CA P I TA LWAT C H PA . c o m
CAPITALWATCH 5TH YEAR
VOL. 6 NO. 11
INSIDE House delays vote on small games of chance expansion PAGE 4 Shale lobbyist tapped to lead gas industry trade group PAGE 7 FEATURE: Candidate for Governor Rob McCord discusses life, motivations, union support PAGES 8-9 Rival unions woo legislative Democrats in Great Transportation Deal debate PAGE 10 EDITORIAL: President’s Gettysburg snub could haunt him PAGE 13
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Gov. Corbett to seek legislative input for Lottery privatization BY KEVIN ZWICK, CAPITOLWIRE
The Corbett administration reached an agreement with United Kingdom-based Camelot Global Services PA LLC to extend the firm’s $34 billion bid. The administration says the extension will allow the state to pursue “legislative efforts” to privatize management of the Pennsylvania Lottery and stressed demand for Lottery-funded programs for the elderly. “Today that need is outpacing our ability to pay for it. With the Legislature’s support, we can work together to set a path and plan for the future of services for older Pennsylvanians,” Gov. Tom Corbett said in a statement. “There are significant reasons to explore ways to grow the lottery and stabilize the Lottery Fund,” said Senate Majority Leader Dominic Pileggi, R-Delaware, in a statement. “It is our duty to make sure our mothers, fathers, neighbors and friends have the services they need and that the commonwealth has the means to pay for them.” The administration has been considering alternative ways to outsource management of the Lottery to Camelot, the lone bidder. The firm promised to increase profits at the Pennsylvania Lottery by $34 billion over the next 20 years through an expansion of online and terminal games like Keno. The company has also guaranteed $200 million to cover any shortfall in profit. Attorney General Kathleen Kane in February rejected the administration’s contract, saying
it violated the state constitution and the state Lottery law. She also said installing the new Keno games would likely need legislative input. Prompted by a projected increase in the state’s older population, the administration began to look at privatizing management of the Lottery believing a privately-run Lottery would produce higher and more stable profits than the current Lottery. The state-run system would generate between $3.5 and $4 billion less over the next 30 years than Camelot’s proposal, according to the Department of Revenue. Privatization foes point to the record-setting $3.69 billion profit last year and the Lottery workforce union, which opposes privatization, says changes could be made in-house to produce greater profits. It’s unclear if a Senateapproved bill to expand small
games of chance in bars and restaurants would cut into the profits expected from the Camelot deal, which relies on Keno gaming in various establishments. The administration predicts the tavern gaming bill will cause a decrease of 5 percent from the state Lottery Fund. Corbett and Senate Democrats support directing the money to the Lottery Fund to replace the expected loss of revenue. Republican legislative leaders want the money directed to the General Fund, as the bill currently would do, although the bill currently sits in the House. The other two Democratic state row officers implored Corbett this week to drop his lottery privatization effort. On October 28, State Treasurer Rob McCord in a statement panned the governor for causing the loss of $3.4 million from the Lottery Fund to pay consultants, which he said should have been
earmarked for programs benefiting older Pennsylvanians like property tax/rent rebates, transit or low-cost prescription drugs. “This is real money that should have been used to help our senior citizens. Instead, it has lined the pockets of consultants who are pursuing an ill-advised plan to privatize our efficient and well-administered Lottery,” said McCord, one of several Democrats looking to face Corbett in next year’s election. The administration has paid $2.36 million payment to consultant DLA Piper and $1 million to Greenhill & Co., a Chicagobased investment firm serving as financial adviser to the administration’s privatization efforts. “We should always examine the Lottery to look for innovative opportunities to generate additional revenue for senior citizen programs,” McCord said. “Sometimes, privatization may make sense, but this is not one of those cases. The Lottery is operating with demonstrable efficiency and generating strong results. Virtually the only Pennsylvanian clamoring for its privatization is Gov. Corbett.” McCord said another $116,000 has been paid to Blank Rome, a Philadelphia law firm defending Corbett’s privatization plan in a court challenge filed by some legislative Democrats and the American Federation of State, County, and Municipal Employees Council 13, which represents the Lottery workforce. continued on page 3
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Gov. Corbett to seek legislative input for Lottery privatization continued from page 1
McCord objected to the privatization effort at the end of 2012, when he questioned whether it would be legal to make payments to Camelot since it was unclear whether a proposed expansion of games including Keno was proposed. He says he will approve payments to the consultants. The treasurer is required to “provide pre-transaction audits or fiscal review” and independently audits all requests for payments from commonwealth funds to make sure they are legal and correct, the Treasurer’s office said noting the consultant payments met the standard. “I consider the administration’s Lottery consulting contracts to be a gross waste of money. But they are not illegal,” McCord said in the statement. “Unfortunately, the Fiscal Code does not allow me to block foolish payments, only unlawful ones.” Similarly, Auditor General Eugene DePasquale in a statement said he ordered an immediate audit of the diversion of Lottery Fund money to the consultants. “Funds from the Pennsylvania Lottery are supposed to help older Pennsylvanians with prescriptions, transportation, homedelivered meals and property tax and rent
rebates, not to fatten the coffers of law firms and private consultants over a Lottery privatization contract that may never see the light of day,” DePasquale said in a statement. He continued: “For the sake of the senior citizens who benefit from Lotteryfunded programs, and Pennsylvanians in general, we must review these payments to make sure that we can account for every single penny. I urge Governor Corbett to terminate any further discussions with private vendors that are siphoning funds from senior programs.” , State Treasurer Rob McCord in a statement panned the governor for causing the loss of $3.4 million from the Lottery Fund to pay consultants, which he said should have been earmarked for programs benefiting older Pennsylvanians like property tax/ rent rebates, transit or low-cost prescription drugs. “This is real money that should have been used to help our senior citizens. Instead, it has lined the pockets of consultants who are pursuing an ill-advised plan to privatize our efficient and well-administered Lottery,” said McCord, one of several
Democrats looking to face Corbett in next year’s election. The administration has paid $2.36 million payment to consultant DLA Piper and $1 million to Greenhill & Co., a Chicagobased investment firm serving as financial adviser to the administration’s privatization efforts. “We should always examine the Lottery to look for innovative opportunities to generate additional revenue for senior citizen programs,” McCord said. “Sometimes, privatization may make sense, but this is not one of those cases. The Lottery is operating with demonstrable efficiency and generating strong results. Virtually the only Pennsylvanian clamoring for its privatization is Gov. Corbett.” McCord said another $116,000 has been paid to Blank Rome, a Philadelphia law firm defending Corbett’s privatization plan in a court challenge filed by some legislative Democrats and the American Federation of State, County, and Municipal Employees Council 13, which represents the Lottery workforce. McCord objected to the privatization effort at the end of 2012, when he questioned whether it would be legal to make payments to Camelot since it was unclear whether a proposed expansion of games including Keno was proposed. He says he will approve payments to the consultants. The treasurer is required to “provide pre-transaction audits or fiscal review” and independently audits all requests for payments from commonwealth funds to make sure they are legal and correct, the Treasurer’s office said noting the consultant payments met the standard. “I consider the administration’s Lottery consulting contracts to be a gross waste of money. But they are not illegal,” McCord said in the statement. “Unfortunately, the Fiscal Code does not allow me to block foolish payments, only unlawful ones.” Similarly, Auditor General Eugene DePasquale in a statement said he ordered an immediate audit of the diversion of Lottery Fund money to the consultants. “Funds from the Pennsylvania Lottery are supposed to help older Pennsylvanians with prescriptions, transportation, homedelivered meals and property tax and rent rebates, not to fatten the coffers of law firms and private consultants over a Lottery privatization contract that may never see the light of day,” DePasquale said in a statement. He continued: “For the sake of the senior citizens who benefit from Lotteryfunded programs, and Pennsylvanians in general, we must review these payments to make sure that we can account for every single penny. I urge Governor Corbett to terminate any further discussions with private vendors that are siphoning funds from senior programs.” CW
NOVEMBER 2013 CAPITAL WATCH
