zanic’s experience in toxic tort-related bankruptcies includes representation of debtors and third party non-debtors, including representation of the debtors in the largest asbestos and silica-related pre-packaged Chapter 11 bankruptcy filed in the United States. Further, Mr. Zanic’s practice has included representations involving business operations or disputes in Afghanistan, Algeria, Brazil, Canada, China, India, Nigeria, Russia, the United Kingdom, the Middle East and other countries around the world. Mr. Zanic earned his BA and JD from the University of Pittsburgh. In addition to membership on the PBC Policy Roundtable, Mr. Zanic is Secretary of the board of the Pittsburgh Parks Conservancy; a board member of Leadership Pittsburgh, Inc.; an advisory board member of Dress for Success – Pittsburgh; and a past board member of the Three Rivers Adoption Council.

MGZ: K&L Gates is a global law firm with 24 offices in the United States, seven in Europe, six in Asia, two in the Middle East, and one in South America. With nearly 2,000 lawyers across four continents, K&L Gates is one of the world’s largest law firms. With that type of depth both geographically and in number of lawyers, we are a full service law firm representing numerous GLOBAL 500, Fortune 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. When did you join the firm? Under what circumstances? MGZ: I started with K&L Gates – then known as Kirkpatrick & Lockhart – in 1987 while still in law school at the University of Pittsburgh. After seven years with the firm, I was elected partner, and, since 2000, have served on the firm’s Management Committee while also maintaining an active practice. Initially, I was the leader of the firm’s litigation practice area. Then, in 2005, I became the Administrative Partner – what most firms would call the Managing Partner – of our Pittsburgh office. After six years in that position, I became a leader of our newly-created Energy, Infrastructure and Resources practice area, working with lawyers on four continents with engagements on every continent except for Antarctica. I have also served on the firm’s Executive Committee since 2010. What are your near-term and longterm goals for the firm? MGZ: The practice of law has become more complex and challenging as the world has shrunk through improved technology and a truly global economy where events in any corner of the globe impact companies not only in the financial and governmental capitals of the world, but in Pittsburgh and Harrisburg. In one sense, the goal of our firm has been constant since the Pittsburgh trunk of the firm was founded in 1946: keep the clients first by helping them to meet and, hopefully, exceed their business objectives. Our goal today is the same, but we express it a bit differently given the changes that have occurred in the global economy: to service our clients’ needs – whether on a local, national, multi-national, or global basis

–by assisting them to operate at the critical intersection of globalization, regulation, and innovation. Are your clients local, regional, national or global? MGZ: K&L Gates is the largest fullyintegrated law firm in the world, with our Pittsburgh partners operating in full partnership with those in every single one of our offices and sharing in a single profit pool. What that means for our clients is that lawyers in each office are portals to every other lawyer in 39 more offices, with each of us standing ready to help our clients regardless as to the city of origin of the attorneyclient relationship. In practical terms, that means our lawyers are not only of their city and local community, but also of the country where they are located and, through the relationships with our colleagues around the world, also global lawyers. As such, we represent clients whether their operations and interests are local, regional, national or global. CW: Where else does the firm have business locations? MGZ: We employ a strategy of having offices in important centers of commerce, technology, and finance, and world and state capitals, so that we can be where our clients need sophisticated legal representation. The firm’s offices are located in Anchorage, Austin, Beijing, Berlin, Boston, Brussels, Charleston, Charlotte, Chicago, Dallas, Doha, Dubai, Fort Worth, Frankfurt, Harrisburg, Hong Kong, London, Los Angeles, Miami, Moscow, Newark, New York, Orange County, Palo Alto, Paris, Pittsburgh, Portland, Raleigh, Research Triangle Park, San Diego, San Francisco, São Paulo, Seattle, Shanghai, Singapore, Spokane, Taipei, Tokyo, Warsaw, and Washington, D.C.. CW: Are there public policy changes your firm is advocating? MGZ: Policies need to appropriately create the right environment so that businesses will invest in PA. While there are many business sectors that can be enticed to expand their operations to PA or to locate their operations here, appropriate public policy changes related to the energy and infrastructure sectors would make a tremendous difference in the PA business climate.

In energy, our public policy needs to support and incentivize the continued smart exploitation of the Marcellus Shale and other energy resources in the state. The need for wise public policy in this area does not stop with the extraction of gas or the creation of energy in other ways, but must include policies that favor the creation of downstream industries and operations, such as ethane crackers and other chemical refining/ manufacturing operations. It is the luring of those types of capital investment to PA that will dramatically assist in increased employment and the lifting of the statewide economy. In terms of infrastructure, our essential infrastructure – whether we are talking roads, bridges, water, wastewater, pipelines, or transmission lines – is either crumbling or does not exist in sufficient quality or in locations where it is desperately needed. While not a panacea for all of our critical infrastructure needs, creating the appropriate legal framework to permit public-private partnership, so-called P3, projects to be used to have private investment upgrade and enhance our infrastructure is essential for us not only to maintain our current standard of living but to improve that standard of living. CW: What did you think of the recent political changes and their impact on business? MGZ: The changes in the last year have been important in their impact on PA’s businesses and on the overall business climate. The passage of joint and several tort reform, starting the process of better aligning government spending with government revenues, and actually getting an ontime state budget were all important first steps. If effective natural gas legislation that does not hamper investment while appropriately helping communities that have been impacted by drilling and appropriately protecting the environment can be enacted, that would be another big step forward. Similarly, if effective P3 legislation can be put in place that permits the private sector to appropriately invest in PA’s infrastructure, then PA will have made significant progress. If that happens, then not only will the climate for PA business have improved, but so too will have the standard of living across the entire Commonwealth.


