New PA Lobbying Penalties Bill Would Chill Grassroots Advocacy

Looking up in the PA Capital Rotunda

On February 8, 2011, with no debate, PA Rep. Bryan Cutler’s new PA lobbying penalties bill (HB 103) sailed through the PA House of Representatives by an overwhelming majority (197-0).

PA House Bill 103 (PN56) would:
(1) increase administrative penalties on the lobbyist for violating the State lobbying law from the current $2,000 to $10,000;
(2) increase penalties for negligent failure to register or report from the current $50 per day late to $250 per day late;
(3) increase the current second degree misdemeanor to first degree misdemeanor for intentional failure to register or report (which includes filing a false or incomplete statement);
(4) allow courts to impose a penalty against a principal of up to $100,000 instead the current $25,000; and
(5) (in addition to the other penalties) bar a lobbyist from lobbying for economic consideration for up to 10 years instead of the current 5 years.

The Bill’s Intent: 
This bill was designed to provide the Pennsylvania Department of State with a stronger enforcement tool, and hopefully prevent another “Lions Gate-McCombs” incident (see analysis below).  Lawmakers felt that for larger lobbying entities, the current penalty scheme was too low to be an effective deterrent.

To their Credit:
 The PA Department of State is staffed with many decent and competent civil servants.  Since 2007 when the State’s lobbying law took effect, the Department has made every effort to work with the regulated community and even work with smaller organizations to help them become compliant. Unfortunately, vague laws that grant broad discretion to regulatory agencies create confusion through inconsistent application of standards and can even invite abuse.

The Bill’s Impact: 
If enacted, Rep. Cutler’s lobbying penalties bill would create an obstacle to public participation in advocacy that is fundamentally contrary to the public interest. HB 103 would have a chilling effect on grassroots advocacy for individuals, smaller organizations and small businesses in Pennsylvania. The unintended consequences of this bill– presuming that they are unintended– are severe. Who would be willing to exercise their Constitutional right to engage in advocacy if penalties for a mistake could cost them so dearly?

The PA Lobbying Law:
Pennsylvania’s Lobbying Registration and Disclosure Law requires that anyone spending more than $2,500 per calendar quarter ($10,000 per year) to influence PA state government decisions, must register as a lobbyist with the PA Department of State, must track their direct lobbying and grassroots advocacy communications, and disclose their expenses quarterly, online. Charities advocating on legislation, regulations, the state budget, or state grant funding are not exempt. Many may be considered lobbyists under state law and could be in violation for not registering. (Act 134 of 2006, 65 Pa.C.S. §1301-A, et seq., 51 Pa. Code §51.1 et seq.)

The lobbying registration and disclosure threshold is so low (at $2,500 per calendar quarter) and so broad (in what must be disclosed) that people may be violating the law by not registering, and they might not even know it.  The law is so complex and so burdensome in its communications tracking and document retention obligations, that making a simple mistake is easy.  The PA Department of State is typically so understaffed and underfunded that it could take weeks (or longer) before that mistake is even discovered.  If HB 103 is enacted in its present form, a simple mistake could carry terrible consequences for the individual and his/her organization.

If you work with nonprofit, and this bill become law, good luck building coalitions. Good luck getting your members or your client’s members involved in public policy.  Good luck encouraging organizations to take action… more than once. In other words, good luck helping others exercise their first amendment rights in Pennsylvania.

Where is the bill now?
The bill passed in the PA House of Representatives on February 8, 2011, by a vote of 197-0.  There was no dissent.  The next day, Feb. 9, 2011, the bill was sent to the State Senate where it was referred to the Senate State Government Committee for further consideration. This same bill was introduced in two prior legislative sessions, but died in Committee. This time around, Cutler’s penalties bill has found new support as part of a package of reform bills fast-tracked by the State House and Senate majority leadership.

To his credit, Rep. Bryan Cutler (R-Lancaster) is aware of these concerns.  He has offered to work with the Pennsylvania Association of Government Relations Professionals (PAGR) to tighten-up language in the underlying law, and with Common Cause of Pennsylvania to find a solution for the chilling effect– if one is possible. It’s still unclear whether any effort to fix this bill might open the floodgates for efforts to change he underlying law– for better or for worse.

HB 103 must be amended or killed in the PA Senate State Government Committee.

It can not be allowed to move forward in its current form.

Direct inquiries to David A. Ross J.D. at daross001@gmail.com.

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The McCombs-Lions Gate Case:
During the third calendar quarter of 2007, A former Pittsburgh TV anchor and Rendell fundraiser, Leslie McCombs, failed to register as a lobbyist under Pennsylvania’s Lobbying Registration and Disclosure Law while she was lobbying on behalf of Lions Gate Entertainment Corp, a California film production company. The bill being lobbied provided for a $75 million film maker tax credit. McCombs said that said she didn’t think she needed to register for Lions Gate because she was already registered as a lobbyist for the University of Pittsburgh Medical Center (UPMC). She said that UPMC cleared her to work on the film tax issue as a one-time deal (whatever that meant).

Lions Gate hired the lobbying firm of former House Minority Whip Mike Veon as its main lobbyist with (I’m told) a $750,000 retainer. Veon Kopp & Associates employed Colleen Kopp, a former deputy secretary of legislative affairs for Rendell. Dawn Keezer, head of the Pittsburgh Film Office, said McCombs “helped use her connections to help get the film legislation passed”, because they claim, there was no Pittsburgh film industry without the tax credit. Veon Kopp & Associates listed Lions Gate as a client, but McCombs did not amend her lobbyist registration to add Lions gate as her client. McCombs remained “unregistered” as to Lions Gate the entire time she lobbied the bill (June through September of 2007).