House delays vote on small games of chance expansion House Republican leaders called off a vote on what would have been a major expansion of gambling to taverns after concerns about recent Senate changes were revealed during a heated Rules Committee meeting Wednesday. House Bill 1098, which allows restaurant licensees to offer small games of chance to patrons, passed the House earlier this year with wide bi-partisan support when it only would have expanded 50/50 raffles to National League Football and minor league sports stadiums for charitable purposes. The Senate amended the bill in June to add tavern gaming, and the chamber passed it earlier Wednesday on a 39-11 vote. The bill passed the House Rules Committee on party lines, but not before objections were aired. House Democrats tried parliamentary moves to slow passage of the bill and raised questions about an estimated 5 percent reduction in Lottery Fund revenue, potential drafting errors and the single-subject rule. Ultimately, concerns among members on both sides over the recently adopted Senate amendment shelved the bill until the Legislature returns in mid-November. House GOP spokesman Steve Miskin said
both House caucuses want to review the Senate amendment changes before sending the bill to the governor. During the Rules Committee meeting, House Appropriations Committee chairman Bill Adolph, R-Delaware, said the bill is based on Indiana’s law, which saw a 5 percent reduction in its lottery sales revenue. House Finance Committee Democratic chairwoman Phyllis Mundy, D-Luzerne, who said past efforts to relieve property taxes with Lottery Fund revenues were halted due to concerns over sparse funds in the Lottery Fund, assailed Republicans. “Now all of a sudden we can afford 5 percent out of the Lottery to put into the general fund instead. That makes no sense. You talk out of sides of your mouth,” she said. Rep. Mark Mustio, R-Allegheny, said she was making a “myopic” assumption that there would be a reduction. “You’re totally discounting the revenue increase on the other side of the equation that could be allocated to those programs,” Mustio said. The Senate Appropriations Committee fiscal analysis expects about 2,000 taverns
to apply – although some House Democrats say it could be over 9,200 taverns - and could generate about $156 million in tax revenue in a full year. Senate Democratic Leader Jay Costa, D-Allegheny, said $38 million in the current budget is already relying on passage of the bill. “This addresses in many respects, legalizes many of the things now going on in taverns,” Costa told reporters Wednesday. “This gives some oversight to what the bars and taverns are doing anyway,” said Sen. Wayne Fontana, D-Allegheny, minority chair of the Senate Community, Economic and Recreational Development
Committee, which added the tavern gaming language in June. Under the bill, restaurant licenses could obtain a license for tavern gaming by paying $2,000 to the General Fund, a $1,000 application fee to the Bureau of Liquor Enforcement and a $1,000 investigation fee to the Bureau of Investigation and Enforcement at the Gaming Control Board, according to a summary of the Senate amendment. Approved license holders could conduct tavern gaming, which includes pull-tabs, daily drawings or tavern raffles. The bill does not include grocery stores or gas stations that may hold restaurant licenses. The Senate fiscal analysis says the individual prize limit would be $2,000 and aggregate weekly prize limit would be $35,000. Tavern raffles (50/50 raffles) would be limited to one per month. Sixty percent of net revenue from pull-tabs and daily drawings would be paid to the commonwealth and into the general fund, with 40 percent retained by the licensee. Under the tavern raffles, 50 percent of the revenue would go to a designated charity, while 30 percent would go to the state and 20 percent retained by the licensee. CW
Gang issues spur dog fighting bill
Sen. John Yudichak, D-14, hast introduced legislation providing state funds to help local prosecutors investigate and enforce laws banning illegal gambling connected to animal fighting, which is also illegal. Yudichak and U.S. Rep. Lou Barletta, R-11, Hazleton, have formed Operation Gang Up to crack down on gang activity. Yudichak’s bill would earmark a share of state gambling revenue to provide grants to district attorneys tackling this problem. Under current law, the state Gaming Control Board distributes $2 million annually in local grants to investigate illegal gambling. Yudichak proposes to earmark $250,000 of that amount to focus on gambling connected to animal fighting. The House approved legislation in June to create a criminal offense for possessing paraphernalia used in animal fighting. The term covers devices, drugs and facilities used for fights or to train an animal to fight. CW
Energy Independence Is On Its Way Back.
For decades, our nation has depended on foreign oil from countries like Iran, Kuwait and Saudi Arabia. But now America is realizing it can rely on natural gas thatâ€™s being drilled for right here by Pennsylvanians like Greg, Laura and Josh. Drilling is just the beginning.
NOVEMBER 2013 CAPITAL WATCH
Pennsylvania Winery Association says state now fifth largest producer According to the Pennsylvania Winery Association, the number of wineries in the state has more than doubled over the past decade. There are now more than 170 wineries in Pennsylvania, making the state the fifth largest wine producer in the country. “One thing about PA is no matter where you are in the state, you are only
45 minutes away from a winery,” said Jonathan Patrono, President of the PA Winery Association. In fact, over the past 10 years, the number of wineries has spiked from 64 wineries in 2000 to 171 in 2011. Part of the reason is because Pennsylvania’s environment is a sweet spot for grape growing. “They’re all making different wine
whether it’s the French hybrids or more the Niagras and the American native grapes. It’d be good to get out and try all the different types we make,” Patrono said. This year’s vintage will be particularly tasty experts say due to the weather being a little drier than other years. They point to the fact that sugars were higher and the acids were stronger. CW
Administration hopes new report will jump-start pension reform, but no consensus yet on a plan In the next week or so, an actuarial analysis from Milliman Actuaries, commissioned by state Budget Secretary Charles Zogby, could kick off the next effort to pass pension reform. What will that effort be? Well, Zogby says the state still wants to reduce its unfunded pension liability, tame the budget tapeworm that rising pension payments have become, and reduce the risk borne by taxpayers from varying stock returns when pension payments come due. But will the Corbett plan be revived, or a new House GOP plan pushed by Rep. Mike Tobash, R-Schuylkill, or will something else emerge? It all depends partly on what Milliman reports, based on the 2012 investment returns of the state employees and teacher pension funds. The Tobash proposal, which is being quietly pushed by House GOP leadership, so far exists only as a PowerPoint proposal. It is a hybrid design mix: For the first $50,000 of annual income employees could choose a traditional defined benefit plan, with the employee getting a fixed percentage of their annual income multiplied by the number of years employed. But the top defined benefit pension would max out at $25,000 per year, whereas now, a state employee - someone who put in 40 years with a top average salary of $48,000 would get a $48,000 a year pension. Any annual salary over $50,000 would not count toward the average salary that would determine the annual defined benefit pension. That salary over $50,000 could, if the employee chose, could be partly invested in a 401-k style plan, as could any salary below $50,000, if the employee chose. It is the new, hot House GOP pension plan and along with Gov. Tom Corbett’s plan to put a 401-k into effect for all employees, reduce some benefits for existing employees, and Cumberland County Republican Rep. Glenn Grell’s plan to have employees opt out of some benefits if they choose, in exchange for a pension
obligation bond of up to $9 billion. And all will be reviewed by Milliman. That review will estimate the savings from all three plans both to the budget and in dropping the unfunded liability, and other benefits and/or costs of them. “We need some facts and that is what we will get from the actuary’s report,” Zogby said. He hopes Milliman will give momentum to a plan to achieve the administration’s goals, because right now, all the plans on the table are full of arrows fired by critics. Administration officials are sticking pins into Grell’s plan, asking the following questions: 1) What is the likelihood of the employee pension obligation bond turning out to be a better deal than using the $500
5) Why shouldn’t the state simply mandate lower employee benefits rather than rest their case on asking employees to make really bad financial personal decision? Other plans fare no better among the administration and Legislature. A 401-k plan alone does not achieve savings and involves transition costs, some pension actuaries say, and it also runs into, like some of the others, the Big Italian Lunch Syndrome. If you have ever gone to a good Italian restaurant and had a big lunch, you know you feel like doing nothing, other than taking a nap. Basically the administration still wants budget relief, liability reduction and less risk of an increasing taxpayer burden. But passing any of these plans will be a huge
“I have some concerns about how the new plan design will treat those future blue collar employees who may never exceed the $50,000 salary level, below which they are limited to a fairly modest pension benefit, regardless of the length of their service.” million a year it will cost to pay off the bond to directly pay off the pension liability? 2) If we had $500 million a year to pay for the $9 billion bond to reduce the unfunded liability by one-third, why not just give it to the pension systems to comply with the law? 3) Why should the administration be for a plan that gives it and education and taxpayers no budget relief? 4) What state employee in their right mind would reduce their benefits voluntarily for an employee monthly contribution reduction that might buy a case of beer a month?