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FEBRUARY 2012 CAPITAL WATCH

Gov. Corbett launches initiative to improve public safety Stressing the need to reduce crime, decrease repeat offenses and manage corrections spending, Governor Tom Corbett recently launched an effort called the “Justice Reinvestment Initiative.” This data-driven strategy is being led by a bi-partisan, inter-branch working group of cabinet secretaries, Republican and Democratic lawmakers, court officials, district attorneys, victim advocates, treatment providers and other stakeholders in the criminal justice system. “We look to you to come up with solutions to make our system better,” Corbett told the working group at its first meeting on January 26 at the Governor’s Residence. “I expect this initiative will help reduce further our crime rate, decrease recidivism and manage corrections spending more efficiently.” In 2011, Corbett, Chief Justice Ronald Castille and the chairs of the House and Senate Judiciary committees requested technical assistance from the U.S. Department of Justice and the Pew Center on States to employ a “justice reinvestment” approach in Pennsylvania. State officials compiled extensive data from various agencies and provided it to the Council of State Governments (CSG) Justice Center, which is conducting the data analysis. The working group will use the findings by CSG to develop strategies to reduce spending on corrections and reinvest in services on the front-end of the judicial system to improve public safety. One of those strategies could include efforts to reduce repeat offenses. “Thirty years ago, criminal justice policy makers knew very little about how to stop the cycle of recidivism. Now we know a lot, and state leaders across the country are putting these research-based strategies into action,” said Adam Gelb, director of the Public Safety Performance Project at the Pew Center on the States. “This partnership gives Pennsylvania an excellent chance to take advantage of the new knowledge and craft policies that will make communities safer and save taxpayer dollars.” The effort in Pennsylvania will be led by Mark Zimmer, chairman of the Pennsylvania Commission on Crime and Delinquency (PCCD), and Department of Corrections Secretary John Wetzel. The working group will meet regularly during the next several months to review data analysis, hear from local government representatives, prosecutors and public defenders, victim advocates, treatment providers and others before crafting policy proposals. The bi-partisan, inter-branch approach of the Justice Reinvestment Initiative has helped 15 other states implement policy changes. The hope is that Pennsylvania, which has implemented policy changes in the past, also can benefit from the data-driven

Gov. Tom Corbett says his initiative will help reduce further our crime rate, decrease recidivism and manage corrections spending more efficiently.

analysis supplied by CSG. “The Commonwealth’s judicial system has been innovative in its establishment of problem-solving courts with specialized dockets focusing on mental health, substance abuse, veterans and community re-entry offenders,” said Chief Justice Castille. “I welcome the opportunity for the judiciary to play a key role in this statewide project examining how best to use our criminal justice system’s resources. We simply have to think smarter.”The Justice Reinvestment Initiative researchbased approach is designed to: •Develop and implement policy options to control and lower the costs of the state’s corrections system; •Improve offender accountability; •Reinvest a portion of the savings into the justice system to further reduce corrections spending; •Measure the impact of policy changes. The effort is critical as Pennsylvania has experienced a 46 percent increase in the number of people admitted to prison between 2000 and 2010. Much of the growth was driven by increases in the number of people convicted of property and drug offenses serving relatively short minimum sentences. During the same period, the number of people in prison grew by 40 percent, from 36,602 to 51,312 and the annual Department of Corrections spending increased 76 percent, from $1.1 billion to $1.9 billion. Despite significant state investments in resident programs for people on parole supervision, a 2011 study showed

that recidivism has declined but remains high. Nearly half of the people (44 percent) released from prison were re-incarcerated within three years. Senate President Pro Tempore Joseph Scarnati (R-Jefferson) said, “In order to keep Pennsylvanians safe, the Commonwealth has in past years invested hundreds of millions of dollars to build additional prisons, expand parole supervision and increase community-based treatment. Nevertheless, recidivism rates have not decreased significantly.” He added, “This welcomed initiative will aid Pennsylvania policy makers by identifying concrete methods to reduce corrections costs as well as proposing ways to limit once-incarcerated individuals from returning to prison.” Chairman Zimmer said he is confident that the Justice Reinvestment Initiative Working Group will use the research and ideas of stakeholders to propose legislative solutions that strike a balance between public safety and reducing costs. Wetzel echoed his comments: “With the extensive data analysis and stakeholder input in this process, policy makers from across the political spectrum will develop strategies that answer a fundamental questions we all ask ourselves: What more can we be doing to increase safety in our communities while getting a better return on taxpayers’ investment?” In 2007, the prison population in Texas was projected to grow by more than 14,000 people over the next five years. After reviewing the CSG’s detailed analysis that revealed the reasons for this trend, along with a set of suggested policy

options, state lawmakers enacted a comprehensive policy package to avert the anticipated growth and save $443 million. The Texas Legislature reinvested $241 million to expand the capacity of substance abuse and mental health and diversion programs, and to ensure the release of low-risk individuals is not delayed due to lack of in-prison and community-based treatment programs. In Ohio, a bipartisan, inter-branch working group partnered with CSG staff to design a 13-point policy framework that members recommended to the General Assembly. In June 2011, state leaders from across the political spectrum in Ohio enacted sweeping legislation that both reduces spending on corrections and increases public safety. State leaders estimate that the new law will enable Ohio to avert the prison population growth projected through 2015, thereby helping the state avoid an estimated half-billion dollars in addition spending. Furthermore, the new statute will ease prison crowding as the population gradually declines to levels last seen in 2007, generating $46 million in marginal cost savings by 2015. Most importantly, the law will significantly enhance public safety. Community supervision and treatment resources will produce the greatest public safety benefits, as they will focus on high-risk offenders identified by a statewide risk assessment system. The state will also reinvest $20 million in the next four years to improve felony probation supervision – funding that will be tied to agencies’ demonstrated reductions in recidivism. CW


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FEBRUARY 2012 CAPITAL WATCH

First time since 1990s Gov.’s budget contains no increase for corrections Under the governor’s proposed budget, the Department of Corrections won’t see a spending increase for the first time since the early 1990s. Gov. Tom Corbett’s budget is instead relying on “anticipated legislative changes” that will provide alternatives to incarceration, working with the Board of Probation and Parole to improve processes, and declining health care costs due to a decreasing prison population. The department was allocated $1.9 billion in the current year’s budget, and Corbett announced that the department’s spending level would stay the same under his 2012-13 budget. The governor’s proposed spending plan for the department recommends a shift of $21.4 million from Medical Care in the correctional system – a combination of budgetary and hiring freezes, reductions in contracted medical care costs and population, and the anticipated

legislative changes – to the State Correctional Institutions budget line. That $21.4 million shift would help cover administrative savings, operational and process changes, and balance wages for the department’s 900 non-union correctional managers in the State Correctional Institution. The wage compression was caused by a 2009 salary freeze among managerial and non-unionized state employees. Current legislation would prevent correctional manager wages from dropping below the highest-ranking corrections officer participating in collective bargaining. The Medical Care line received roughly $239 million in this year’s current budget, and will be cut to about $217 million. The State Correctional Institutions line will increase from roughly $1.56 billion to $1.58 billion, according to the governor’s budget. The budget also says some savings