Eventually Lions Gate and McCombs amended their registration statements. There was some disagreement however, about the duration that they were “out of compliance”. By July of 2009, the State Ethics Commission fined McCombs $5,025 for failing to promptly register as a lobbyist for Lions Gate Entertainment Corp. and omitting a daytime phone number in registering as a lobbyist for UPMC. The many reasons behind this sordid affair involve everything from allegations of sexual indiscretion to state tax credits underwriting ¼ of the film costs so the UPMC logo would appear in a national television series. (which is basically corporate welfare) McCombs’ fine was based on $50 for each day she worked as a lobbyist for Lions Gate. McCombs paid the fine, but it was more embarrassing for the PA Department of State than it was for McCombs. For McCombs, or for Lions Gate, the fine was so cheap relative to the gain that the Department of State was nearly powerless to enforce it’s new Lobbying Law. Read Lobbyist cites ‘oversight’ in registration snafu, By Brad Bumsted, Pittsburgh Tribune-Review (9/5/07), and UMPC fouls another one off, from the Health Care Renewal Blog, by Roy M. Poses M.D.  (9/17/09) which is commentary on the article State Ethics Commission fines UPMC’s Leslie McCombs, by Kris Mamula, Pittsburgh Business Times (9/10/09).

The old legal maxim that hard cases make for bad law is appropriate here. Particularly unpleasant cases are a poor basis for a general law which would cover a wider range of less extreme cases.

The Scarnati-Console Energy Case:
Compare the McCombs -Lions Gate case with the recent Scarnati-Console Energy case. On February 14, 2011, Senate President Pro Tempore, Joe Scarnati (R., Jefferson) agreed to repay from his personal account, the value of the Super Bowl tickets that he had accepted as a gift from Console Energy, a company with large Natural Gas interests in Pennsylvania. Scarnati stated however, that he would repay the airfare from his campaign account because they discussed campaign matters on the flight. The Scarnati case underscores the need for a total gift-ban for lawmakers and for campaign finance reform. Stiffer lobbying penalties would not be applicable here, because this ethical digression is perfectly legal in Pennsylvania. Read more on the Scarnati story at: Scarnati to pay back shale company for Super Bowl junket, By Angela Couloumbis, The Philadelphia Inquirer (2/14/11), and read: Perks from Pa. drilling interests: A top senator got a free Super Bowl trip from one Marcellus Shale firm. The state permits such gifts, By Angela Couloumbis, Joseph Tanfani, and Andrew Maykuth, The Philadelphia Inquirer (2/13/11).

PA Legislative Reforms: 
Read the press release from State Rep. Frank Dermody, PA House Democratic Leader, detailing what House Democrats call their renewed commitment to good government, which was issued on January 17, 2011 (the day before Governor Corbett’s inaugural).  Two weeks later, on January 31, 2011, the PA House Republican Caucus issued their government reform agenda known as the Pennsylvania Agenda for Trust in Harrisburg (PATH).  In response, (and on that same day, January 31, 2011) the PA House Democratic Caucus issued an expanded list of “good government” bills and amendments to other bills, “upping the ante” to some extent.

Public Interest Lobbying:
In recent years, “lobbying” has become a dirty word.  But what about “lobbying in the public interest”, or “grassroots participation”?  No matter what you call it, it’s advocacy, and it’s core to a charity’s ability to achieve its mission.  To put it another way, if a charity is not lobbying, then it’s not doing its job.  And not advocating “not doing their job” is exactly what would happen if the penalties under HB 103 were in effect.

Compared to corporate lobbying, charity lobbying operates at a competitive disadvantage. Federal law limits the amount charities can spend on lobbying, and strictly prohibits charities from engaging in partisan electioneering.  Under section 501(c)(3) of the tax code, charities can not endorse candidates, can not contribute to campaigns, and can not have political action committees (PAC’s). Since the recent Citizens United US Supreme Court decision however, corporations are much less restricted than they have been in the past, which gives corporations an overwhelming influence advantage over charities.

This is supposed to be balanced by the fact that charities can receive public contributions that are income tax deductible by the donor, and (in PA and other states) charities can qualify for local property tax exemptions. In exchange for property tax exemptions, PA law requires charities to advance a charitable purpose, to donate a substantial portion of their services to benefit the community; to benefit a substantial and indefinite class of persons who are legitimate subjects of charity; to relieve government of some of its burden; and to operate entirely free from private profit motive. These points called the “5 HUP criteria” which is based on a 1980’s court case [See PA Act 55 of 1997].  By contrast, for-profit businesses have no affirmative duty to benefit their community, or to reinvest their surplus.

Pennsylvania is home to over 58,000 charitable nonprofit organizations. From hospitals and colleges, to homeless shelters and museums, 501(c)(3) nonprofits employ one out of every nine workers in Pennsylvania (est. 650,000 employees) and touch the lives of nearly every person in our Commonwealth. However, the vast majority of Pennsylvania’s public charities are small. Over 90% have annual operating budgets of under $500,000. Together, these 90% hold only 5.6% of the nonprofit sector’s total assets, and generate just over 2% of the sector’s total revenue.

