Knowles: Transportation is Smartest Place to Invest Liquor Privatization Dollars

With a public hearing on liquor privatization now scheduled in the state Senate, a group of state House members is calling for the upfront windfall from the sale of private wine and liquor licenses to be invested in transportation infrastructure. 

State Rep. Jerry Knowles (R-Berks/Schuylkill)

State Rep. Jerry Knowles (R-Berks/Schuylkill)

“It takes each and every dollar from privatization of the wine & spirits shops, and those dollars would be spent on roads and bridges,” state Rep. Jerry Knowles (R-Berks/Schuylkill) said of the legislation he sponsored

The governor wants to see liquor privatization revenue used for education block grants, but the bill that passed the House never designated a specific use for the revenue; it simply created a restricted account to hold the money. 

“I would like to see it be a billion, but it doesn’t matter if it’s $750-million, it doesn’t matter if it’s half a billion,” Knowles said at a capitol news conference.  “That’s still big money where I come from.” 

Knowles and his supporters are wary of being blamed for school funding cuts when the four-year block grant program, envisioned by the governor, expires.  “I want to make it perfectly clear,” Knowles said, “the governor has a good idea, it’s just that I have a better idea.”

Rep. Knowles recognizes that his plan would not raise enough revenue to solve PA’s near $3-billion dollar annual transportation funding shortfall, but he suggests that any legislative solution should start with HB 220. 

Meanwhile Senate Transportation Chair John Rafferty is scheduled to unveil a new funding plan on Tuesday, and the as-of-yet unrelated liquor privatization bill faces an uncertain fate in the chamber.

State House, Senate Seats up for Grabs Too

The big races, like President and US Senate, may be getting most of the attention today, but state lawmakers are also jockeying for position all across the state.  All 203 state House seats are on the ballot, as well as half of the 50 seats in the state Senate. 

Terry Madonna

Terry Madonna

Franklin & Marshall College political science professor Terry Madonna doesn’t expect any sweeping changes in the makeup of the Republican-controlled legislature tonight.  “There won’t be the huge coattails that would help Democrats win back control of the legislature,” Madonna says.  “It looks like in the House they may pick up a couple of seats, but I think it’s largely going to be the same composition in the House.” 

Ditto for the Senate, where Madonna could see the Democrats pick up a few seats, but not enough to win back control.  The GOP held a 30 – 20 edge in the Senate for most of the legislative session, but a retirement in western Pennsylvania makes the current tally 29 – 20, with one vacancy.    

Another factor to consider is that of the 203 state House seats, nearly 100 incumbents are unopposed on today’s ballot.  Nine incumbent state Senators are unopposed as well.

Lawmaker Calls on Turnpike Officials to Resign

The Pennsylvania Turnpike Commission is sitting on $7.3-billion dollars in long-term debt, according to Auditor General Jack Wagner, and state Rep. Peter Daley (D-Washington/Fayette) is calling on two top Turnpike officials to resign.

In a letter sent to the Turnpike Commission, governor’s office and every member of the state House, Daley said it’s time for Turnpike CEO Roger Nutt and COO Craig Shuey to go.  “They have been trying to play this shell game long enough,” Daley said in an interview with WJPA-FM.

The rise in Turnpike debt can be attributed to a 2007 transportation funding plan known as Act 44.  The law, which Daley voted for, called for the tolling of Interstate 80.  While Pennsylvania never received approval for I-80 tolls, Act 44 still calls on the Turnpike Commission to make annual payments of $450-million dollars a year to PennDOT.

Daley’s letter acknowledges that Act 44 has added to the Turnpike’s woes, but he still believes that a lack of leadership is to blame, saying the Turnpike needs to put expensive new capital projects on hold.

While a Turnpike Commission spokesman declined to comment on Daley’s letter, he did provide us with a statement from Roger Nutt regarding their debt obligations.  It reads:  “I reassure you, there is no looming financial crisis at the Turnpike Commission; we continue to receive favorable bond ratings, and we fully intend to meet all funding obligations to PennDOT – as we’ve done for the past five years.” 

Daley says a House committee is expected to take a closer look at the Turnpike debt situation in the weeks ahead.  “We’re going to be asking that a special committee be set up to oversee what’s going on in the Turnpike Commission and to render a report back to the legislature”

Houses, Housing, Property Taxes, Street

Select Committee on Property Taxes to Meet on Monday

State House leaders have tapped a select committee to study property taxes, under a resolution that passed with broad bipartisan support before lawmakers’ summer break.  Monday marks the group’s inaugural meeting, but its final report and recommendations won’t be due until the end of November.

“We really look at that report as a way to set the table for the 2013-14 legislative session, as a way to move forward to try to address this issue,” says Rep. John Quigley (R-Montgomery), who sponsored the legislation and sits on the new select committee.

Quigley introduced the resolution in early June, after the Property Tax Elimination Act was tabled in the House Finance Committee. His district office was soon swamped with calls.  “It certainly has been quite a buzz in the Berks, northern Montgomery, northern Chester County area,” Quigley says.