ordeal legislatively, and once it is passed, it will be the Big Italian Meal of Pensions for the General Assembly, followed by naptime for the Legislature, two years or more until another bill can be passed. So for the administration, they have to get enough in any next bill to justify not getting any more until years from now, maybe longer. And the 401-k for new employees and the plan of Senate President Pro Tem Joe Scarnati, R-Jefferson, to move state elected officials to a 401-k-style plan, both fall under the title of “too little to get because we won’t get any more for years” to the administration So the administration is asking Milliman
to review Tobash and their plan to see if either work for all three of their goals. In the meantime, a lot of folks are starting to express concerns about the Tobash plan, and to keep bashing the governor’s plan, which they say adds to the unfunded liability problem the state now faces. Grell said: “I commend Rep. Tobash for his work on the pension issue and for his willingness to step forward with a credible plan to address the problem. I will continue to engage with Rep. Tobash as the details of his plan are made available, particularly to the actuarial analysis, to see how his approach will address the unfunded liability and the rapidly escalating employer contributions our school districts are facing. “I have some concerns about how the new plan design will treat those future blue collar employees who may never exceed the $50,000 salary level, below which they are limited to a fairly modest pension benefit, regardless of the length of their service. “Additionally, I would be unlikely to support the proposed ‘fresh start’ re-amortization of the unfunded liability over the proposed 30 or 40 years timelines. That part of the plan is too reminiscent of the strategies that have contributed to our current situation.” Grell is referring to the part of the Tobash plan that would, three years after the last pension reform act, re-amortize the funding of the pension over 30 or 40 more years to reduce the amount to be paid in the next few years. Since a big part of the unfunded liability is state under-funding over the past 11 or so years, Grell is right to say another re-amortization, three years after the last one, seems a little much. So there we are, with the unions and Grell playing with the Tobash plan like it is a piñata, the administration doing the same with Grell’s plan, and the unions and lawmakers peeing on the governor’s plan. And it is Milliman’s job, and the administration’s, to breathe life back into one of them. Good luck doing that with a spreadsheet. CW
NOVEMBER 2013 CAPITAL WATCH
Shale lobbyist tapped to lead gas industry trade group BY KEVIN ZWICK, CAPITOLWIRE
A powerful Pittsburgh-based trade association for natural gas companies named a former shale company lobbyist to act as the new public face of Pennsylvania’s shale industry. David Spigelmyer, a Clearfield County native and former lobbyist for Chesapeake Energy Corp., is taking over the helm of the Marcellus Shale Coalition, which has served as the collective voice of a burgeoning natural gas industry constantly under fire from political opponents and environmental activists. “My role’s going to be to continue to try and work closely to get the message out there broadly and work closely with regulators in Harrisburg and Washington... to grow this resource to deliver the jobs long term for manufacturing and existing businesses,” Spigelmyer said in a brief phone interview Monday. Through his prior roles with MSC, Spigelmyer played an active part in helping to shape the state’s impact fee and regulatory framework addressing unconventional natural gas drilling. Spigelmyer also was instrumental in the organization’s founding in 2008 and has served as chairman, vice-chairman and head of its legislative committee, according to a MSC release. He was chairman of the
CE NT R A L
MSC and most recently led Chesapeake Energy Corp. Appalachia division’s lobbying operation. MSC’s CEO Kathryn Klaber, who led the organization since its inception in 2009, announced in July she would be leaving her post, amid concerns from those in the industry about public relations troubles. Spigelmyer said his taking over is not to signal a broad change in the direction of the MSC. Recently, the MSC has injected itself into the 2014 gubernatorial election by opposing renewed calls from some Democratic candidates for a severance tax, which it said were “misguided, job-crushing policies that would throw a wet blanket on this positive, widespread progress.” U.S. Rep. Allyson Schwartz and two former Department of Environmental Protection secretaries, John Hanger and Katie McGinty, have said they support a severance tax. Schwartz proposed a 5 percent severance tax on top of the impact fee to fund education, transportation and other budget areas. Spigelmyer pointed to the over $1.8 billion in business taxes, $400 million in impact fees, $750 million on road repairs to date, and tens of millions in royalties
PEN N SYLVA N I A YOUTH
across the state. When asked if the organization will play a larger political role in the 2014 contest, with Gov. Tom Corbett, an ally of the gas industry, up for reelection, he said the organization plans to continue being active within the legislative and regulatory side. He said there was a “huge opportunity and retention story” on the refinery jobs in south Philadelphiasouth Philadelphia and
Delaware County. Corbett, local, state and federal officials, and labor and business leaders to pushed publicly for a deal to keep the plants from closing. Spigelmyer also touted Pennsylvania’s growth in the industry, and dismissed the “false choice” given by critics who say it’s either the environment or energy. “You don’t have to make that false choice,” he said. Patrick Henderson, Corbett’s top energy staffer, said Spigelmyer brought “a very pragmatic approach” in helping to shape Act 13, the state impact fee law. “Dave is, first and foremost, a Pennsylvanian. He wants to see the shale industry succeed here because he wants to see Pennsylvania succeed. He also recognizes the importance of high – but fair and consistent – environmental standards. That is reflected in Act 13, which is recognized as a national model of environmental protection and received crucial support from conservation, environmental and local government organizations,” Henderson said. “I have always found Dave to be honest, forthright, a problem-solver, and someone committed to doing the right thing,” he added. CW
TOYS COME ALIVE... in
Central Pennsylvania Youth Ballet’s enchanting production of George Balanchine’s The Nutcracker ™! Be delighted by the dazzling costumes, charming sets and accomplished dancers set to the magical music of Tchaikovsky. Make ‘The Nutcracker’ your family’s holiday tradition.
Saturday, December 14, 1 & 5 PM Sunday, December 15, 2 PM
Tickets: 717.214.ARTS or whitakercenter.org
Maestro Stuart Malina conducts the Harrisburg Symphony Orchestra
Saturday, December 21, 1 & 5PM Sunday, December 22, 2PM
Tickets: 717.534.3405 or hersheytheatre.com The performance was superb as usual. I have enjoyed the Nutcracker before and every time the talent of the Central Pennsylvania Youth Ballet was exceptionally exhibited. This is a treat that all children should see! –P.K.
There is only one word that comes to mind in describing this event, ‘Spectacular!’ –L.C.
The evergreen freshness of ‘The Nutcracker,’ as choreographed by George Balanchine, is cause for wonder.
The Nutcracker has become a Christmas tradition that I share with my daughter. It is always beautiful, magical and just plain good. –G.L.