These smaller charities are barely able to understand Pennsylvania’s vague, complex and burdensome lobbying registration and disclosure law, let alone to correctly comply with it. Furthermore, smaller charities, small businesses and individual lobbyists can not absorb violations of $250 per day for a simple mistake, or a $100,000 misdemeanor for something more complicated.  They would more likely disengage from public policy entirely, or choose to violate by not registering. Never the less, organizations receive no special treatment or exemptions under the PA Lobbying Law. Instead, the law was specifically designed to put charities’ lobbying on record.

Charities, small businesses and citizen activists are an irreplaceable resource to lawmakers for research and policy, and they are a valued partner in the legislative process.  Mission driven institutions operate on the frontlines of society’s problems, serve under-represented groups, and service state and local government contracts. Only by working together with all of these groups, can lawmakers truly improve the quality of life in our communities. If penalties for simply sharing information are too high, then legislators and regulators will soon be working in a vacuum, without the benefit of the regulated community’s experience.

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Pennsylvania Election Overview: November 2, 2010

Tuesday, November 2nd 2010 is the “midterm” general election throughout the United States. “midterm” refers to the gubernatorial election cycle which follows the presidential election by two years, and is viewed as a referendum on the American President’s job performance. President Barack Obama (D) has spent his first two years in office mired in a recession, with record unemployment and the 7th year of a costly US and NATO-led War on Terror in Iraq and Afghanistan. The President’s approval rating has risen in the past month by 5% to a 50% approval rating , it is yet to be determined whether riding Obama’s coat-tails will be a help or hinderance.

The purpose of this article is to share with you information and resources about the election, the candidates and the issues.  

Pennsylvania Races:  2010 is a tremendous election year for Pennsylvania as well. On Tuesday, Pennsylvanians will elect a new Governor and Lieutenant Governor, 26 of 50 State Senators, all 203 State Representatives, all 19 of its Congressional seats, and one of two US Senators. At stake is nothing less than majority control in Harrisburg and perhaps in Washington too. At the top of ticket, Pennsylvania is a battleground for the US Senate seat formerly held by long-time Senator Arlen Specter. The two candidates are Joe Sestak (D) and Pat Toomey (R) and by most accounts, are racing neck-and-neck. The latest Rasmussen poll (10/29/10) shows Republican candidate Pat Toomey leading Democrat Congressman Joe Sestak by 4 points (R50% to D46%). Last week‘s poll was similar (R48% to D46%) This race is still a toss-up and may simply come down to voter turnout. As of last week, some 2.5 million American already cast their vote.

US Senate Races: Nationwide, some 37 US Senate, seats are up for grabs. The latest Rasmussen poll shows Democrats retaining at least 48 Senate seats, Republicans at least 45, and 7 seats are considered toss-ups, including California, Colorado, Illinois, Nevada, PENNSYLVANIA, Washington, and West Virginia.

State Gubernatorial Races: 37 States will elect governors in this election too. The latest Rasmussen poll shows Democrats retaining 12 Governors, Republicans 28, independents 1 and 9 races are still toss-ups. Pennsylvania Governor’s race is “Leaning Republican”, but the expectation is that Tom Corbett, Pennsylvania’s current Attorney General will win handedly.

US House Races: Elections for all 435 United States House of Representatives elections will be held on Tuesday, representing all 50 US states, delegates from the District of Columbia and delegates of four of the five major US territories. Winners of this election cycle will serve in the 112th Congress which begins in January. 37 U.S. Representatives will retire at the end of their current term and 5 vacancies were filled earlier this year by special elections.  With 255 Democrat seats, Nancy Pelosi (D-CA) is the current Speaker of the House. With 178 seats, John Boehner (R-OH) is the Republican House Minority Leader. The party in the White House typically loses Congressional seats in a midterm election year anyway, and given the state of the economy, there is no reason to expect differently this year. Balance of power in the US House of Representatives might shift to the Republicans. Congressional Quarterly is projecting Democrats will gain at least 195 seats, Republicans at least 203. But with 37 seats too close to call, majority hangs in the balance. The Cook Political Report however, (10/26/10) raised its House forecast to “a Democratic net loss of 48 to 60 seats, with higher losses possible.” According to Cook, PA-3 Dahlkemper (D) Leans R; PA-4 Altmire (D) Leans D; PA-6 Gerlach (R) Likely R; PA-7 (Sestak) (D) [Sestak did not run for re-election but his seat is hotly contested] Leans R; PA-8 P. Murphy (D) is still a Tossup; PA-10 Carney (D) is a Tossup; PA-11 Kanjorski (D) is still a Tossup; PA-12 Critz (D) Leans D; PA-13 Schwartz (D) Solid D; PA-15 Dent (R) Likely R; PA-17 Holden (D) Likely D.  In total, 160 Republican seats and 122 Democrat seats are considered safe.

Here are the issues and endorsements of the top 2 PA Candidates for US Senate and PA Governor: 

Sestak:  Issues for US Senate Candidate Joe Sestak (D) include the Economy, HealthEducationEnergy and EnvironmentDefenseAgricultureAnimals and WildlifeEthicsGender EqualityHousingInternet and BroadbandIsraelLaborLGBTSeniorsSmall BusinessTransportationVeteransYouth, and Working Families. Sestak’s newspaper endorsements include the The Philadelphia Inquirer, ; The Pittsburgh Post-Gazette, ; Philadelphia Daily News, ; The Harrisburg Patriot-NewsWilkes-Barre Times Leader, Erie Times-NewsWashington Observer-ReporterScranton Times-TribuneYork Daily Record.