The 13-member panel is comprised of seven Republicans and six Democrats.  It will be investigating local and county property taxes in addition to the school district property taxes, which make up the bulk of the burden.

Details won’t be hammered out until Monday, but Quigley estimates that the select committee may call three to five public hearings.

Revamped Teacher Evaluations Bill is on the Move

Lawmakers may soon finalize a new system for teacher evaluations in Pennsylvania.  The amended bill has already garnered unanimous support in the state House, and the issue has long been one of Governor Tom Corbett’s top education reform priorities.

The current system, which is almost entirely based on classroom observations, allows for teachers to receive a rating of either ‘satisfactory’ or ‘unsatisfactory.’  “That system does not provide for useful or meaningful feedback,” state Rep. Ryan Aument (R-Lancaster) tells Radio PA.  99.4% of teachers are rated as satisfactory.

Aument has been leading the legislative push for a fairer system of educator evaluations; one that takes student performance into account.  His latest amendment, which specifically outlines the multiple measures of student performance to be considered, is building consensus around the issue.

“From day one we’ve made it clear that good evaluations are based on multiple measures,” says Pennsylvania State Education Association spokesman David Broderic.  While the bill is not perfect, according to Broderic, he says the PSEA is glad to be a part of the process.

Up to 50% of teacher evaluation ratings would be based on student performance under HB 1980.  Possible ratings would include ‘distinguished,’ ‘proficient,’ ‘needs improvement’ or ‘failing.’  Aument says teachers who fall into the bottom two categories would participate in a performance improvement plan. “Our goal was to put in place a tool that’s pro teacher, and pro student,” he says.

Pennsylvania Partnerships for Children President & CEO Joan Benso sees a disconnect in a system where 99.4% of teachers are rated as satisfactory, yet nearly 30% of children can’t read at grade level.  “Being sure that we have an evaluation system that not only rewards teachers that are performing well, but ID’s teachers that are struggling, so we can develop improvement plans for them to do better, will ultimately drive student achievement.”

Benso hopes lawmakers will adopt Aument’s bill before the summer break.  After passing the House with unanimous support, HB 1980 awaits Senate action.  If enacted, the new evaluation system is expected to be in place for the 2013/2014 school year.

Under the Capitol Dome

State Budget Votes Near

The state’s current budget was enacted with zero Democratic support last year.  This year may not be much different if Wednesday’s House Appropriations Committee meeting is any indication.  After two hours of debate, the committee advanced the $27.7-billion dollar spending plan along party lines.

The spend number may be almost 2% above this current budget, but most of the increases are due to mandatory costs like pension obligations and medical assistance.  “This budget contains no tax increases,” Appropriations Chairman Bill Adolph (R-Del.) repeated twice for emphasis.

While better-than-expected revenues in the spring allowed Republican budget negotiators to spend a half-billion more than what was first proposed in February, Adolph told the committee the state is still on pace to end the fiscal year nearly $200-million dollars in the red.

“This is a sustainable budget that meets the needs of Pennsylvania residents,” Adolph concluded.

The recently released spreadsheets show $100-million dollars restored to the Accountability Block Grants that fund full-day kindergarten programs across the state.  Add that to $50-million being set aside for distressed school districts and budget supporters say all school districts will receive at least the same amount of state funding they got this year.

State Rep. Joe Markosek

State Rep. Joe Markosek

That doesn’t satisfy House Democrats though.  “I would challenge anybody in this room to go to any school director in the Commonwealth, in the public school system, and ask them if they think they are getting more money for educational purposes,” says Democratic House Appropriations Chair Joe Markosek (D-Allegheny/Westmoreland).

Markosek also lamented a planned tax credit for “big business” at a time when county human services are facing 10% cuts.  That 10% cut, however, is half of what was proposed back in February.

Final House votes could come as early as Thursday, with Senate votes to follow.  The state’s new fiscal year starts on Sunday.  Details of other budget season priorities – like education reforms and the ethane tax credit – are still being finalized.

State Capitol

Lawmakers Mull Expanded Education Tax Credit

Potential education reforms are being debated under the capitol dome ahead of Saturday’s state budget deadline.  One of them would expand the state’s Educational Improvement Tax Credit (EITC) program with a sub-program that targets low-income families in the state’s worst performing schools.  It was characterized at Monday’s House Education Committee hearing as “EITC 2.0.”

While the existing EITC program has long enjoyed bipartisan support, critics are characterizing the proposed expansion as a school vouchers program.  “85% – 90% of the kids who would get those vouchers are already in private schools,” says minority education chairman James Roebuck (D-Philadelphia).  “It’s not a means to get kids out of so-called failing public schools… it’s a subsidy to private education.” 