will come from “anticipated legislative changes that will expand programs providing alternatives to incarceration and expand boot camp eligibility.” One of the budget and policy guidelines issued by Corbett’s budget office in September said that the state’s criminal justice agencies should look for ways to save on sentencing. “Process improvements need to be implemented to more effectively facilitate the transition from inmate status, to supervision, and to life as an unsupervised citizen,” the guidelines state. Several legislative proposals cited by the department – State Intermediate Punishment, Recidivism Risk Reduction Incentive program and the Quehanna Boot Camp – deal with reducing recidivism among parolees, or providing alternatives to incarceration, as Corbett’s budget proposes. Corrections spokeswoman Susan Bens-

inger also said legislation requiring medical facilities and providers to charge both state and county prisons Medicare rates for impatient services and Medicaid rates for outpatient services is expected to save the department about $16 million. Bensinger also said a Request for Proposal for statewide Correctional Health Care Services issued in September could also yield savings. The cancellation of a proposed new prison in southwest Pennsylvania and the redesign of another prison project also saved $200 million in capital budget expenditures and about $60 million in operating costs. Budget Secretary Charles Zogby said that the budget would also eliminate a legislative requirement for counties to send the commonwealth half of their adult probation supervision fees, which are then returned to the counties in full. CW


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February 2012 CAPITAL WATCH

Group says changes can generate billions A labor coalition report says tax code changes and government efficiency measures would save or generate $2.3 billion. The report, presented by the CLEAR Coalition, an organization of eight labor unions, says about $800 million could be saved from improving government efficiency, while changes to the tax code could generate $872 million. The coalition said measures, such as closing “archaic” tax loopholes, enacting a Marcellus Shale tax, improving state tax collections, “right-sizing manage-

tization of certain government services, public education cuts and tax loopholes. “We could choose the high road of fairness and dignity or the low road of income disparity,” Bloomingdale said. A spokesman for Gov. Tom Corbett said there is a “philosophical difference of opinion” in certain areas of the report. “I can tell you that there are some things in this report that we’ve already begun working on, such as reducing the state fleet, looking for greater efficiencies and cost-savings all across state government,

“. . . By reducing bureaucracy and clearing away layers of management and decision-making, service performance should actually improve.” ment-worker ratio” in state government, reforming the procurement process, and reducing the government fleet, could save and generate revenue. Rick Bloomingdale, president of the PA AFL-CIO, said that although his agenda may not be “compatible” with Republican leadership, he thinks this report offers “real solutions in a bipartisan manner.” The report also contains some unionfriendly suggestions and is critical of priva-

and rooting out waste, fraud and abuse,” said Corbett spokesman Eric Shirk. “There are other areas where there is a philosophical difference of opinion on how best to move the state forward. The report suggests a tax increase to help fill in the revenue gap. The governor remains committed to a balanced, on-time budget, without raising taxes,” Shirk said. Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi,

R-Delaware, said a number of the ideas are “worth deeper exploration,” and will be further reviewed. “Governor Corbett campaigned on reducing the size of the state vehicle fleet, and the Senate has passed Senate Bill 104 to help that effort,” Arneson said. “Cutting fraud and abuse in Medicaid is a goal I believe everyone shares.” The report also calls for an expansion of home- and community-based care and less long-term facility-based care, which the report says could save between $200 million and $248 million annually. “Medicaid reimburses nursing home providers upwards of $60,000 per year for each person served; community services cost roughly one third of that,” the report states. The report also suggests the state consolidate its prescription drug purchases from the current nine agencies using 17 different programs. Such consolidation could increase the state’s negotiating leverage and reduce administrative costs, said the coalition. The report also contains some rather union-friendly measures, including a change of the “top-heavy” state management-worker structure, a reduction in the amount of private contracting of state work, and also modernizing instead of privatizing the state liquor system.

According to the report, Pennsylvania state government employs 13,231 managers to oversee 60,643 state workers, fewer than five nonsupervisory workers for every manager or supervisor. “… By reducing bureaucracy and clearing away layers of management and decision-making, service performance should actually improve,” the report states. On reducing the amount of contract work, the report claims the $4 billion state contracting system “is rife with systemic problems that waste hundreds of millions of dollars annually.” The report cited the 2010 State Government Management and Cost Study Commission recommendation of conducting a performance review of the state government procurement process. Arneson said: “Reforming the procurement system is not particularly glamorous, but could very well pay dividends in terms of cost savings.” The report also suggests ways to modernize the state’s liquor system, including an expansion of Sunday hours of operation; allowing the Liquor Control Board to apply different markup rates based on local demand; and a bailment system that allows wine and spirit distributors ownership of their products while they sit in state stores. CW

c e n t r a L P e n n S y LVa n I a y O u t H B a L L e t P r e S e n t S

Giselle “A classic the world over.” The Wall Street Journal

“The classic of all ballet classics.” The New York Times

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Whitaker Center for Science and the Arts The Central Pennsylvania Youth Ballet’s production of the internationally renowned ballet Giselle comes to the Whitaker Center stage! Giselle marks Alan Hineline’s world premiere staging of desire, deception, betrayal and forgiveness from beyond the grave in the story of a young peasant girl cruelly betrayed by a prince disguised as a commoner. Live music by the Central Pennsylvania Symphony.

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NEWS 9

FEBRUARY 2012 CAPITAL WATCH

DPW announces food stamp asset test limits The state Department of Public Welfare finally issued a press release on Feb. 1, listing the asset limits the agency seeks to use for determining eligibility for the food stamp program, also known as the Supplemental Nutritional Assistance Program (SNAP). As part of the final plan the department has submitted to the Food and Nutrition Service (FNS), the asset limit for those age 59 and under would be $5,500, while for those who are disabled or age 60 and older, the limit would be $9,000. The department estimates that 1,448 households on SNAP have resources at or above $5,500 and 2,575 elderly/ disabled households have resources at or above $9,000. Approximately 813,000 Pennsylvania households are currently enrolled in SNAP. “Reinstating asset testing to the SNAP program is an important first step toward preserving limited taxpayer resources for the truly needy,” said state Welfare Secretary Gary Alexander. “The asset test ensures every public dollar we have goes directly to those who need it most.” Currently in Pennsylvania no one that earns more than 160 percent of the federal poverty level can get food stamps. For an individual, that cutoff would be $17,424, for a family of four it would be $35,760. The maximum monthly SNAP benefit for an individual is $200, and for a family of four it’s $668. An asset test had been employed by Pennsylvania until it was discontinued in 2008 by then-Gov. Ed Rendell. During a recent state Capitol news conference organized to protest reviving the asset test, Rendell said he dropped the test because of “the recession and the weakening economy.” “It is just mean-spirited,” said state Rep. Mike Sturla, D-Lancaster. “We’re going to take the concept of the safety net and flip it and tell people they have to impoverish themselves before they get the benefits.” Calling the policy a “waste of time and money,” Bill Patton, spokesman for the state House of Representatives’ Democratic Caucus, said, “This decision by the Corbett administration will end up costing more taxpayer dollars. SNAP benefits are federal funds, but the state shares half the cost of administering the program. By imposing an asset test, the bureaucratic cost of running the program will rise, and Pennsylvania’s cost of administration will rise.” Added Patton: “The announcement is designed to make the Corbett administration ill-advised asset test sound more reasonable. It’s still a bad idea, driven by ideology not facts. It wastes state dollars and discourages responsible saving by those most in need.” The department noted its proposed asset limits are “significantly higher” than the asset limits that had been