Toomey: Issues for US Senate Candidate Pat Toomey(R) include: VeteransIsraelJobs & Economy, BailoutsTaxes, ; SpendingHealthcare, ImmigrationFamily & MarriageSecond AmendmentEnergy & Resources and National Security. You can also read some of these issues on Toomey’s blog. Toomey’s newspaper endorsements are hidden somewhere on his webpage. I challenge you to find them.

Corbett: Issues for Candidate for PA Governor Tom Corbett (R ) are found in his “50 ways to Rebuild PA”. and his positions on human services generally. Corbett’s Newspaper endorsements include, The Patriot News (Harrisburg, PA), The Tribune-Review (Pittsburgh, PA), The Post-Gazette (Pittsburgh, PA), The Sun Gazette (Williamsport , PA), The Altoona Mirror (Altoona, PA), The Lancaster New Era (Lancaster, PA), The Sentinel (Lewistown, PA), The Times Leader (Wilkes-Barre, PA), The Times Observer (Warren, PA), The Daily Item (Sunbury, PA), The Indiana Gazette (Indiana, PA), The Bucks County Courier Times (Bucks County, PA) and numerous associations and elected officials.  Corbett’s Lieutenant Governor would be Jim Cawley.  

Onorato: Issues for Candidate for PA Governor Dan Onorato (D) are found in his “New Vision for Pennsylvania’s Future”, or go to the website for  specific positions like Jobs & the EconomyGovernment ReformEnergy & EnvironmentHealthcare, ; Pre-K – 12 EducationHigher EducationStrong CommunitiesPublic SafetyAgricultureSeniorsDisabilities and Arts & Culture.  Read excerpts of Onorato’s newspaper endorsements. The complete list of editorials is as follows: Delaware County Daily TimesDoylestown Intelligencer, Easton Express-Times; El Hispano (No link), Erie Times-News, Johnstown Tribune-Democrat, Penn State Daily Collegian, Philadelphia Daily News; Philadelphia Inquirer, Philadelphia Tribune, Pittsburgh Courier, Pocono Record, Scranton Times-Tribune, Tri-County / Courier-Express / Leader VindicatorUniontown Herald-Standard, Washington Observer-ReporterYork Daily Record. Onorato’s Lieutenant Governor would be Scott Conklin.

Here are three candidate questionnaires to shed light on the where the candidates stand on the issues.

Common Cause PA:  On October 11, Common Cause of Pennsylvania asked PA Gubernatorial and US Senate candidates to identify their top three government reform goals and where government reform stands among the candidate’s overall priorities. Gubernatorial candidates Tom Corbett (R) and Dan Onorato (D) were asked specific questions on a lobbyist gift ban for executive branch employees, campaign contribution limits, disclosure of independent campaign expenditures, the state campaign finance database, WAMs, whistleblower protection, a constitutional convention, and a special legislative session on government reform. Read Tom Corbett’s response and Dan Onorato’s response.  US Senate candidates Joe Sestak (D) and Pat Toomey (R) were asked about their top reform priorities, such as public financing of congressional elections, disclosure of independent expenditure campaigns, changing the filibuster rules, use of earmarks, and senatorial “holds” on judicial nominees. Read Joe Sestak’s response.  Pat Toomey (R) did not respond.

The Arc of PA: The outlook for human services is not particularly positive. With respect to intellectual disabilities, we can thank the Arc of PA for their candidate questionnaire.  Pennsylvania’s Gubernatorial and US Senate candidates were asked their positions on the federal Individuals with Disabilities Education Act (IDEA), adult protective services (APS), access to affordable health care for those with pre-existing conditions, the Community Choice Act, and a number of other issues. Read the Arc of PA’s candidate questionnaire and responses [12.57 MB pdf].  There was no response from US Senate candidate [NOW SENATOR-ELECT] Pat Toomey.

David A. Ross and Associates: On October 18, David A. Ross of David A. Ross and Associates asked Joe Sestak (D), Pat Toomey (R), Tom Corbett (R) and Dan Onorato (D), if elected, in what three ways would you partner with and strengthen Pennsylvania’s manufacturing, tourism, and nonprofit sectors, to achieve your campaign goals and to improve the quality of life in Pennsylvania.  Read “Three Questions for Pennsylvania’s Candidates”. While the candidates were unresponsive to the questionnaire, they were quick to integrate some of these themes into their own campaign rhetoric. As you read the questions, ask yourself whether the candidates truly have a plan to implement their positions and make good on their promises. Without a specific plan, and stakeholder support, their promises are just empty rhetoric.

Here are some of the ISSUES and influences in this election:

The economy: The effects of the global recession are far from over. The US budget deficit (not even the federal debt) has is now topped $30 billion per day. 15 millions Americans remain unemployed and their situation will not improve any time soon. 8 million of those jobs will never return according to the Vice-President Joe Biden. Over 400,000 Americans are losing their job every month, and the president is calling for Americans to stay the course. The economy grew at only 2% in the past 3 months and at 1.7% for the 3 months prior. It would take a 5% growth rate for a year to lower the jobless rate by 1%. The US jobless rate is nearly 10%.  DO THE MATH. It will take 5 years to recover. Unemployment lasts 26 to 52 weeks, sometimes more, sometimes less, but at half to a third of a person’s salary.  That is not enough to feed a family, and their unemployment will expire before they find work.  What is Congress and the Administration doing to restore jobs? Precious little. And even less with respect to restoring American manufacturing. Every man, woman and child in America sends $3 to China every day. It’s called our trade deficit and it has been growing for nearly two decades.  During that time, America has shipped its factories, its wealth and its economy to China in exchange for cheap consumer goods. Now China is growing by an unparalleled 9% to 11% each year, while the US struggles with barely 2% economic growth and near double-digit unemployment. THIS PROBLEM MUST BE RESOLVED before it’s too late.