–The New York Times
George Balanchine’s The Nutcracker™ Choreography George Balanchine © The George Balanchine Trust
Experience an intimate venue in the heart of Harrisburg
Photos: Rosalie O’Connor, Maria Barnett
NOVEMBER 2013 CAPITAL WATCH
Candidate for Governor Rob McCord discusses life, motivations, union support BY PETER L. DECOURSEY, CAPITOLWIRE
tate Treasurer Rob McCord remembers his late mother tenaciously fighting and working to keep a roof over his head amid a tough divorce that brought him from California to start his fourth grade year in Lower Merion schools. He remembers being so hungry before that move took place that neighbor parents told him he could not come to their house because he ate too much. He said there was no meat and not much food at home for him. And what meals there were often consisted of cheap powdered milk as his mother was not only embroiled in a divorce, but also a battle with Stanford University for firing and evicting her to get her out of university housing once she was no longer married to a faculty member. Then she took a job at the then-Drexel Institute of Technology in the autumn. Ever since then, “Fall for me still feels like the birthplace of opportunity,” McCord told an audience of about 200 at his gubernatorial campaign announcement at Montgomery County Community College in September. After graduating from Lower Merion and Harvard and working as a congressional staffer and think-tanker, McCord said he decided to go into the private sector as an investor in tech companies. He said: “My mom took me aside and
said I’m a little worried that you are going to make your life too much about money. She literally said ‘earthworms can copulate and consume. That’s not worth that much.’ And I’m like, let’s not undervalue copulation and consumption, mom, right?” But he said he told her that by working with the tech sector: “We can create a lot of jobs, but also, if I become financially independent I will return to public service.” So, he told a cheering announcement speech crowd, “… to a certain extent, I am just doing what I told my mom I would do.” Now he enters the race, with several key union leaders saying major union support will move him up from second or third in polls. In a Nov.4 press release, the American Federation of State, County, and Municipal Employees announced that the group will endorse McCord for governor. The release says that AFSCME held interviews with six of the Democratic candidates for governor and selected McCord as their candidate. This union is the largest of the AFLCIO affiliates and represents more than 65,000 employees in the commonwealth of Pennsylvania (45,000 state employees and 21,000 in Pennsylvania’s counties, municipalities, cities, school districts, authorities, nonprofits, and health care facilities) “Our members know Rob McCord. He has done a superb job as our treasurer,” said AFSCME Council 13 Executive
Director David Fillman. “And coming from a union household that often faced tough economic times, he understands how important it is to invest in working families again. We’re confident he will continue to serve with fairness and integrity as our governor.” This is his third major union endorsement t. Both the UFCW Local 1776 in southeast Pennsylvania and Pittsburgh’s IBEW Local 5 have endorsed him. As a potential gubernatorial candidate, he has been polling well behind frontrunning U.S. Rep. Allyson Schwartz, D-Montgomery, and about even with York businessman Tom Wolf and former DEP Secretary Katie McGinty. The field also includes former DEP Secretary John Hanger and Allentown Mayor Ed Pawlowski, and several others. McCord’s speech ranged back and forth between his personal story and his withering criticisms of Gov. Tom Corbett, whom he described as a member of the “dumb” part of the Republican Party, and said the governor was obsessed with “giving the 1 percent more” and practicing “crony capitalism.” Republican State Committee Chairman Rob Gleason blasted back, saying: “The Democrats continue to be unsatisfied with their field and that is directly tied to more candidates joining the Democrat Primary circus. “Rob McCord has been playing politics from the Treasurer’s office for months now,
but perhaps instead of using taxpayer dollars for political attacks all day, he’ll actually discuss why his extreme agenda is more liberal than the hundreds of liberal votes made by front-runner Allyson Schwartz. “Rob McCord is just another tax-andspend liberal who has shown zero ability to solve Harrisburg’s problems and we look forward to continue illustrating the contrast between more taxes, fewer jobs candidates like McCord and Schwartz, and our less taxes, more jobs Governor, Tom Corbett.” McCord said of Corbett than the state’s poor job growth rate ranking “is no accident … under a governor who has basically had a career as a bureaucrat and a political appointee and as a career politician, never involved in creating jobs. … It’s fun that his people have read a poll and he is now using the word ‘jobs.’ But it doesn’t add up. “… This is the same guy who said: there are plenty of jobs out there, people just love welfare. Then he said: There are plenty of jobs out there, they just aren’t going to pass a drug test. Then he said: there are plenty of jobs out there, don’t look at the statistics that say we’re ranked 49th, the University of Arizona and the Bureau of Labor Statistics are putting the fix in. It’s ridiculous.” Of Senate Bill 1, the $2.5 billion transportation funding proposal the governor has been unable to pass through the state House, McCord said: “It’s a no-brainer that we need to pass that bill, and we need to have a governor who’s a good
NOVEMBER 2013 CAPITAL WATCH
competition be a productive process which is what I think we’re about to see in this Democratic process” of next year’s crowed Democratic gubernatorial primary. In fact, one of the labor leaders attending the announcement and endorsing McCord for governor, Dan Woodall of Laborers Council 13 in suburban Philadelphia, met McCord through an introduction from Cordisco. Woodall’s union had endorsed
Cordisco, but then backed McCord, and Woodall became friends with McCord with Cordisco’s active blessing, Woodall said. But in answering a question from WHYY’s Dave Davies about critics saying McCord raised money from “Wall Street,” McCord said: “There was sort of an SEC rule change, so money managers aren’t even allowed to give, so that’s an absolute non-issue.” But of the criticism, which has been spread by critics and rival campaigns, “... It’s a little bit sad for me. I’ve got a lot of friends in this race, a lot of talented people are running and I have a lot of respect for them, but they all have teams who embrace, kind of, the career politician BS, and they do their opposition research and they say well, if we can successfully make this criticism, that polls well. “People who know me know a) I’m self-
made, b) I’m very independent, you know, proven that time and again, and c) I have a very broad diversity of supporters. Diverse geographically, diverse financially, diverse by industry etc. “But I never worked on Wall Street, … very, very few of my supporters ever worked a day on Wall Street.” Asked if he would run negative ads on opponents, McCord told reporters: “I’m a very positive person. I won’t shy away from a fight, but I won’t intentionally mislead people. I think it’s really ridiculous for people to imply” he is the candidate of the rich in the race. Schwartz and Wolf’s camps declined comment. McGinty and Pawlowski and Hanger welcomed him to the race and said they looked forward to the coming campaign and debate. Finishing his speech, McCord said he was running to ensure a “kid with a single mom, that kid has dreams every bit as big as I had, ... that kid deserves every bit as good a shot as I did. “Somewhere along the way … we stopped thinking it made sense to invest in working families and that was just wrong and we can reverse that and we will reverse that if we work together.” To rising applause, McCord shouted: “I am best built to beat Tom Corbett, … with your help I will beat Tom Corbett!” CW
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PHOTO BY JADRIAN KLINGER
salesperson, and can get votes from both sides of the aisle and ask people to take a few tough votes to pay the real cost of their transportation.” McCord said the governor’s continuing push to pass a liquor privatization bill showed his misplaced priorities, saying of Senate Bill 1: “We can get that done if you don’t put dumb bills in front of it and hold a huge job-creating bill hostage to the crony capitalist bills” like liquor privatization. “After reviewing the Treasurer’s comments, it is clear Rob McCord supports the same failed policies that led to a $4.2 billion budget deficit ... . After nearly five years in office, he has not shown one new initiative to move our Commonwealth forward and that is why he started off a negative campaign from the start,” said Corbett campaign manager Mike Barley. “Governor Corbett’s agenda of living within our means and keeping lower taxes, has helped to create over 130,000 jobs and built a solid fiscal foundation for our state moving forward.” McCord said of his work as treasurer: “We reminded people that smart Democrats do a heck of a lot better job of running the economy, and helping to run the economy – not that all Republicans aren’t the smartest – but a lot better job than the dumb Republicans who try to govern by talking points, haven’t created a job in their lives, don’t know how markets work, don’t know how pensions work, never touched anything more than crony capitalism.” One example, he said, is lottery privatization: “Typical crony capitalism. Illegal crony capitalism. No-bid crony capitalism.” Several companies started out bidding for the contract but then dropped out leaving only one ultimately meeting the bid criteria. McCord also blasted Corbett when he recalled former mentor U.S. Rep. Norm Mineta, D-San Jose, who was interned during World War II because he was Japanese-American. McCord said he learned from Mineta, who was interned on the order of President Franklin Roosevelt, as were tens of thousands of Japanese Americans, “There are certain things that you fight for, and those are civil rights, and one of the reasons we call them rights is they don’t always need a majority to be for them. Just like the right to vote. “Even if it polls well to say you’ve gotta bring a picture ID to the election, just because it polls well, doesn’t make it right, and we need a governor who knows how to say it ain’t right! Not on my watch! You defend rights! You do not attack rights!” said McCord as the crowd cheered his blasts at the governor’s Voter ID bill. McCord noted that his bitter 2008 primary against Bucks County Democratic Chairman John Cordisco and then-State Rep. Jen Mann, ended with all three being “close friends” and said: “ You can have
NOVEMBER 2013 CAPITAL WATCH
Rival unions woo legislative Democrats in Great Transportation Deal debate BY PETER L. DECOURSEY, CAPITOLWIRE
The great transportation deal debate of 2013 is quietly finishing with union leaders debating each other, with their audience the House and Senate Democratic caucuses. Gov. Tom Corbett, at this point, will sign most anything the two chambers will pass. Senate Republicans will probably accept most anything that can pass the House, as long as it is close to their $2.5 billion a year, $500 million-a-year-formass-transit Senate Bill 1. So as House GOP Counsel Dave Thomas said last Friday of the deal brokered by his boss, House Speaker Sam Smith, R-Punxsutawney, “I think next week is vital” for this issue to move or be done for this year. So here is the debate: three powerful and influential union leaders say trading a prevailing wage concession for a $2.3 billion-or-more-a-year transportation bill is a good deal. They don’t like making even what they consider a minor concession on prevailing wage, but it won’t apply to many, if any, jobs under this bill, according to Pat Gillespie of the Philadelphia Building Trades, Philip Ameris of the Laborers of Western Pennsylvania District Council and officials of the Philadelphia-area International Brotherhood of Electrical Workers. But while those are three of the most powerful unions and sets of leaders in the state, on this issue, they are almost alone, and it is still not clear if they can provide enough votes to pass a House-GOPtrimmed version of Senate Bill 1. Their power usually comes from the fact that much of the union establishment often follows in their wake. But in this case, those three have equally powerful and active opponents in the labor movement, such as the eastern and western Carpenters unions, and many building trades and electricians’ locals, especially in the west.