imposed by the Rendell administration prior to 2008. According to the department, the proposed asset limits were adjusted for inflation, pushing them more generously above the federal thresholds that were used prior to 2008. “Pennsylvania last had an asset test in 2008, when the limits in place were $2,000 for a household and $3,250 for a household with an elderly or disabled individual,” said the department in its press release. The department has also rejected claims of added costs to the state due to the asset test. “To reinstate the asset test, remember, first of all, it was done as recently as 2008, so many [DPW] caseworkers have done it,” DPW spokesperson Anne Bale said. “Secondly, we collect asset information with other welfare programs. “Many people on food stamps are on these programs that collect asset information. So for many of our existing clients, we have the asset information for them, or at least a good portion of it. “We’re not talking about tons of additional work.” Bale also noted that while the department estimates approximately 4,023 total households will be affected by the limits, that “number does not account for

assets that may be excluded resources that will not count against eligibility.” Bale said the following items are exempted from consideration as assets: • Homes and surrounding land and buildings which are not separated by property that is owned by others; • A home temporarily unoccupied because of employment, training, casualty, illness or natural disaster if the household intends to return; • A lot on which a household which currently does not own a home intends to build a permanent home; • Personal effects and burial plots (clothing, jewelry, gift cards); • Household goods; • Life insurance and pension plans; • Income producing property and equipment; • One vehicle per household, vehicles under $4,550 in value and any vehicles used to generate income;

• Government payments; • Inaccessible resources (e.g. frozen bank accounts); • Installment contracts; • Resources previously prorated as income; • Non-liquid resources with liens; • Disaster and emergency assistance payments; • Certain government resources such as tax refunds, federal child tax credits, earned income tax credit, WIC, and education assistance; • Indian funds and lands; • German reparation payments; • Family savings accounts; and, • Seed accounts. Bale said the proposed limits must still be reviewed by the federal Food and Nutrition Service to allow federal officials the opportunity “to provide feedback,” but the department intends to implement the asset test on May 1. “It’s not a rejection issue,” said Bale regarding the federal review of the asset plan. “The program is allowed, we just have to communicate with them what it is we are doing and work with them to come to mutually agreed upon guidelines.” For more information about the asset test for SNAP go to www.dpw.state. pa.us. CW


10 news

FEBRUARY 2012 CAPITAL WATCH

Supreme Court says splits, non-compact districts unconstitutional By Peter L. DeCoursey, Capitolwire

Eight days after their lightning bolt of an order removed the force of law from the 2012 proposed district lines, the Pennsylvania Supreme Court told the Legislative Reapportionment Commission it split too many neighborhoods, towns and regions and spread some districts too much. The court’s decision and a federal lawsuit filed by Republican legislative leaders now call into question whether the primary can be held on April 24. Also at issue: what maps will be used to determine Senate and House districts? Senate Majority Leader Dominic Pileggi, R-Delaware, and House Majority Leader Mike Turzai, R-Allegheny, filed a lawsuit in federal court in Philadelphia that will be heard Monday at 10 a.m. They are asking the court to issue an injunction, ensuring that the 2001 maps cannot be used in the 2012 election. The commission also released a proposed schedule of meetings, starting with a discussion meeting to hear from legal counsel Wednesday, with submission of plans on Feb. 15, and a vote on a new preliminary plan by Feb. 22. A public comment period is expected to come after that, then a final vote. That will be followed by an appeal filing period before the court rules on the plan. The public comment periods were reinforced in a footnote at the end of an 87-page decision by Chief Justice Ron Castille. Put it all together, and Pileggi said: “The April 24 primary [date] is in jeopardy. There is no question about that.” But there may be a question about that. Because the court has provided an alternate option if the new map is not in place and the primary is not moved. In that case, Castille and three Democratic justices said the district maps in place since the 2002 elections remain in effect. That footnote reads: “We note that once the LRC approves a new preliminary plan, the Constitution affords persons aggrieved by the new plan a right to object, before the plan is finally approved by the LRC, and to a subsequent right to appeal to this Court. Should such appeals be filed, we will decide them with alacrity, as we have decided the ones now before us.” That footnote is the latest volley between the court and GOP legislative leaders. The GOP leaders want to have the 2012 elections based on the commission’s plan nuked by the court or the forthcoming plan. That is why the leaders are asking federal courts to ensure the old maps are not in place for this election. But the GOP leaders hailed one part of the opinion. As Pileggi pointed out, none

of its 87 pages offered constitutional objections to the districts moved across the state. Pileggi said: “I think that issue is pretty much settled.” Costa said the choosing of which districts will move is up to the commission: “The question is, which seat is that? That is what the commission will discuss.” HOW IT BEGAN. The whole issue arose after the court ended 40 years of judicial ratification of partisan redistricting maps. By a 4-3 vote last week, the court, with Castille joined by three Democrats against his three fellow Republicans, issued an order stating the commission plan was unconstitutional. They also recognized that the 2012 campaign petition period was underway. During that time, Republican and Democratic candidates seek positions on the April 24 primary ballot. Since the proposed map was negated by the court order, they said candidates needed certainty about where the districts were. House Speaker Sam Smith, R-Punxsutawney has already asked a federal court to negate that decision, saying the 2001 maps now yielded some districts 20 percent smaller than the ideal population average, and some 30 percent bigger than ideal. Those kinds of population deviations make the 2001 map unconstitutional for these elections, Smith’s lawsuit argued. The Pileggi/Turzai lawsuit made the same arguments, but asks the judge to quickly rule in his favor. Senate Minority Leader Jay Costa, D-Allegheny, said his caucus was scrambling to learn more about the Pileggi/ Turzai action, and would likely file to be heard opposing the GOP leaders’ request. Gov. Tom Corbett and the Republican legislative leaders still hope to get a GOP-favoring map into place for this year’s elections. They publicly pressured the court to release the opinion finally produced today, and to let the commission swiftly fix the shortcomings in the plan. Castille wrote: “As we have noted earlier, we recognize that our constitutional duty to remand a plan found contrary to law has disrupted the 2012 primary election landscape. That disruption was unavoidable in light of the inexcusable failure of the LRC to adopt a Final Plan promptly so as to allow the citizenry a meaningful opportunity to appeal prior to commencement of the primary season. “We trust that the LRC will avert similar delay as it is called upon to faithfully execute its task upon remand, and we trust that future such Commissions will act more promptly. We are not in a position to predict when the LRC will

