Democrats, Republicans Both Talking Delaware Loophole

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A group of House Democrats is displeased with the new Republican-led attempt to close the so-called Delaware Loophole, but the two sides appear to be getting closer in the process.  The Delaware Loophole essentially allows large, multi-state corporations to avoid paying Pennsylvania business taxes.    

Back in January, Republican Rep. Dave Reed (R-Indiana) introduced a bipartisan bill aimed at closing that loophole through the ‘expense add-back’ provision.  But Democratic Finance Chair Phyllis Mundy (D-Luzerne) calls it window dressing.  “The language is so broad and riddled with exceptions that it’s ineffective and meaningless in terms of closing the Delaware Loophole,” Mundy explained at a capitol news conference on Wednesday. 

Phyllis Mundy

State Rep. Phyllis Mundy (D-Luzerne)

Mundy still believes the best way to go about that is through a process called ‘combined reporting,’ but she recognizes the political will isn’t there, and now advocates what she calls a better version of the ‘expense add-back’ provision.  She contends the Reed bill would actually create a ‘loophole within a loophole’ by allowing companies to deduct expenses they deem to be for legitimate business purposes.  “Corporations would have little trouble finding a reason to claim a legitimate business purpose in order to avoid paying their fair share of taxes.” 

Rep. Reed sees the new developments as a positive step.  “I am just glad that Representative Mundy has finally come to the conclusion that there’s not support for combined reporting in Pennsylvania, and that an add-back provision is the better methodology of closing the Delaware Loophole, and that the revenue should be used for tax fairness across the board,” Reed tells Radio PA.   

Both lawmakers support plans that would use the newfound revenue to gradually lower the state’s corporate tax rate from 9.99% to 6.99% over the course of six years.

Reed says that unlike combined reporting, the add-back provision would target only the companies actually using the loophole.  He anticipates a House Finance Committee hearing to be scheduled on the topic later this month. 

Currently 35-states use either ‘combined reporting’ or ‘expense add-back’ as a way to promote business tax fairness.

Rick Santorum Takes Three States, GOP Race Continues

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    Rick Santorum won three states on Super Tuesday, tasting victory in North Dakota, Tennessee and Oklahoma. The former Pennsylvania Senator fell just short of taking the key state of Ohio, finishing a very close second to Mitt Romney.

    Romney won six states on Tuesday, including Massachusetts, where he served as governor. Newt Gingrich won his home state of Georgia. Ron Paul was shut out, winning no states and only picking up a little more than 20 delegates.

    Santorum’s showing on Tuesday means the race for the GOP nomination continues. The focus now shifts to Kansas, which holds it caucuses on Saturday. Then it’s on to Alabama’s primary on March 13th. Pennsylvania Republicans go to the polls on April 24th, and with every Santorum win, it’s looking more and more like the primary race will still be undecided once the vote comes to the Keystone State. If so, it would be the second time in the last two elections that Pennsylvania’s primary mattered. In 2008, the hotly-contested Democratic race between Barack Obama and Hillary Clinton gave us six weeks of heavy campaigning in the Commonwealth.

 

PA School Districts

State Education Officials Continue to Probe Possible Cheating on Standardized Tests

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Dozens of schools in Pennsylvania are still under scrutiny after an examination of standardized test scores raised questions. The state Education Secretary was asked about the situation during a budget hearing in the house appropriations committee  this week.

Ron Tomalis said that 51 schools in Philadelphia and schools in 21 other districts, including 4 charter schools, are still under review. He says the department will be making sure teachers in those schools do not proctor their own classes when the exams are given this year. In some schools, the state will have monitors present during the exams.

Tomalis told the house appropriations committee they’ve identified schools where the pattern does not appear to be isolated. He says in those schools,  the questions were building wide across a couple of subjects and a couple of grades. He says in other schools, there were patterns specific to just one or two proctors. He says it’s a shame they’re dealing with this situation.

More than 20 other districts have been cleared of wrongdoing.      The math and reading PSSA tests are scheduled to begin March 12th, with writing and science tests next month.

PHEAA Prepared to Bolster State Grant Program Again This Year

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The Pennsylvania Higher Education Assistance Agency is fiscally stable according to its president.   However, it’s contributions will not be enough to cover state funding cuts for college grant programs for the 2012-2013 academic year.

PHEAA has tentatively approved giving a 50 million dollar supplemental grant to the state grant program, as it did last year, thanks to earnings from servicing federal student loan programs.   

President James Preston told house appropriations committee chairman Bill Adolph that the supplemental grant would still not be enough to cover the loss of state funds for grants to college students.  He told the s committee  that the agency believes the average grant would  fall by $158  and the maximum grant would drop by $252.

Preston says PHEAA is servicing 106 billion dollars in federal student loan assets. The revenue earned by PHEAA helps cover its administrative costs.