But the bill’s prime sponsor says it’s irresponsible to characterize his effort as school vouchers.  “Despite the fact that the student leaves to go to another school, their state, local and federal dollars remain in that classroom – thus elevating significantly the per-pupil spend of those classrooms they are leaving,” explains state Rep. Jim Christiana (R-Beaver).  He tells the House Education Committee the scholarships would be funded by businesses that choose to participate in the tax credit program.

The Pennsylvania School Boards Association (PSBA) opposes the bill, because they say it would siphon valuable dollars from the General Fund at a time when school districts are struggling.

While it appears the push is on to pass an expanded EITC along with the state budget, Republican chairman Paul Clymer (R-Bucks) characterized the bill as a work-in-progress.

Pennsylvania Liquor Store

House Won’t Revisit Liquor Store Debate until the Fall

With the June 30th budget deadline fast approaching, House Majority Leader Mike Turzai (R-Allegheny) has decided to hold off on further liquor store privatization debate until the fall.  That gives Turzai the summer to build consensus around a privatization plan with the help of Governor Tom Corbett.

“Nobody in Pennsylvania has a better bully pulpit than the governor,” says Turzai spokesman Steve Miskin.  “We expect he’s going to use that and we’re going to get people to the table and get this thing done.  We’re closer now than we ever have been.”

House Democrats have been critical of Turzai’s privatization plans, and Rep. Dante Santoni (D-Berks) is pleased with today’s developments.  “It just didn’t make sense… I think the Majority Leader saw the error of his ways and pulled the bill,” says Santoni, the ranking Democrat on the House Liquor Control Committee.

Santoni supports modernization of the Pennsylvania Liquor Control Board (PLCB) over privatization.  That could include everything from expanded Sunday hours, to flexible pricing and the use of coupons & rewards programs.

But Miskin stresses that the privatization plan is still very much alive.  “We’re going to work on it and we’re going to continue working on it until it’s done; until the liquor stores are in private hands.”

State Capitol Facing North Office Building

PA’s Pension Woes Not Unique

Wisconsin is the only state with a fully-funded public pension system, according to a new report from the Pew Center on the States.  “Overall the 50-states have a $1.38-trillion dollar funding gap between what they should have set aside to pay for their retirement promises – both pensions and retiree health care – and what they actually have on hand,” explains Pew Center senior researcher David Draine.

Draine tells Radio PA the economic downturn has definitely hurt state pension plans, but the problem has also been decades in the making.  “Lawmakers in states like Pennsylvania and others failed to make the recommended contributions both in good times and bad.”

The current state budget includes $1.1-billion dollars in pension obligations.  That number is expected to nearly quadruple to $4-billion dollars by 2016, and Governor Tom Corbett is making pension reform a top post-budget priority.

“We’ve got to get pension reform done… the vast majority of the money that the school districts say they need is to go to the teachers’ pensions.  That’s where it’s going,” Corbett said at an unrelated news conference last week.

Republican leaders in the Senate appear ready to move on legislation that would move all new hires to a 401K-style defined contribution pension plan.  “It is overdue for Pennsylvania state government to move in that direction,” says spokesman Erik Arneson.  Numerous pension-related bills have been introduced in the state House as well.

A 2010 law increased employee contributions, raised the retirement age to 65 and extended the vesting requirement to ten years for all new hires.  Draine says that will slow the growth of Pennsylvania’s unfunded pension liability, but will not solve the problem.


House Mulls Payday Loan Bill

Pennsylvania’s consumer protection laws effectively bar payday lenders from operating in the state, but they can’t stop unlicensed companies from targeting Pennsylvania consumers with their ads.  By locating out-of-state and doing business online, State Rep. Chris Ross (R-Chester) says these unregulated businesses can trap Pennsylvanians in a cycle of debt with their high charges.

Ross has introduced a bill that would create new short-term lending regulations in hopes of providing Pennsylvanians with a safer, less costly option.  “These are things that we’ve worked at with the Department of Banking and my colleagues in the Senate to try and provide as much protection as possible,” Ross explained to Radio PA.

HB 2191 would cap these short-term loans at 25% of a borrower’s paycheck, and require that an existing loan be paid off before a new one is obtained.  Another provision would enable eligible borrowers to obtain free credit counseling.

But critics believe the proposed cure is actually worse than the problem.  “It bumps the interest rate that you can charge on a small loan from where it is currently, which is around 24%, to 369%,” says Keystone Research Center labor economist Mark Price.  “That is a remarkable increase that will lead to the dramatic expansion of payday lending.”

Price is referring to the loan’s annual percentage rate (APR).  He uses the example of a $300 dollar, two-week loan.  Under the Ross bill, the borrower would be charged roughly $43-dollars.  Crunch the numbers for the course of a year and it brings you to the previously cited APR.

“We have the prospect now of hundreds of these payday lending storefronts opening up all across the commonwealth,” says Price.

Ross says unlicensed payday lenders are currently charging twice the maximum his bill would allow.  HB 2191 has already cleared the House Consumer Affairs Committee with a bipartisan vote of 20 – 4.  It now awaits further action on the House floor.