Foreign Policy & National Security: The single largest problem America has is China. China is on its way to becoming the wealthiest superpower in the world by 2015. You may not care about titles, but with this title goes military supremacy. Since 2009, China has increased its military spending by 7.5%, investing in nuclear weapons, long-range missiles, submarines, aircraft carriers and cyber warfare. China can now strike as far as the US territory of Guam, and challenge US aircraft carriers in the South China Sea. China’s economic boom has given the country the means to challenge the US on Taiwan, South Korea, and Japan. A strong US military with unmatched technology is critical to global stability not to mention America’s very survival. Our technology will no longer be unmatched however, if China becomes wealthier. What they can’t invent, they can buy or spy. So how does the Administration plans to stem the flow of US factories, jobs and wealth to China before China becomes the next economic superpower and engages us in an arms race that we can’t afford to match?  See Jos Sestak’s speech on  foreign policy (10/4/10).

Good Government: Organizations like Common Cause of Pennsylvania focus on “good government” issues. From voter registration to counting and recording the votes, Common Cause PA is working to ensure that PA elections are more reliable and more voter-friendly. That means easier voter registration, no-fault absentee ballots, election day registration, curb-side voting for the disabled, early voting, better training for poll workers, better ballot access opportunities for independents and minor parties, and penalties for acts of voter intimidation. Unfortunately, the effects of the global recession are far from over and “good government” issues are taking a back seat to more immediate economic concerns. But how government proceeds and the solutions they chose, has as much to do with the process by which government operates as it does with feasibility of the policies they chose.

Redistricting: Bear in mind that election will have far-reaching consequences for the political rights of every Pennsylvanian. The party that gains control of Pennsylvania’s State Legislature, will control (among other things) the redrawing of Congressional districts (for their own advantage) and have an advantage in drawing lines for legislative seats. In other words, whoever draws the district lines, may determine who your State legislator will be, or at the very least, which party will dominate your community for the next decade.

Voter Intimidation: Pennsylvania has no specific law making voter intimidation illegal. If you have a question about your voter registration or poling place, or if you think someone has given you false information, threatens you, or tries to stop you from voting, call the LIVE, nationwide ELECTION PROTECTION HOTLINE, toll-free at 1-866-OUR-VOTE (866-687-8683) or visit them online at http://www.866OurVote.org. Trained volunteers will be standing by to help you from 6:00am until the polls close at 8:00pm. It’s free, it’s nonpartisan and it’s confidential. Watch the Election Protection Hotline video. Voting is more than just a right, it’s a responsibility. So vote on November 2.  Help others get to the polls. Talk to your family about voting.  It’s critical that the voices of all Americans – including yours – be heard at the polls.  For other voting issues, visit the PA Department of State website, or VotesPA.com for a list of county contacts and county web sites or to locate your polling place. See Common Cause of PA’s ELECTION PROTECTION webpage.

Money and politics: Who was responsible for the negative campaigns. The candidates and independent groups or PACs. The landmark (or “landfill“, depending upon how you view it) US Supreme Court decision Citizens United v. FEC (1/21/10) opened the floodgates on corporate money being used to fund political campaigns. Now large sums of previously prohibited dollars are being funneled through advocacy groups and trade associations who are not directly affiliated with the candidates in order to influence elections. Corporations are now free to pay for political advertisements — now considered “genuine issue advocacy” — so long as the funding is disclosed.  Citizens United is the “Roe v. Wade” of election law.  Scholars will be measuring its impact and debating its merits for years to come. Other funding issues are skewing Pennsylvania politics too. Pennsylvania legislators and candidates alike have received tremendous sums of money from the Natural Gas drilling industry. Read “Deep Drilling Deep Pockets” a report on the campaign contributions and lobbying expenditures of the natural gas industry in Pennsylvania, by Common Cause of PA.  visit MarcellusMoney.org for contributions to individual candidates.  According to Common Cause, this year’s $4 billion election was the most expensive in US history.  In the words of Common Cause’s new  National chairman, “we’ve never seen in American history as much money flowing to our nation’s capital. [ ] there are hundreds of millions of dollars flowing to candidates and we have no way of knowing who is providing this money at all.  [ ] when you have that much money, it is inevitably influencing, if not bribing, if not corrupting politics, [ ] people back home say to themselves: government does not work.”

Final word on “Good Government”:  Neither party has a monopoly on how best to run the myriad of government agencies that serve Pennsylvanians. Good government issues trascends partisan politics.  On this at least, we must all agree.

Other influences: President Obama as leader of the Democratic party got off to a slow start this year in supporting Democrat candidates nationwide, and in promoting the relative success of his programs, stimulus, bailouts, and their effect on America’s economic “recovery” (if there is a recovery). This may contribute as much to whether Democrats lose control in Washington and Harrisburg as the coat-tail effect itself.  Weather plays an important role in voter turnout, especially in heavily Democratic Philadelphia, where urban voters generally walk to their polling places. The weather (11/2/2010) was perfect, sunny and seasonally mild.  If anything depresses voter turnout it will have been the negative campaigns advertisements. Such brutal half-truths filing the airwaves may offer short-term gains, but undermine a winning candidate’s ability to govern after the dust settled. After this election, image repair will be needed by the President and many winning candidates.