complete its task of developing a new final redistricting plan that complies with law, nor when such a new plan can become final and have force of law.” Turzai responded with a statement: “The Legislative Reapportionment Commission firmly met its constitutional and statutory obligations. The Supreme Court opinions in fact concede that we met the necessary standards set by court precedent. “Unfortunately, by a 4-3 vote, the court is changing the rules and applying them in a retroactive manner. That creates undue hardship on the citizens of Pennsylvania and the proper functioning of state government. We will, of course, move with all deliberate speed to meet the challenges in front of us.” Other options, including moving the primary, are up to the governor and Legislature, at least until such a move is challenged in the courts, Castille wrote. Pileggi said that is increasingly possible, but not yet a certainty. Costa said his caucus was skeptical of doing that to gain a tactical political advantage for the GOP. Both Costa and Pileggi indicated they were not at this point supportive of keeping the federal primary on April 24, but having the state House and Senate elections later. Democratic legislative leaders have said it is more important to get redistricting right than to swiftly pass another gerrymandered plan, and noted that Corbett and House Republicans took power in 2010 on the 2001 map, so they can hardly argue it is unfair. SAYLOR, EAKIN LIKE NEW RULES, BUT DIDN’T BELIEVE OLD PLAN NEEDED TO BE STRUCK DOWN. In the decision, Justice Castille wrote that the commission plan split too many towns, wards and counties, and that too many districts were not compact. He also said alternate plans proved it was possible to make a plan that violated those constitutional requirements, without doing undue violence to population equality. The court opinion’s new definitions of what it takes to meet constitutional muster in redistricting picked up more support than the order had last week. It had the same 4-3 split on whether the commission plan was unconstitutional, with Chief Justice Castille and Democratic Justices Max Baer, Seamus McCaffery and Debra Todd still holding that position. Castille’s three fellow Republicans, Justices Tom Saylor, Mike Eakin and Joan Orie Melvin, still said the commission plan was constitutional. But Eakin and Saylor each split their response on the new opinion. Each said

that the commission plan was constitutional. But also they agreed with the court’s new position that population equality did not eclipse the two other major constitutional requirements for redistricting: splitting of wards, towns and counties only when “absolutely necessary,” and making districts compact. Orie Melvin wrote in her dissent that she continued to believe, as the commission argued, that population equality trumped all other considerations. The Legislative Reapportionment Commission told the justices in their hearing on the plan that by approving previous plans, the court had set clear constitutional precedents their plan followed. Justice Castille in today’s decision responded that was not so: “Our review of our precedent reveals that no decision of this Court has purported to establish, or ‘grandfather in,’ any particular maximum level of population deviation; nor has any decision held that a certain number of political subdivision splits is constitutional, irrespective of the constitutional challenge being forwarded in challenging those splits.” POPULATION EQUALITY NO LONGER TRUMPS KEEPING TOWNS, COUNTIES WARDS TOGETHER. Castille also wrote that while the commission defended its proposed splits of towns, counties and wards as necessary to make districts as similar in population as possible, the commission was wrong in saying slightly higher population disparities were unconstitutional under federal law. Castille also wrote that alternative plans submitted by Costa, the only commission member to vote against the plan, and Amanda Holt, showed: “evidence that the Final Plan was contrary to law. … This plan shows that a redistricting map could readily be fashioned which maintained a roughly equivalent level of population deviation – the LRC’s primary justification for the numerosity of the political subdivisions it divided – as the Final Plan, while employing significantly fewer political subdivision splits with respect to both Chambers of the General Assembly. “The Holt appellants also highlighted that their alternative plan had deviations from the ideal population for both the House and Senate districts that were smaller than the deviations in the Final Plan. Although the appellants’ brief goes into great detail comparing their plan to the Final Plan, the most convincing point is the raw number difference continued on page 11


OPINION 11

FEBRUARY 2012 CAPITAL WATCH

Supreme Court says splits, non-compact districts unconstitutional continued from page 10 in subdivision splits. In the House, the alternative plan splits seven fewer counties, 81 fewer municipalities, and 184 fewer wards; in the Senate, the Holt plan splits seven fewer counties, two fewer municipalities, and 22 fewer wards.” He wrote: “The Holt appellants argue that the Final Plan is contrary to law because, as their alternate plan proves, while the Final Plan may comply with governing law respecting population equality, the Plan flouted independent and coexisting Pennsylvania constitutional mandates of compactness and contiguity of legislative districts, and respect for political subdivision boundaries. “… The Holt plan is powerful evidence indeed. The LRC answers that appellants failed to carry their burden of proof. We cannot agree.” But Eakin disagreed with Castille, Baer, Todd and McCaffery on this point. “It is entirely possible that this [Holt] plan, lovely on its surface, is not so beautiful when examined in depth – on the other hand, it may be a masterpiece. We do not know and are not possessed of the means to make such an evaluation, particularly given the time constraints cogently detailed in the majority’s opinion. “The bottom line is that we do not know whether the Holt plan, or any other plan, proves anything other than that it is possible to divide fewer political subdivisions. “This in my judgment does not prove the LRC plan is unconstitutional. The bipartisan LRC, however, has the time, the means, and indeed the mandate to consider all options, and I would give it significant deference. Given that deference, the burden on challengers is indeed heavy and, in my judgment, has not been met in this case.” Castille did however see Holt’s plan as proof that the commission should have had fewer splits and more compact districts. “Accordingly, we take this opportunity to reaffirm the importance of the multiple commands in Article II, Section 16, which embrace contiguity, compactness, and the integrity of political subdivisions, no less than the command to create legislative districts as nearly equal in population as ‘practicable.’ Although we recognize the difficulty in balancing, we do not view the first three constitutional requirements as being at war, or in tension, with the fourth.” “To be sure, federal law remains, and that overlay still requires, as Reynolds taught, that equality of population is the ‘overriding objective.’ “But, as later cases from the High Court have made clear, that overriding objective does not require that reapportionment plans pursue the narrowest possible deviation, at the expense of other, legitimate state objectives, such as