Why do those unions think this is bad deal? State AFL-CIO President Rick Bloomingdale and state Building Trades honcho Frank Sirianni have emerged as the most public critics and opponents of this deal. And they say those Ameris, Gillespie and the IBEW honchos are wrong. Bloomingdale, Sirianni and a host of the medium-sized union leaders in the center and north and west of the state argue this deal will take prevailing wage and its higher pay from many more projects and workers than Gillespie, Dougherty and Ameris believe. Bloomingdale and Sirianni also believe that as Sirianni likes to say, “You don’t mess with the Holy Grail,” of unions, the prevailing wage law. They believe telling Republicans they can slice away from prevailing wage in exchange for big projects and contracts is a losing deal and a terrible precedent. Blomingdale keeps on asking: “Why do Republicans want to cut workers’ pay to fund transportation, which is a basic function of government?” But Gillespie, Ameris and IBEW officials are debating a simpler question with Sirianni and Bloomingdale: how can their unions, and other construction unions hold steady, much less thrive, without a big transportation bill like this one coming soon? They also assert there will be negligible effects from raising the prevailing wage threshold from $25,000 to $100,000 on heavily-state-funded transportation projects, and doubt that will affect many workers. And since this is a key week for this bill, both sides have a vital audience. The bill can’t pass without 45 to 50 House Democratic votes and 52 or more House Republican votes. It can’t get to the GOP vote total without prevailing wage, Thomas and Smith say. Gillespie says 22 southeastern House
Republicans will vote for it because of the outreach of his union and the IBEW. Now the big three have to out-lobby Bloomingdale, Sirianni and roughly three-dozen smaller unions, many of which Ameris argues have little role in transportation projects and little stake in this deal. But unless Gillespie, Ameris and the IBEW manage to convince more union leaders to at least withdraw their opposition, or 25 or so House Democrats to ignore their local union leaders, it will be hard to get enough House Democratic votes to pass this deal. Same problem in the state Senate. As of Friday, Senate Minority Leader Jay Costa, D-Allegheny, was expressing hesitation about moving forward with a deal that touched prevailing wage. Neither he nor House Minority Leader Frank Dermody, D-Allegheny, have yet said no or yes to this deal and Dermody and Costa and their members are the audience for this debate. And the debate is to the point where they have to be convinced now or this deal will slip away. Bloomingdale said union leaders will learn this week when they can review the new bill language – it is expected to be unveiled Monday or Tuesday, and amended into Senate Bill 1 Tuesday or Wednesday, if things go well – that they believe to be far more dangerous than Ameris and Gillespie say. Bloomingdale said: “There is a lot of work that people will learn, … that if they change the threshold, his members would lose it all, I don’t think they will support it. … We have to explain how the threshold would work if you put it in Senate Bill 1, and we are going to do that.” Gillespie and Ameris said the bill would affect few or no transportation projects unions get now, and the threshold hike would only apply to transportation projects. Bloomingdale and Sirianni said more projects would come under the threshold because of the definitions of projects in Senate Bill 1. Gillespie said of the threshold increase: “Other guys can stand on some kind of ceremony about prevailing wage, but if you don’t have adequate transportation to take kids to school and people to shop and to work, you don’t have development. And if you don’t have development, you don’t have construction and that is where our jobs come from: development. “And development follows transportation routes. Look at Valley Forge, King of Prussia, Fort Washington. All of those made jobs for all the trades because we have good roads that go there. That is what this is about.” Of the prevailing wage issue, he said: “This is just a tactic to try and get a transportation bill with $2.5 billion a year.
We need $4 billion a year but this is the most we can get. Senate Bill 1 got to the House, and the majority leader,” Rep. Mike Turzai, R-Allegheny, “starts circulating … these typical anti-transit Tea Party things. We had to do the threshold thing in order for us to get Republicans in the House to at least pick up the banner and circumvent Turzai’s tactics.” He said he did not know why Bloomingdale and Sirianni thought the threshold hike would affect union jobs. “They think I have been sold a bill of goods. No, I am a person whose members are in desperate need of work. $100,000 projects and above are the norm. I don’t know of many in heavy construction and highway construction, or in mass transit construction that are below that. “The danger here is the precedent-setting, that is what everyone is worried about. But the laborers out west and I and others, our members need work and that is why we are here.” Sirianni said Gillespie is wrong that the threshold hike would not affect members of their unions. “We do a lot of work under $100,000: all the guard rail work, all the painting work, refurbishing of maintenance sheds, when they add a bathroom, all those projects are under $100,000,” said Sirianni. “A dollar’s work is worth a dollar’s wages.” Gillespie also said getting proper funding for SEPTA and other mass transit agencies is vital: “We have thousands of jobs going into the Navy Yard” in Philadelphia, “and there is only one road in and one road out, so that is going to be a massive traffic problem as jobs grow there. What we could do is bring folks to the navy yard by extending the Broad Street Subway” in Philadelphia. “SEPTA can’t even think about those kinds of things, because they are living hand to mouth. They can’t do a vital project like that, they can’t even have a 10-year plan because they don’t have the funding. And this could change that.” “I think people don’t appreciate the predicament we’re in,” he said. “You measure a $2.5 billion transportation bill against changing the threshold from $25,000 to $100,000 - that is a bargain, you should make that deal.” One odd reality remains: Thomas continues to say the GOP wants not only the threshold hike, but also to exempt maintenance projects from the prevailing wage. Bloomingdale, Ameris, Sirianni and Gillespie all oppose redefining maintenance projects out of prevailing wage. Gillespie said, echoing Ameris, “We didn’t agree to that. If they’re going that route, all bets are off. We’re unalterably opposed to changing the definition of maintenance.” CW
NOVEMBER 2013 CAPITAL WATCH
Major says PA lawmakers work together to send $600 million debt reduction bill to governor In a unanimous, bipartisan effort, Pennsylvania lawmakers worked together this week to send to the governor a bill that reforms the state’s Redevelopment Assistance Capital Program (RACP) and reduces the program’s debt load by $600 million, announced state Rep. Sandra Major (R-Susquehanna/Wayne/Wyoming). “Our counterparts in Washington, D.C., were apparently unable to accomplish what we did this week in Pennsylvania – working together to reduce government debt,” said Major. “By taking a hard look at a program that was growing out of control, we were able to agree to lower the debt ceiling and make more efficient use of taxpayer
dollars that support it.” RACP uses borrowed money to fund economic development projects selected by the governor. Grants awarded by the program are used for the acquisition and construction of regional economic, cultural, civic and historical improvement projects. The funding may be used for the design and construction of facilities that are economic development projects which generate substantial increases in employment, tax revenues or other measures of economic activity. RACP currently has a debt ceiling of $4.05 billion, but that would be reduced by $600 million for a total of $3.45 billion under House Bill 493. The legislation also
would put new controls in place to create a transparent and objective review and approval process that will include putting projects on the Internet for public scrutiny and requiring a 30-day public comment period prior to approval. “I think it’s only right that when state funds are being used, taxpayers of Pennsylvania have the ability to review and weigh in on the merits of a project,” said Major. “This is a valuable program that is of great benefit to our local communities, but we need to make sure the projects being selected and the amount of funds being provided are warranted. With these new processes in place, we will be able to
more responsibly manage funds dedicated to RACP.” Major said the new process will be objective and ensure projects are chosen based upon merit, impact on economic development and level of public-private partnership, geographic disbursement and shovel readiness. She also noted that the legislation would create a new stringent review and approval process within the Office of the Budget, which would develop eligibility criteria and establish guidelines for the process. House Bill 493 is expected to be signed into law by the governor in the coming days. CW
House addresses prescription drug problem Prescription drug abuse has skyrocketed, and local state House representatives have passed a bill to address aspects of the problem. It awaits a state Senate vote. As a nation, “We have, unfortunately, an insatiable appetite for drugs,” said state Rep. Matthew E. Baker, R-Bradford, who sponsored a bill that creates a confidential prescription drug monitoring database for professionals who prescribe or dispense prescription medication. It would replace the attorney general’s existing Schedule II database, which tracks a narrow category of prescription drugs and does not make any information collected accessible to doctors and pharmacists. This new database would track Schedule II to V drugs. The goal of the bill is to help doctors know who is in real need of prescriptions and who is simply “doctor shopping,” especially the drug dealers, said state Rep. Garth Everett, R-Lycoming.