Considering the candidates, the issues, the economy, and the general climate, the November 2, 2010 Midterm election promises nothing less than fireworks. 

Pennsylvania needs enlightened leaders who are fair, open, and honest with the Legislature and with the electorate, and who build bridges with organizations to improve the quality of life for everyone– not just for their supporters. At the same time, we need avid citizen watchdogs to expose abusive practices of awarding sweetheart deals and tax incentives to cronies and campaign contributors. If those who win Tuesday’s election continue the “old ways” of running the state (gamesmanship, cronyism, and graft), then nothing will change regardless which party is in power.  Given Pennsylvania’s disastrous economy, joblessness, poverty, hunger and a multi-billion dollar state budget deficit, PA can not afford to return to the old ways of doing business.

–by David A. Ross, J.D.

THREE QUESTIONS FOR PENNSYLVANIA’S CANDIDATES

The Scranton Times Tribune ran a news story today (10/18/10) entitled “Nonprofits fear winter coupled with high unemployment.” Leaders of nonprofits and charities in Northeast Pennsylvania announced that the coming winter coupled with growing unemployment will push the limits of their organizations. That they lack money and capacity to meet the needs of their communities is not a matter of poor management. These are sophisticated organizations. It’s the economy. Pennsylvania’s social safety net is in serious jeopardy, because unemployment is rising, new jobs are not being created, and personal wealth is barely growing for Pennsylvanians- if at all.

2010 is a critical election year in Pennsylvania. Our Governor, Lieutenant Governor, 26 State Senators, and all 203 State Representatives are up for election, as well as Pennsylvania’s 19 Congressional seats. At stake is nothing less than majority control in Harrisburg and perhaps in Washington too. At the top of ticket, Pennsylvania is a battleground for the US Senate seat formerly held by Arlen Specter. The two candidates are Joe Sestak (D) and Pat Toomey (R) and by some accounts, are racing neck-and-neck.

With only 9 days until the November 2 general election, Pennsylvanians have decisions to make — big decisions with big consequences. Whether the issue is the economy, foreign trade, the social safety net, or campaign finance reform, the candidates have positions. Some have posted their positions on their websites; others have not. One thing they all have in common. They have not provided details on HOW THEY PLAN TO ACHIEVE THEIR GOALS. Without a plan, their goals are just empty campaign promises. So the real question is…. IF YOU ASK THEM HOW THEY PLAN TO ACHIEVE THEIR GOALS, WILL THEY TELL YOU?

That’s exactly what I did. I asked them. I have spent the past 6 years identifying socio-economic problems, and working with partners (building coalitions) to develop solutions and implement those solutions. Drawing from this experience, I drafted the three questions pasted below. I have shared it with them and will continue to share it with as many people as is possible… until I get a response. Then I will post their responses so we will all know whether they really have a plan or whether it’s all hype.

SO PLEASE READ THE THREE QUESTIONS BELOW. Feel free to SEND THE QUESTIONS TO YOUR LAWMAKERS. Between tourism, nonprofits and manufacturing, we can identify solutions to improve one-third of Pennsylvania’s economy– or at least know where the candidates stand.

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(1) MANUFACTURING SECTOR

In 2008, manufacturing accounted for 14% of the Pennsylvania’s total GDP (down from 21% in 1997). In 2009, manufactured goods accounted for more than 90% of Pennsylvania’s exports (down from 95% in 2002). China is our third largest export market (up from 16th in 1999). Currently, manufacturing accounts for just 10% of Pennsylvania’s total workforce (down 40% since 1990). During this same time (20 years), overall nonfarm employment in PA increased by 8%.

Some say it would be impossible to restore Pennsylvania’s manufacturing capacity. Others say that if we do not rebuild our factories, Pennsylvania’s economy will never recover. Considering that 600,000 Pennsylvanians are unemployed, I believe that restoring Pennsylvania’s factories is critical to Pennsylvania’s future.

America needs a comprehensive plan to rebuild our domestic manufacturing capacity, starting here in Pennsylvania, and starting today. American manufacturing is critical to the long-term health of our economy, to the welfare of our people, and ultimately to the survival of our nation.

Q1: If elected to the US Senate, in what three (3) specific ways would you partner with the manufacturing sector to prevent the loss of skilled manufacturing jobs in Pennsylvania and attract new skilled manufacturing jobs to Pennsylvania?

(2) NONPROFIT SECTOR

Pennsylvania is home to nearly 58,000 501(c)(3) charitable nonprofit organizations. From hospitals, colleges, daycare centers and clinics, to soup kitchens, social service providers and foundations, Pennsylvania’s nonprofit sector employs about 600,000 FTE workers (or 11% of the workforce in PA). Together these workers earned over $21.1 billion in wages in 2003 (or 10% percent of total wages paid in Pennsylvania). For many communities, nonprofits are also an economic engine for growth and development.

Since the recession began however, Pennsylvania’s nonprofits are facing declining contributions, decreasing revenue, and losses of government and foundation funding. Resources are dwindling, but the community’s need for the services that nonprofits provide continues to grow.