are reflected in our charter of government.” Pileggi said the commission would now set about its work, but complained: “We were hoping for more objective guidance” but got little concrete direction. But Holt said that was the point of her 16 months, and more than 1,000 hours of work: “to have the court validate that the constitutional rule about not splitting subdivisions was a valid one and one that needs to be given more weight in the redistricting process than it has been in the past.” She said in October of 2010, she and a group of nearby-living friends were dismayed to find they lived in different districts. That piqued her interest to see if it could be done better. As Castille noted in the opinion, the proliferation of powerful computers made it easier to challenge the commission than it had been in the past. Saylor, in his opinion, which both concurred and dissented, wrote: “The majority opinion is remarkable in many aspects, including its timeliness, its scope, and the passages of salutary guidance which it provides. “For the most part, I support the clarification of the appellate review for redistricting challenges, particularly in terms of: the acceptance that alternate plans may be employed by challengers to address their heavy burden of proof; the movement toward a more circumspect position regarding the role of population equality; and the recognition of the interplay among the several requirements of the Pennsylvania Constitution pertaining to redistricting.” But he disagreed with the criticism of the commission Castille made, and that the commission plan was unconstitutional. Eakin wrote that overall: “The 2011 plan has fewer problems than the plan we found constitutional” 10 years ago. “…It is not unconstitutional under existing precedent. While I do not quarrel with the majority’s reordering of constitutional priorities, I do not find a need to make that reordering retroactive. “Redistricting is required to ensure constitutional representation of all voters, reflecting population changes that occur over a decade. Computers or not, drawing a new plan using new rules will not happen in time for this year’s elections. Changing the rules and rejecting the otherwise constitutional plan subjects our citizens to continued unbalanced representation. I find this result unnecessary.” Holt said: “I plan to stay engaged in the process and will be interested to see how things progress, and as citizens are given opportunities to participate in the process, I will take advantage of those opportunities.” CW

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12 NEWS

FEBRUARY 2012 CAPITAL WATCH

First-ever Marcellus Shale legislation passed; sent to governor for signature After years of highly polarized debate, Marcellus Shale legislation was sent to the governor’s desk on Feb. 8. The bill will give local governments the choice of whether to impose a fee, establish environmental regulations, and determine how gas drilling is zoned in municipalities across the state. . The House debated through Feb. 7 until 11 p.m. and continued debate for hours on the following day before passing the conference report, 101-90. Because of six vacant seats, the constitutional majority needed for passage was 99 “yes” votes. The Senate passed the measure Feb. 7, 31-19, just prior Gov. Tom Corbett’s annual budget address before a joint session of the General Assembly. “After long negotiations and a lot of hard work, we have reached a consensus on how to address the impacts in the Marcellus Shale regions,” Gov. Tom Corbett said in a news release. “I am very pleased with the cooperative spirit shown by the General Assembly and their staffs while working to resolve this complex issue. I look forward to signing this legislation into law.” Rep. Brian Ellis, R-Butler, the prime sponsor of HB 1950, said the bill protects the environment, provides familysustaining jobs, and provides impacts for local areas affected by drilling. “We knew compromise would have to be achieved,” he said, “…a compromise this chamber has been unable to reach for the last four years.” Opponents say the bill is a giveaway for the gas industry with a weak fee, lax environmental regulations, and provisions that diminish local government powers on zoning. “It’s a sweetheart deal for the multibillion-dollar oil and gas industry, and it swindles Pennsylvania’s taxpayers and fails to make these huge out of state corporations pay their fair share,” said Democratic Whip Mike Hanna, D-Centre. “… At a ridiculous almost 1-percent effective tax rate, this fee would be among the lowest of any natural gas-producing state in the nation.” The legislation is a product of months of negotiations between House and Senate leadership and the governor’s office. After dueling bills were passed in both the House and Senate, a conference committee of four Republicans and two Democrats was called late Feb. 6 and voted 4-2 on party lines sending the final 174-page product to both chambers. House GOP Policy Chairman Rep. Dave Reed, R-Indiana, said the bill, while not perfect, is a “fitting conclusion of four years of discussion on Marcellus Shale.”

“This bill may not be perfect but we’ve been waiting for perfect for four years,” he said. “At some point you have to stop talking about doing something… and you have to actually get about the business of doing something about it.” Reps. Mike Gergely, D-Allegheny, and Tom Caltagirone, D-Berks, were the only two Democrats to vote in favor of the bill. Several Republican representatives voted against the measure: Reps. Stephen Bloom, R-Cumberland; George Dunbar, R-Westmoreland; Eli Evankovich, R-Armstrong; Mark Gillen, R-Berks; Scott Hutchinson, R-Venango; Timothy Krieger, R-Westmoreland; Daryl Metcalfe, R-Butler; Mark Mustio, R-Allegheny; Brad Roae, R-Crawford; and Rick Saccone, R-Allegheny. Among some of the changes is a high-

Some members of the County Commissions Association of Pennsylvania who were in the Capital on Feb. 7 said allowing municipalities to overturn a county’s decision on imposing a fee is fair, but could lead to tensions. “It’s the American Way,” said Lycoming County Commissioner Jeff Wheeland, who sat on the governor’s Marcellus Shale Advisory Commission. “If a significant number of municipalities sense an impact and the county is either insensitive or unaware, it seems to me that it is fair, at the local government level, to respond to impact,” said Erie County Commissioner Joe Jiles. “To have that as an option seems fair.” “I think there will be tension between townships and boroughs and counties and how we go about doing this,” said Bradford County Commissioner Mark

“This bill may not be perfect but we’ve been waiting for perfect for four years,” he said. “At some point you have to stop talking about doing something… and you have to actually get about the business of doing something about it.” er fee that’s tied to the price of natural gas and inflation. The new fee structure, which ties the fee amount to the price of natural gas and inflation, could yield between $190,000 and $355,000 per well in the first 15-years. Portions of that funding will be split between local accounts and statewide impact-related accounts. “This is a heavy industry and we have to be ready for it in case there is a problem,” said Rep. Kate Harper, R-Montgomery, who introduced severance tax legislation last April that would have funded statewide environmental programs like Growing Greener and the Hazardous Sites Cleanup Fund. Those two programs receive funding under HB 1950. The inclusion of those programs into the distribution structure was a major selling point for Harper and other southeast Republican House members in the fall. The county governments where unconventional wells are located will now vote on whether to impose an impact fee. If they chose not to, municipalities in that county could impose the fee if half the municipalities, or if municipalities representing at least 50 percent of the county’s population, adopt resolutions to impose a fee.