“The real concern are people who are doctor shopping at a high level and selling (those drugs),” Everett said. “We do want to stop the individual also, but we’re trying to clip the dealers out there, who are turning around and selling it to kids.” Even as Pennsylvania is ranked the ninth highest in the nation in the rate of drug overdose deaths, according to the federal Center for Disease Control, it is one of the last states to have such a comprehensive tracking system, Baker said. The cost is high. Not only has $53 billion been expended on treatment and “funneling” offenders through the criminal justice system in the state, the number of deaths from prescription opiates was greater than deaths from heroin and cocaine combined in 2010, Baker said, citing the federal Drug Enforcement Administration’s August report. Baker attributed this epidemic to the “pain management revolution of the late
1990s,” when patients’ demands pushed production of these drugs, according to a pharmaceutical threat assessment. In 1991, doctors issued 76 million opiate prescriptions; by 2001, that doubled to 139 million. By 2010, it tripled, Baker said. The bill addresses law enforcement, prevention and intervention. “What we’re trying to do is improve patient care and prescription practices as well as uncover drug diversion and identify doctor shopping, and provide training of health-care professionals in the identification and prevention of drug problems, and referrals where appropriate,” Baker said. As some patients “doctor shop,” they go doctor to doctor for prescription medications, and some re-sell the drugs. A very small percentage of doctors illegally overprescribe these drugs, as well, Baker said, and this database would raise a flag to all of those activities.
The issue is privacy. An amendment was passed that would require any doctor, pharmacist or law enforcement officer to file for a search warrant to access any information. While Baker opposes that amendment, saying the current Schedule II database has no restrictions and this amendment would be a “step backward on the war on drugs,” Everett compared the database to an officer rifling through his medicine cabinet at home - a search warrant should be required for either case, he said. Even without the amendment, doctors, etc., would only check the database upon suspicion, not automatically, Baker said. But is the database an overreach into patient privacy? “Just because you use (prescription drugs), doesn’t mean you’re a (drug) abuser, and it’s on those records forever,” Everett said. The privacy amendment passed 119-75. CW
Landowners now protected from hunting violations committed by others on their land Legislation introduced by state Reps. Neal P. Goodman and Doyle Heffley to ensure property owners are not held responsible for hunting violations committed by those granted permission to hunt on their land was included in a bill signed into law Nov. 1 by Gov. Tom Corbett. “Most hunting in Pennsylvania is done on private property, and this law will encourage farmers and landowners to keep their property open to hunters,”said Goodman, D-Schuylkill.
“That’s important because more than 1 million Pennsylvanians hunt, and they spend more than $1 billion every year on the sport. Hunting is an important part of the economy, as well as an important part of our heritage.” Goodman and Heffley, R-Carbon, worked together on the legislation (H.B. 1125) after meeting with farmers from their legislative districts. The legislation has long been a top priority of the Pennsylvania Farm Bureau.
The bill signed into law, S.B. 648 introduced by Sen. Richard Alloway, was successfully amended in the House by Goodman with language similar to his and Heffley’s H.B. 1125, which further limits liability for landowners in cases of violations by those granted permission to hunt on their land. Goodman said farmers and landowners could have been penalized for violations of the Game and Wildlife Code committed by someone they permitted to hunt on their
property under former state law. “My legislation is a common-sense change to the Game and Wildlife Code that I hope will lead to more hunting opportunities in the commonwealth,” Goodman said. Both Goodman and Heffley are avid hunters. Heffley is a member of the House Game and Fisheries Committee. Goodman served on that committee before he was elected to House Democratic leadership. CW
NOVEMBER 2013 CAPITAL WATCH
Save over $800 million by merging school employees health care plans BY SEN. DAVID G. ARGALL
In recent weeks, lawmakers in Harrisburg have debated several competing attempts to reform the archaic and unfair school property tax system that has existed in Pennsylvania since the 1830s. This critical issue deserves our undivided attention since it is the only tax that has the power to leave a person homeless. One major concern raised by both the supporters and the opponents of property tax elimination is the issue of rapidly rising school district costs, especially health care costs. A recent report by the state’s Independent Fiscal Office highlighted the fact that property taxes have grown far faster than the rate of inflation. Rising health insurance costs for school districts pose a major threat to both the education of Pennsylvania students and the wallets of taxpayers. To address this growing problem, I am introducing a resolution to require the Legislative Budget and Finance Committee to study the practicality and potential cost savings of merging all pub-
lic school employees into the same group health benefits package. The study will examine the benefits currently provided to school employees, the cost of current and future benefits, employee contributions, and other factors that could result from merging school employees’ health care insurance plans. In current practice, each of the state’s 500 school districts negotiates and purchases their own health insurance package. Some of those districts cooperate with other districts, while others do not. Since larger groups are afforded better health insurance rates, covering all school employees under a single statewide plan or several large regional plans would allow every school district to leverage the considerable negotiating power of an exponentially larger group of employees. A study compiled by the Hay Group in 2004 found that annual savings would be over $800 million. These efforts were supported by both conservatives and liber-
Not above the law Rep. Daryl Metcalfe is circulating a memo calling for the impeachment of the state’s attorney general, Kathleen Kane, for her “misbehavior in office” and “violation of her constitutional, statutory, and ethical duties.” Metcalfe’s allegations stems from Kane’s progay legal decision. Specifically, Kane recently said that she “cannot ethically defend the constitutionality of Pennsylvania’s version of DOMA” because “it is wholly unconstitutional.” Metcalfe’s memo follows: In the U.S.A, no one is above the law. We do not have a king or queen, but a Constitution and the rule of law. If an elected official has a responsibility under the law, but refuses to comply with the law, then that individual should no longer be allowed to remain in office.
Sen. David Argall
als, Republicans and Democrats, school employees and taxpayers. Ultimately, the issue did not move ahead due to opposition from special interest groups. Because the issue is both timely and incredibly
BY REP. DARYL METCALFE
of our law known as the Commonwealth Attorneys Act requires that the Attorney General defend the constitutionality of all lawfully enacted statutes. There is an exception when, “it is more efficient or otherwise is in the best interest of the Commonwealth,” but there is no exception for the Attorney General’s personal opinion of the law. On July 11, 2013, Attorney General Kane announced at a press conference that she would not defend the constitutionality of our state’s Defense of Marriage Act against a federal lawsuit. Her reason was that she believes the law is “wholly unconstitutional.” No court has ruled that Pennsylvania’s legal definition of marriage between one man and one woman is unconstitutional.
This type of misbehavior in office cannot be allowed. If an Attorney General can pick and choose which laws are constitutional and which laws she will defend or enforce, then the will of “We the People” through our elected lawmakers will be thwarted. In the Federalist Papers, James Madison wrote, “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.” Immediately following her public announcement, I joined colleagues in sending a letter to the Attorney General urging her to reconsider her decision to refuse to fulfill the duties of the office to
“I believe that all members of the legislature should join me in telling Kathleen Kane, “You’re fired!’” It was reported that as a candidate for Attorney General, Kathleen Kane said, “The Attorney General does not have the right to pick and choose which laws he or she enforces.” I agree! According to our Pennsylvania Constitution, the Attorney General “shall exercise such powers and perform such duties as may be imposed by law.” A section
important and the possibility for savings is so great, we have to try again. As I worked to draft this resolution over the past several months, I sought input from taxpayers, school directors, health care experts and insurance industry professionals not only locally, but throughout the state. Their input was extremely helpful. Every dollar committed to health care costs is another dollar we cannot invest in our children’s education and school property tax elimination. In speaking with teachers, taxpayers, and school board members, the prospect of skyrocketing health care costs taking money away from the classroom is among their most serious concerns. If the legislature wants to get serious about meaningful school property tax reform, we need to get serious about the spending. I am hopeful this resolution will be an important step in that process. CW Sen. David G. Argall (R-29 )represents parts of Berks, Carbon, Lehigh, Monroe, Northampton, and Schuylkill Counties.