Q2: If elected to the US Senate, in what three (3) specific ways would you partner with and strengthen the nonprofit sector to achieve the goals of your campaign and improve the quality of life in our Commonwealth?

(3) TRAVEL, TOURISM AND HOSPITALITY INDUSTRY

Pennsylvania tourism is the state’s second-largest industry. Together, PA hotels, amusement parks, restaurants, ski areas, stadiums, and attractions of all types, generate $28 billion in revenue each year and pay $10 billion in wages and benefits to over 400,000 workers (or about 7% of Pennsylvania’s workforce). While these are certainly impressive numbers, tourism in Pennsylvania has room to grow. Understanding what motivates people to visit PA or employers to relocate to PA, and coordinating economic development to enhance PA tourism would improve Pennsylvania’s business climate over the long term.

Q3: If elected to the US Senate, in what three (3) specific ways would you partner with the tourism industry to improve economic growth and development?

Budget Agreement Reached: Includes Severance Tax, No Tobacco Levies.

 

(6/29/10) Budget Agreement Reached: Includes Severance Tax, No Tobacco Levies. PA Governor Rendell announced this afternoon that the legislative leaders and he agreed on a $28.05 billion budget plan for FY2010-11. The budget would increase spending by $182 million, or less than 1% from the current FY2009-10 budget. This new budget is $500 million more than Senate Republicans wanted and $1 billion less than the governor proposed.

The budget includes a severance tax on natural gas from the Marcellus Shale, with details to be worked out by October 1. It does not include an excise tax on cigars and smokeless tobacco. Nor does it eliminate the sales tax vendor discount, close the Delaware loophole, or reduce corporate income tax rates.

The FY2010-11 budget will include a severance tax on natural gas from Marcellus Shale, with details to be worked out by October 1, layoffs of 1,000 state employees, funding cuts to libraries (-9.1%, $5.5 million)

Department of Environmental Protection (-9.2%, $14.6 million), Department of Conservation and Natural Resources (-11%, $10.2 million), Department of Labor and Industry (-10%, $9.2 million), agriculture programs (-11.7%, $7.9 million), and the Executive Offices (-7.5%, $15.3 million).

The new budget relies heavily on one-time funding sources most significantly $850 million in extended FMAP funds that have not yet been approved by Congress. The Governor said that if Congress fails to approve the FMAP funding, he and legislative leaders will have to identify additional cuts in the budget.

http://www.pennbpc.org/budget-agreement-reached-includes-severance-tax-no-tobacco-levies.

(6/29/10) Pennsylvania Gov. Ed Rendell: Budget is good one but will require state worker layoffs, by Jan Murphy, The Patriot-News

PA Budget Negotiations Continue Without FMAP Money: Lawmakers believe they can reach agreement by Wednesday’s deadline.

PA Budget Negotiations Continue Without FMAP Money: Lawmakers believe they can reach agreement by Wednesday’s deadline. 

 

With just 3 days left (6/27/10) until Pennsylvania’s Constitutional June 30 annual budget deadline, last Friday’s (6/25/10) announcement of the loss of Pennsylvania’s FMAP money makes it highly unlikely that PA Lawmakers will pass the State’s budget on-time. Negotiations continued through the weekend. Lawmakers still believe they can make Wednesday’s budget deadline. 

FMAP Money: On June 16, 2010 Pennsylvania’s Governor Ed Rendell warned that the State would begin laying-off as many as 1,000 of its 71,000 government employees, including teachers, as early as July, 1 if the additional $850 million in federal Medicaid assistance money (FMAP) was not approved in the new Federal Job‘s Bill. The Governor was counting on that money to limit the state’s FY2010-11 budget deficit to $1.2 billion– which would otherwise have to be made up with sharp budget cuts. 

The Jobs Bill: On June 24, 2010 the US Senate failed to approve the $23 billion American Jobs and Closing Tax Loopholes Act, (H.R. 4213) known as the Jobs Bill, or the extenders package. The bill provided for federal extension of unemployment benefits to hundreds of thousands of long-term unemployed workers at a time when 15 million Americans (9.7% of the workforce) are out of work. The bill also provided other emergency stimulus measures to save jobs; protect doctors from a 21 percent cut in Medicare reimbursement rates (possibly causing them to stop serving needy patients); and provided to the states’ additional Federal Medical Assistance Percentages (FMAP) program money so the states can continue paying Medicaid for the “poorest of the poor”. 

The Democrats: For the past two weeks, Senate Democrats led by Majority Leader Harry Reid (D-NV) attempted to push the Jobs Bill through the Senate after it had been stalled there for eight weeks. Reid filed for cloture on the debate with just days before a vote. Senate Republicans rallied their minority coalition that included some moderate Democrats. A 2/3 majority (66 votes) is needed for a cloture vote to end debate (filibuster) in the Senate. On June 24, 2010 the cloture vote failed 57-41 (short by 9 votes). 

The Republicans: According to Senate Republican Minority Leader Mitch McConnell (R-KY), Democrats were using this important legislation to add tens of billions of dollars in unrelated deficit spending at a time when the national debt (not the federal deficit) has reached $13 trillion for the first time in history. This equals nearly $42,000 for every man, woman and child in America. Check out the Republican counterproposal (6/10/10).  According to an ABC report , the sense in Congress is that for the first time in decades, there is no more money.  That Congress is broke wasn’t America’s best-kept secret. I have heard State Senator Andy Dinniman announce publicly for the past three years that Washington has no money left. So is this really why Congress is using the Jobs Bill to hold the line on pay-go rules. (Pay-go rules require every new appropriation to be paid for be an existing offset within the budget. This means that your appropriation would have to come from someone else’s funding.) If this was a turning point for Congress, they are a little late. 