Smith. “I think in my county especially it will be a heavily debated topic on whether to impose it or not.” Another change is the state Public Utility Commission will administer the collection of the fee and rule on whether local zoning ordinances allow for “reasonable gas development.” In December, the negotiations were mulling the idea of using the attorney general’s office to review and rule on whether the zoning ordinances allowed for reasonable gas development. Mryon Arnowitt, the state director for Clean Water Action, said the zoning provision is “a huge step backwards” in protection for state towns and environment. “The state override of local zoning ordinances will greatly increase the threats to communities from all aspects of the gas extraction,” Arnowitt said. “Never before has one industry been given full rights to do as they please, without recognizing the needs of other businesses, residents and our environment.” The legislation says local governments still retain the authority granted under the Municipalities Planning Code and the Flood Plain Management Act. The bill allots 60 percent of revenues to local governments, 40 percent to the Marcellus Legacy Fund for statewide programs.

Here’s the breakdown of the fee distribution’s local share: • 21.6 percent of total revenues from the fee for municipalities hosting drilling; • 22.2 percent for shale counties • 16.2 for municipalities in shale counties, including those with and without drilling; The statewide share breaks down as follows: • 10 percent to Highway Bridge Improvement Restricted Account distributed to fund replacement or repair costs associated with locally owned atrisk deteriorated bridges, with funds distributed based on population. • 8 percent to the Commonwealth Financing Authority for projects pertaining to: acid mine drainage remediation, including recycling water used in drilling operations; orphaned or abandoned oil and gas well plugging; planning acquisition, development, rehabilitation and repair of greenways, recreational trails, open space, parks and beautification projects; Sewage treatment and other programs. At least one-quarter of the total fee funding spent by the financing authority will be for flood control projects. • 6 percent to the counties, proportioned by population, for the planning, acquisition, development rehabilitation and repair of greenways, recreational trails, open space, natural areas, community conservation and beautification projects, community and heritage parks and water resource management. Formula based on county population.” • 5 percent to the Pennsylvania Infrastructure Investment Authority to be used in accordance with the Pennsylvania Infrastructure Investment Act. • 5 percent to the H20 PA Program within the Commonwealth Financing Authority. • 4 percent of the total fee to the Environmental Stewardship Fund, for distribution to the Departments of Agriculture, Conservation and Natural Resources, Environmental Protection, and the Pennsylvania Infrastructure Investment Authority. • 2 percent to DCED in 2011, 2012 and 2013 to provide for the planning, development and construction of a facility to liquefy natural gas or convert natural gas to ethane, propane or similar substances. In 2014 and thereafter, this 2 percent would go to the Hazardous Sites Cleanup Fund. CW


OPINION 13

FEBRUARY 2012 CAPITAL WATCH

Editorial

WWMcDD: What would McDonalds do? Yeah, verily, back in the 1950s, the now worldwide McDonalds restaurant chain started on the concept of offering a simple, filling meal at an extremely affordable price. People lined up outside the Golden Arches like they would today for Lady Gaga – all waiting for the opportunity to buy a cheeseburger, fries and a fountain drink for a dollar. The concept was a smash hit but, eventually, the consumer wanted more – and more, and more. Today, the McDonalds menu board stretches pillar to pillar above the service counter. The key to Mickey D’s success: offer something for every taste and need; keep them coming back – for more. This image came to mind as members of the Capitol Watch team worked their way through the denizens of Capitol Hill after the Governor’s budget address this year. No smiles. Nothing to cheer about – unless you enjoy taking away somebody’s health benefits or raising junior’s college tuition. Governor Corbett offered a stingy, hold-the-line budget that offered something less for virtually every citizen

of the Commonwealth. This is not to excoriate the Governor. He is delivering on some of his election promises. Our point here is to underscore for voters the old proverb, “Be careful what you wish for.” It’s our observation that most people who believe we can reduce state spending without reducing services also believe that we would be better off if government were run more like private enterprise. Which brings us back to McDonalds.

Folks can pretty much agree that 60 years of growth and profitability means that the McDonalds crowd knows pretty much how to run a business. So, WWMcDD? If they ran the Commonwealth of Pennsylvania, what would McDonalds do? One thing we can be certain, they would not be trying to turn back the clock to reset the menu to 1955 to “a burger, fries, soft drink and a smile” and, even if they did, they couldn’t deliver it profitably for a buck. And if they did, they could expect two things to happen: customer traffic would decline and revenues would fall. They wouldn’t be open before 11 a.m. (Who wants a burger for breakfast?) and they’d be laying off full and part-time staff left and right. Another thing Mickey D would not be doing is reducing portion sizes. And they wouldn’t dare abandon Happy Meals. So back to Harrisburg: notwithstanding campaign promises to the contrary, is the Corbett Administration well served by its own commitment to reducing

portion sizes, reducing menu offerings, reducing staff and driving people away by doing less – for less? And will people truly be happier if they have less government in their lives if it means having less of the services and things and programs they receive from government? There’s no small measure of irony in the fact that the government of “services and solutions” got its start back in the 1930s when our nation was trying to work its way out of a seemingly intractable economic depression. Now, as we weather another nagging and brutal economic downturn, the “solution of the day” is to try to undo all that government has come to be over the past 70 years. Government became what it is today because there were – and are – needs to be filled and no other entity was stepping up to the plate to fill them. Most people today believe that government is too big, too pervasive and too costly. The adage recurs: “Be careful what you wish for.” CW

news

Federal judge rejects GOP appeals; says must use 2001 districts for 2012 elections Three separate attempts to get federal courts to invalidate using the 2001-created districts for the 2012 elections were rejected by a federal judge Feb. 8. Judge R. Barclay Surrick denied requests by three of the state’s topranking GOP legislative leaders and a Latino group to overrule a Pennsylvania Supreme Court order. He also ruled that the Supreme Court order will stay in place, so that this year’s elections take place on the 2001 lines. House Majority Leader Mike Turzai, R-Allegheny, and Senate Majority Leader Dominic Pileggi, R-Delaware, issued the following joint statement: “The federal court’s opinion focuses on timing issues, not the merits of the argument. We are reviewing our legal and legislative options. In the meantime, as directed by the Legislative Reapportionment Commission, we will present revised maps on February 15 and vote on those maps at the Commission’s meeting on February 22.” GOP leaders could appeal, and Matthew Haverstick, attorney for House Speaker Sam Smith, R-Punxsutawney, said: “We’re considering pursuing appeals.” But several sources said neither state courts nor federal courts could stop leaders from moving the date of the April 24 primary to June. Moving the primary date by about two months would mean a new reapportion-