The most recent U.S. Supreme Court case, United States v. Windsor, declared the federal law to be unconstitutional because it intruded upon the states’ “historic and essential authority to define the marital relation.” Her decision and declaration was based solely on her own opinion. Of course as a member of the executive branch of our government, she does not have the right to act as a member of the judicial branch.
which she was elected. Last week, having allowed her ample time to reconsider her decision, I sent a cosponsor memo to members of the Pennsylvania House of Representatives to request their support of an impeachment resolution. Impeachment is a legislative tool designed to create accountability between the three branches of our government. Legislatures at the state and federal
Rep. Daryl Metcalfe
level have been derelict in their duty for not using it to reign in executive and judicial branch violations of our constitution and our law. Impeachment is a process to remove someone from office or in other words to say “You’re Fired!” An excerpt from the impeachment resolution reads, “Wherefore, Attorney General Kathleen G. Kane is guilty of an impeachable offense warranting removal from office and disqualification to hold any office of trust or profit under this Commonwealth.” Is anyone above the law? The introduction of this impeachment resolution has nothing to do with politics, personalities, or political parties but has everything to do with the rule of law. I believe that all members of the legislature should join me in telling Kathleen Kane, “You’re Fired!” CW Rep. Daryl Metcalfe represents part of Butler County.
NOVEMBER 2013 CAPITAL WATCH
Time’s a ticking for transportation For the last half-dozen years or longer, transportation advocates have seen a significant increase in the public’s awareness of and support for a comprehensive, multimodal solution to the transportation funding issue. It’s more than a little ironic that, thus far, efforts to address Pennsylvania’s transportation needs have themselves been snarled in the congestion of ideas and interests, starting, stopping and inching along ever so slowly. So it might have been disappointing to some when the General Assembly broke for a two-week recess last month without taking action on a funding bill, even as legislators and administration officials reported that there has been progress in discussions of the issue. But by calling a “time out” and pledging to tackle the issue upon returning from the General Election break, we believe legislative leaders have set the stage, once and for
all, for a constructive and thoughtful effort to resolve this exceptionally important public policy matter. To be sure, there are several issues that remain to be sorted out and agreed to, and it will not be easy. Several tough questions remain: • Will prevailing wage reform attract enough Republican support to carry the issue through the House, and then in a concurrence vote in the Senate, or would such a condition lose most or all Democratic support? • Also unresolved is how to phase out Act 44, the funding mechanism under which the Turnpike Commission contributes revenue annually for PennDot and public transportation purposes. Having failed to secure approval to toll Interstate 80, the Turnpike is increasing its debt in order to make the payments, and the arrangement is not sustainable.
BY GEORGE WOLFF
• Another is the level at which license and registration fees should be increased, and among which groups of drivers. And while one might conclude that the issue is destined for impasse, we are encouraged by the recent meeting among the leaders of the four legislative caucuses, in which each reaffirmed a desire to work through that and several other issues of concern and pass a transportation funding measure Under the “conventional wisdom,” it is unlikely that legislators will pass a tough measure such as transportation funding in an election year, and time is running out to move the bill by the end of this year. Time also is running out on the last, best chance there is to begin fixing this problem before it gets much, much worse. Most of us who follow this issue closely believe that if the window of opportunity closes without action this fall, it will stay
closed until the fall of 2015 or longer, and by then our transportation system will be crippled beyond imagination. On the bright side, though, the four caucuses have taken an affirmative step and have accepted the responsibility for framing a constructive end-game to this issue. We are optimistic that this step will lead to a conclusion that nearly 60 percent of Pennsylvania voters say they support – safer roads, with less congestion, and the creation of tens of thousands of good jobs, mostly in industries other than highway construction. CW George Wolff is founder of the Keystone Transportation Funding Coalition, whose members include the highway construction industry, public transit agencies, labor unions, business associations, farm organizations, AARP, bicycle and pedestrian advocates, air and seaport organizations, local governments, the trucking industry and freight and passenger rail organizations.
President’s Gettysburg snub could haunt him
BY JACQUELINE G. GOODWIN, Ed.D.
From the start of his political career, President Obama seems to have modeled himself on Abraham Lincoln. Both were born in other states before settling in Illinois. Each became a lawyer then served in the state legislature before serving a single term in Congress. Each rocketed onto the national political stage with powerful speeches and became commander-in-chief without any military experience. The parallels range from the superficial--their tapered physiques, their young children living in the White House--to the serious: Abraham Lincoln freed the slaves, and Barack Obama is the first African-American president. On the campaign trail, Obama often said Lincoln was his favorite president, telling reporters once that during Senate “squabbling” he’d venture down to the Lincoln Memorial for a respite and to be reminded “of all the hard times that this country has gone through.” He even took his family there to reflect. Obama also traced Lincoln’s 1861 train route in coming to Washington, taking the oath of office on Lincoln’s Bible. So when Park Service officials announced that President Obama would be a “no show” on the 150th anniversary of President Abraham Lincoln’s Gettysburg Address, it came as quite a surprise that the president would not follow in his favorite predecessor’s footsteps. Park Service officials did not give a reason, referring all inquiries to the White House. The White House press office, in turn, was also mum, which just adds to the mystery. Now the keynote speaker role will be shared by Secretary of the Interior Sally Jewell and James McPherson, a Civil War historian who won the Pulitzer for “Battle Cry of Freedom.” Reaction to the news was pretty routine. Some folks chalked it up to “stuff like this happens with elected officials,” while others said it was probably best that the president didn’t attend since the controversy surrounding Obamacare would only take away from the ceremonies. However, local newspapers excoriated the president. The Patriot News said Mr. Obama doesn’t have “the stones” to attend; York’s Daily Record called the decision “unacceptable” and said “Mr. Obama’s retreat from Gettysburg will linger long and bitter.” Whatever the reason, it does make one wonder what was President Obama and his advisors thinking when
turning down the invitation. The Battle of Gettysburg was the worst man-made disaster in the history of the Americas. The armies moved out quickly leaving a small community to deal with thousands and thousands of dead bodies and wounded soldiers. It was up to the President Lincoln to wring some meaning out of the tragedy. And that he did. His interpretation that “we are dedicated to the proposition that all men are created equal” has stood the test of time. Like Lincoln, President Obama shares a love of words, a belief that rhetoric and oratory can change people’s minds. By not attending, President Obama has given up his chance to use his calming presence to deliver a reasoned argument on the topic of his choice, something which, like
Lincoln, he is very good at. It’s too bad that President Obama cannot make the ceremony. There would be no better way of honoring Lincoln’s legacy, and paying respect to the thousands that gave that “last full measure of devotion” here, than having the President of the United States and our Commander in Chief participate in Dedication Day ceremonies at Soldiers’ National Cemetery. The words of President Lincoln are as true today as they were 150 years ago – “the world will little note, nor long remember what we say here, but it can never forget what they did here.” Unfortunately, one person is forgetting how important this day is to America’s history. And that’s a darn shame. CW
NOVEMBER 2013 CAPITAL WATCH
SHOULD THE STATE LEGALIZE MEDICAL MARIJUANA? Time has come to legalize marijuana for medical purposes. . .heck, for all purposes
BY TONY MAY
BY CHARLIE GEROW