The Economy: Without the Jobs Bill the economic forecast is bleak. Pennsylvania’s unemployment rate for May was 9.1% — only .6% better than the national average of 9.7%. Experts fear that Pennsylvania’s unemployment will grow if 1,000 state workers are laid-off in July, if thousands of nonprofits see their State contracts and grants cut, and if 1 million of the 15 million unemployed workers nationwide lose their $310 per week long-term unemployment benefits. 

What’s next? Last week’s failure of the cloture vote on the Federal Jobs Bill means that the Jobs bill will not be moving forward.– at least not in its current form. Its most important provisions may seek passage in separate bills. Sen. Olympia Snowe (R-ME) and others are now pushing for a separate bill to authorize the extension of federal unemployment insurance benefits and FMAP money for the States. This process could take weeks, if it even happens at all. States may not even get the FMAP funds they were promised if they get any at all. 

The PA State Budget: Governor Rendell’s original budget proposal for FY2010-11 (2/9/10) was $29 billion (That is $ 26.27 billion in state money plus $ 2.76 billion in ARRA money for a total of $29.03 billion). Without the $850 million FMAP money, the Governor’s budget proposal is over a billion dollars short. 

By Saturday night (6/26/10), House and Senate Democratic leaders said they would not approve a budget of less than $28.2 billion. Their plan included a $300 million increase for education. This would have required new revenue sources (tax increases). House Republican leaders were unwilling to support the 1% increase over last year’s $27.8 billion budget. Even at that level, Rendell claimed that it could lead to 1,000 teacher layoffs. 

Last week, Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, (R-Delaware) indicated that the Senate Republicans would approve a budget of $27.5 billion. Their budget proposal takes into account the actual revenue that the state has received, and NO additional “revenue enhancements“ (pronounced “tax increases“). By Saturday night (6/26/10) Senate Republican leaders were willing to go as high as $27.8 billion with no tax increase, but that required cutting a Rendell priority of $354 million additional funding for school districts. By Saturday night, only $400 million separated Republican and Democrat positions on the state budget. If the agreement between the Governor and the four legislative Caucuses leads to an on-time budget, the total state budget for FY2010-11 would likely be $27.9 billion. 

According to the Harrisburg Patriot-News Editorial Board, “$28 billion is about as high as the state budget can reasonably go. The easy revenue sources have already been tapped, the Rainy Day Fund has been depleted, and there is no appetite in the Legislature for broad-based tax increases on individuals or corporations. To further chop programs — especially in social services and environmental monitoring — at a time when so many in the state are struggling and our gas drilling industry is expanding at a breakneck pace would be unwise. Make no mistake, there still will have to be painful cuts to balance even a $28 billion budget, but to go much lower than that would be to start balancing our state’s budget in detrimental ways to our citizens.”

As of last week, there was much speculation that the state would raid $340 million of its tobacco settlement funds, which are part of a $206 billion multi-state settlement with tobacco companies to compensate for smoking-related health expenses.  While there is much satisfaction over the $261 million that the state collected from its tax amnesty program, there is also much concern that creative accounting tricks could put-off a few hundred million in debt until next year’s budget. Beyond that, cut will most likely come from nonprofit programs. 

OPEN LETTER TO ALL NONPROFITS: 

AN URGENT WARNING WAS SHARED WITH ME BY A HIGH RANKING MEMBER OF THE GOVERNOR’S STAFF. I was explaining that another budget impasse like the one we had we had last year would kill smaller nonprofits with state or county contracts or subcontracts, and exacerbate the hole in the social safety net. Once these nonprofits scale back or close their doors, the business interruption costs, interest on borrowed money, and the loss of skilled labor can not be recovered– not to mention the impact on the communities they serve. His response was poignant and extremely concerning. He said “Unless nonprofits get their butts in gear and lobby hard for revenues and against draconian funding cuts, they will be closing their doors for good.” I am not sharing this with you lightly. THE SITUATION IS SERIOUS. 

Budget Impasse: So how long will it take to pass the state budget this year? What happens if lawmakers can’t get the job done by June 30? That’s the 28 billion dollar question. Last year (2009), it took the PA legislature an additional 101 days after the June 30 Constitutional deadline to pass the state budget. For three and a half months, the State withheld billions of dollars in payments that it owed for services rendered on contracts and grants. While big agencies debated funding priorities and lobbied to secure their budget line items, thousands of smaller nonprofits that relied on this money to service state or county contracts or grants, were forced to cut services, lay-off staff, or close their doors. Counties, schools and nonprofits continued to provide vital services in the absence of state funds, but at their own expense. Unlike counties and schools however, most nonprofits are small organizations, lacking sufficient reserves to absorb the cost of late government payments on contractual obligations. Nonprofits that survived the 2009 budget impasse, discovered the hard way that bridge loans must be paid back with interest; furloughed workers may never return; and late fees and business interruption costs depleted any reserves they had left. The result was cuts to human service funding, fewer nonprofit services, and an angry electorate who lost faith in State government. 

Budget Reforms: The 2009 Budget Impasse demonstrated that the only sure way to prevent another impasse is to reform the budget process.  Read Budget Process Reforms Can Prevent a Budget Impasse.

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