ment plan would have enough time to be reviewed, get public comment, final approval, court review, and still be in place in time for a June primary. “This is a victory for the people of Pennsylvania. The public deserves an orderly election process,” House Democratic Leader Frank Dermody, D-Allegheny, said in a statement. “While the Legislative Reapportionment Commission continues working to create a legal redistricting plan, judicial authorities in both state and federal courts have directed the state to proceed with the 2012 election using existing district lines,” he said. “That is the only logical conclusion that will give certainty to voters who deserve to know in a timely manner which candidates will appear on the primary ballot.” Turzai said earlier today that a new reapportionment plan could not be in place before the April 24 primary unless the state Supreme Court allows shorter comment and appeal periods. CLICK HERE for that story. “After forceful decisions from both the Pennsylvania Supreme Court and the Federal Court, the Legislative Reapportionment Commission needs to proceed with care and deliberation so that it may consider citizen input to develop a new legislative map that meets all Constitutional standards,” Senate Democratic Leader Jay Costa, D-Allegheny, said in a

statement. “The commission must draw a fair map and the process should not be altered or shortened for partisan political reasons.” Amanda Holt, the Lehigh Valley area piano teacher whose map was cited in the state Supreme Court’s opinion rejecting the 2011 plan, said she would favor moving the primary election date if that resulted in a constitutional map. “I think the district lines that are used should be constitutional lines,” she said. “That’s what I hope happens.” Surrick wrote that while Republican leaders said the districts created in 2001 were now unconstitutional because of major population discrepancies, past court decisions showed the current districts were acceptable. “… the primary election is eleven weeks away. In view of this immediacy, we are compelled to have the elections proceed under the 2001 Plan. In short, this is precisely a case ‘where an impending election is imminent and a State’s election machinery is already in progress,’ such that a court may withhold from granting relief, even if the existing apportionment scheme is found to be invalid,” he wrote. “To enjoin the 2012 election from proceeding under the 2001 Plan would leave the Pennsylvania primary in a state of unacceptable uncertainty. Perhaps this is why the Supreme Court directed that

the 2001 Plan be used,” he wrote. He added, “With election deadlines quickly approaching, and no existing alternative reapportionment plan, Defendant needs certainty as to how to proceed. There is no reasonable alternative at this point but to allow the elections to proceed under the 2001 Plan.” The Republican legislative leaders had expected to lose the suit asking for an injunction. But they had hoped the lawsuit filed by Smith, which asked the court to rule out the 2001 map without an injunction request, would be successful. They also had worked with a Latino group, whose lawsuit shared their goals. But Surrick threw out all three lawsuits. Normally it takes weeks to get an appeal heard from the Third Circuit Federal Court, which has jurisdiction in this region. Smith’s lawsuit dealt more with his duty in calling special elections to fill six vacancies due to retirements. And Surrick’s opinion dealt very briefly with whether Smith had to call any special elections until a plan is done. Smith’s lawsuit both said using the 2001 lines would be unconstitutional and asked: how could he hold elections until he knew where the districts were? Surrick wrote in a footnote that he did not think Smith could be compelled to hold special elections until 10 days after the final plan “attains the force of law.”CW


14 news

FEBRUARY 2012 CAPITAL WATCH

House panel reports out unemployment benefits extension bill A bill to ensure Pennsylvania’s unemployed can continue to receive 13-weeks of federally-funded jobless benefits moved one step closer to the governor’s desk.. The state House of Representatives’ Labor and Industry Committee, on a vote of 23 to 1, reported Senate Bill 1375 to the full chamber for consideration. The bill is necessary to ensure that about 17,000 Pennsylvanians continue to receive the 13 weeks of federally-funded extended benefits. Pennsylvania pays for the first 26 weeks of unemployment, while the federal government offers additional weeks of benefits in those states with unemployment rates higher than a federally-established threshold. Since the Legislature did not resolve the matter by Feb. 4 – the federal deadline for certification of the commonwealth’s unemployment rate - the 17,000 will now have to wait for their benefits to resume until a bill is signed into law by the governor. The bill’s changes will be done retroactively to Dec. 31, so those currently missing out on the extended benefits will be able to collect those missed benefits once the bill is signed into law.

The lone vote against the bill was made by state Rep. Scott Boyd, R-Lancaster. “I believe we have an obligation to deal with the solvency of the unemployment compensation system,” said Boyd about his vote against the bill. “Extending benefits without dealing with solvency I personally don’t think is wise. “I understand the time frame, and I know we need to get this bill to the governor and get it signed, but at the same time, we’ve got some bigger issues to take care of and unfortunately I’m going to have to be a ‘no.’” And while Rep. Scott Perry, R-York, voted to report the bill out of committee, he said following the meeting he’s hoping for more to be done about the unemployment compensation (UC) system. “There will be amendments offered to the bill – I just don’t know if there will be enough votes for any of them,” said Perry. He and other House Republican lawmakers in June pushed for several changes to be made to the system to address the state’s more than $3 billion debt

to the federal government for loans to the state’s unemployment system. The federal government has been loaning money to the commonwealth since the state UC Fund became insolvent due to the continued high rate of unemployment following the most recent economic recession. Perry had offered a bill the last time the extended benefits issue came up in June, one that would have made approximately $632 million in annual reductions to the state’s unemployment system, with hopes of resolving the insolvency issue in seven years or less. The changes to state unemployment law proposed by Perry’s bill would have done such things as counting full severance pay against unemployment benefits, required requalification for benefits and altered the calculation of benefits to be paid. The Legislature ultimately approved and the governor signed a bill that made about $114 million in annual reductions to the system. Business groups have also been vocal in their opposition to passing another

benefits extension bill without addressing insolvency since the state’s employers are responsible for repaying the debt owed the federal government.. In December, the House approved an amended version of a Senate bill that seeks to authorize the state Department of Labor and Industry to issue as much a $4.5 billion in bonds in an effort to pay off the debt Pennsylvania owes to the federal government. After passing the House on a 193-1 vote on Dec. 19, the bill was returned to the Senate, where it awaits consideration by that chamber’s Rules and Executive Nominations Committee. And while that particular solvencyrelated bill has yet to be acted upon by the state Senate, the House Labor and Industry Committee’s minority chairman says he’s committed to addressing insolvency. “As always, I’ll make myself available, the committee available, staff available anytime … to address solvency, I’m there,” said Rep. Bill Keller, D-Philadelphia, during Monday’s committee meeting. CW


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Capital Watch February 2012