If you live in Pennsylvania It’s hard to imagine agreeing don’t ask your doctor to prewith Sen. Daylin Leach. So, scribe marijuana for any mediI’ll have to re-think my posical purposes even though there tion. But in the meantime I is a growing body of research will stick with my instinct and showing its usefulness as a Longtime TV partners, Tony May and Charlie Gerow provide commentary and analysis on political ask: why not legalize medical matters every Sunday on WHPTV-CBS 21’s program, “Face the State,” in addition to being regularly pain reliever and even a tumormarijuana? In the absence of featured on the Pennsylvania Cable Network (PCN). In their other lives, May is a partner at Triad inhibiting substance. In fact, compelling reasons not to, I Strategies, and Gerow is CEO of Quantum Communications. research published in Lancet, will part with some of my conthe journal of the British servative brethren. Medical Society, in 2006 premised that use of cannabis is less dangerous than tobacco, I suffer with glaucoma. I’ve already lost a frightening percentage of my eyesight. prescription drugs, and alcohol in terms of social harms, physical harm, and addiction. My condition is currently controlled with daily dosages of eye drops. If that should The Pennsylvania General Assembly should follow the lead of 21 other states and fail, I sure as heck would want every known therapy available to me, including approve the prescribing of marijuana for medical purposes. While they are at it, they marijuana. should give serious consideration to legalizing marijuana possession in small quantities of Of course there are many illnesses much more debilitating than glaucoma that can recreational use. Pennsylvania needs to join other states in putting pressure on the federal be treated with marijuana, from Alzheimer’s to fibromyalgia to HIV/AIDS to cancer. government to rationalize its approach to marijuana – pretty much in the same way the Many people with conditions far worse than mine are asking for the right to use federal government was persuaded that its 14-year experiment in attempting to ban the marijuana legally. manufacture and consumption of beer, wine and whiskey was counter-productive. So are many in the medical community. Years ago, a National Institutes of Health panel The United States ended up repealing the 18th Amendment (Prohibition) in 1933 pretty concluded that smoking marijuana could help treat a number of chronic conditions includmuch because it was an abject failure. Rather than leading to a decline in crime and ing pain and nausea. It could also help people who failed to respond to other remedies alcohol abuse, it made lawbreakers out of millions of ordinary Americans and increased the study said. drunkenness. It made organized crime a major growth industry. Now, almost 80 years In one survey more than 70 percent of U.S. cancer specialists said they would prescribe later, history has repeated. Our jails are overcrowded, in no small part because of the marijuana if it were legal. Nearly half of those interviewed said they had already recomtrillion-dollar War on Drugs launched in the 1970s by Richard Nixon and carried on mended that their patients break the law to use marijuana. enthusiastically ever since by his successors in the oval office. Sanjay Gupta, CNN’s medical guru and a well-renowned neurosurgeon, once spoke We’ve even been forced to ban the planting and harvesting of marijuana-related hemp out against legalization of marijuana for medical purposes. But this summer he wrote a plants for agricultural and industrial purposes, even though modern agri-science has cre- piece entitled “Why I changed my mind on weed,” in which he apologized for his earlier ated strains of hemp plants that are extremely low in cannabinoids. This in an era in which stand. His further research, he said, had convinced him that he was simply wrong. He “natural fiber” is a major selling point for a host of consumer products. Because we have discussed the anti-cancer effects of marijuana and cited another study in which 76 percent been so afraid of marijuana in the U.S., we’ve blacklisted a plant which can produce a of the physicians surveyed said they would approve the use of marijuana to help ease the host of materials ranging from paper, textiles, clothing and biodegradable plastics to con- pain of a woman suffering from breast cancer. struction materials, body and cosmetic oils, health food and bio-fuels. Hemp was once Medical marijuana is legal in nearly half the states. The largest state in the Union, such a common agricultural product – used mainly for making rope and paper – that four California, made it legal by popular vote nearly two decades ago. In the intervening Pennsylvania townships have Hempfield in their name. years none of the “scare” issues raised during the referendum has manifest themselves. Declaring a truce in the long war against marijuana will save taxpayer dollars at the fed- As the New York Times reported last week, “Warnings against partial legalizationeral, state and local levels – something that should please taxpayers of every political incli- -of civil disorder, increased lawlessness and a drastic rise in other use--have proved nation. It should lead to a clearing of our jails and prisons of hundreds of not thousands unfounded.” of Pennsylvanians jailed for marijuana-related prosecutions. Legalizing medical marijuana William F. Buckley, the godfather of modern conservatism and the founder of the and decriminalizing the possession and use of marijuana for recreational purposes would National Review argued for the legalization of medical marijuana (and marijuana in genlead to the structuring of a scheme of regulation and taxation, not unlike that used for eral for that matter). Another National Review icon, Richard Brookhiser, used marijuana alcoholic beverages. In other words, it would create a new revenue source for the state. (not legally at the time) when he battled cancer. Would there be or could there be a downside? Certainly there is risk involved in the His testimony in favor of medical usage of marijuana before the House Judiciary use of any product – but there is no indication that use of a regulated marijuana product Committee sums up my own thoughts: “My support for medical marijuana is not a conwould be less safe that use of illegal pot. In fact, it should be safer, just like licensed alco- tradiction of my principles, but an extension of them. I am for law and order. But crime hol slowly drove out the problems created by the consumption of bathtub gin and rotgut has to be fought intelligently and the law disgraces itself when it harasses the sick. I am whiskeys produced in stills constructed of hazardous metals. for traditional virtues, but carrying your beliefs to unjust ends is not moral, it is philistine. But, if you can accept the premise of British doctors that marijuana is less dangerous Most importantly, I believe in getting government off people’s backs. We should include than alcohol, tobacco and prescription drug abuse – or, perhaps, no more dangerous – the backs of sick people trying to help themselves.” then the downside risk is minimal if non-existent. CW Guess we are both stuck agreeing with Sen. Leach on this one. CW
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NOVEMBER 2013 CAPITAL WATCH
THE STOCK MARKET’S NOVEMBER EFFECT BY SCOTT C. WEAVER, CFP, CFS, CAS
Trends in the stock market “work until they don’t”. It really is that simple. Seasonal trends are no different. There is no crystal ball or magic formula that works every time. There are probabilities and bell curves that work most of the time. If you visit your doctor for an infection that won’t go away, he or she may give you an antibiotic that works maybe 80% to 90%, well within the bell curve of probability. However, there is still that unknown or small percentage that will defy the odds. Sometimes the antibiotics just don’t work the way they were supposed to. Seasonal investing also has a high probability but has never been a guaranteed success story. However, looking back, the percentage of gains during the “November Effect” does warrant a closer look. The “November Effect” represents the months between November and April. Looking at the chart below, you can see since 1950 these months have, for the most part (excluding February), out-performed the months between May and October. Sayings like “go away in May” and “buy when the snow falls and sell when the snow melts” also reference this seasonal market effect.
Scott C. Weaver, CFP, CFS, CAS
*Source: Ben Jacobsen and Cherry Zhang study titled The Halloween Indicator: Everywhere and All the Time Also, research done by Ben Jacobsen and Cherry Zhang examined more than 300 years of market performance. In a study, titled “The Halloween Indicator: Everywhere and All the Time”, the research concluded that the months from November to April outperformed the months from May to October by 4.52% over the 300 year period and 6.25% during the last 50 years. Another study* suggests that 92% of stock market performance can be attributed to the November Effect. The “November Theory” outperformed the general market 80% of the time over a five year period and 90% over a ten year period. Once again, like the antibiotics, highly probable, but not 100% guaranteed. So why the big difference? Window dressing by Fund Managers, tax-loss selling, holiday retail seasons, inventory lows, weather and corporate earnings have all contributed to performance disparity. The underperformance during the summer months have been linked to higher energy prices, lack of volume and fewer earning releases by corporations. Historically, the November Effect has been generous for stocks. But remember, what goes up must come down. Eventually, bull markets have always given way to bear markets. Currently, the fundamentals that drive the key stock indices are simply not there. One example is copper and its relationship to the stock market. The relationship is simple: copper is an industrial metal, and when demand for it is increasing, it means companies in the economy are producing and selling more. Today however, we see copper prices and major stock indicators moving in opposite directions. Not a very bullish signal. But for the meantime, the Federal government is printing trillions of dollars and artificially driving interest rates to historical lows. This may keep the market propped up for the time being. How long and when they stop printing money is anyone’s guess. Do your home work! Weigh your options and invest accordingly. Happy investing! Scott C. Weaver *study performed by Ben Jacobsen and Cheery Zhang. Article referencing study can be found at http://m.kiplinger.com/article/investing and titled The Halloween Effect Could Give Stock Investors a Treat written by Steven Goldberg
The information contained herein is obtained from sources believed to be reliable but its accuracy and completeness is not guaranteed. Any tax or legal information in this piece is merely a summary of our understanding and interpretation of current laws and regulations and is not exhaustive. Neither NEXT Financial Group, Inc., nor its representatives are qualified to give tax or legal advice. Securities and investment advisory services offered through NEXT Financial Group, Inc. Member FINRA/SIPC. None of the entities named herein are affiliated with NEXT Financial Group, Inc. 1250 N MOUNTAIN RD STE 4 HARRISBURG, PA 17112 • (717) 652-4965. • Toll free (877) 837-3024.
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