Turnpike to Take Next Step Toward All-Electronic Tolls

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Imagine a Turnpike with no toll booths.  A new study concludes that vision to be feasible both financially and physically.  The first advantage cited in the Turnpike’s feasibility study is safety, because motorists would no longer have to slow down, jockey for position and merge at every toll plaza.

“We’re also looking at a cleaner environment, improved convenience because you don’t have to slow down, and certainly – as the study points out – operational efficiencies because it’s a much less expensive way to collect a toll,” Pennsylvania Turnpike Commission Carl DeFebo explains. 

But the 39-page document does note several disadvantages as well.  For instance, a high initial cost of conversion and the number of images to be processed in order to bill non E-ZPass customers.  An All-Electronic Toll system would likely involve photos being snapped of non E-ZPass vehicles; the owners would then receive an invoice for the required tolls. 

E-ZPass users currently pay about 17% less than cash-paying Turnpike travelers.  DeFebo says they would continue to pay a lower toll rate based on the higher cost of processing invoices for non E-ZPass users. 

With the new study in hand; the Turnpike Commission will hire a program management firm to oversee the next phase of the study process.  “This is a minimum five year process,” DeFebo says, noting they could encounter a number of ‘stop signs’ along the way.

Super Tuesday Showdown

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    Voters in ten states go to the polls today for their primary elections. Of course, all eyes are on the GOP presidential primary, as Republicans today have the chance to send a clear message about who they want to run against President Obama this fall.

    Much of the attention today will be on neighboring Ohio, where front-runners Rick Santorum and Mitt Romney have been neck-and-neck in the polls heading into today’s vote. Romney is coming off a win in the Washington caucuses last weekend, while Santorum is hoping to regain his February momentum by appealing to the most conservative wing of the party.

    The other states voting on this Super Tuesday are Alaska, Georgia, Idaho, Massachusetts, North Dakota, Oklahoma, Tennessee, Vermont and Virginia. Pennsyvania’s primary will be held April 24th.

 

Voter ID Issue Back on Front Burner

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As the state Senate Appropriations Committee was preparing to consider controversial voter ID legislation, the Protect Our Vote coalition gathered in the capitol rotunda to urge lawmakers to reject the proposal.  The group also unfurled a roll of petitions filled with 13,000 signatures of voter ID opponents.  Copies of those petitions were then delivered to all 50 state senators. 

“It is an unfunded mandate to be passed along to the cities, towns and taxpayers of the commonwealth, and will not result in curtailing so-called fraud,” said Michael Brunelle, executive director of the SEIU State Council.  The coalition and its supporters say HB 934 is unnecessary, and it will deprive citizens of their right to vote. 

But the state would provide free photo IDs to eligible voters who need them, according to Secretary of the Department of State Carol Aichele.  “It is my commitment to make sure that everyone who wants a photo ID in Pennsylvania is able to obtain one,” she told the Senate Appropriations Committee last week.  The photo IDs would be churned out through PennDOT’s 97 drivers licensing centers, and the governor’s proposed budget has even carved out $1-million for non-drivers ID cards for voting purposes. 

The legislation would effectively require all voters to produce an approved form of photo ID every time they go to the polls.  Supporters say it would ensure integrity in the vote process, but critics say there’s no evidence of widespread voter fraud. 

The bill passed the House (108 – 88) last June.  Then, an amended version was advanced by the Senate State Government Committee (6 – 5) in December.  The Senate Appropriations Committee passed it late Monday (15 – 11).

Harrisburg’s Wild West Artifacts Headed for Auction Block

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The city of Harrisburg may not epitomize a the idea of a frontier town, but former Mayor Stephen Reed amassed thousands of wild west artifacts and antiques for a never-built Wild West Museum.  The city’s new administration is now pulling those items out of storage in anticipation of a high-profile auction this summer. 

President of New York-based Guernsey’s Auctioneers Arlan Ettinger says he’s humbled to have been chosen for the project.  “This is not liquidation, but an offering of treasured items that we’re quite certain will bring in substantial amounts of money,” Ettinger said at a special media preview last week.  But analysts don’t expect the city to recoup the $7.8-million reportedly spent to acquire the artifacts. 

The auction is expected to take place over the course of eight days in mid-July.  “This will be a major event for the city of Harrisburg, and it will have various venues around the city, with the potential to draw thousands of people to our great city,” says current Mayor Linda Thompson.  Details are still being finalized.   

While the items are still in the process of being cataloged, Ettinger expects at least 8,000 lots to span ten categories.  Two of the items sure to attract collectors’ attention are Doc Holliday’s dental kit and Wild Bill Hickok’s gun.  Mayor Thompson says the net proceeds will be used to pay down the cash-strapped capital city’s debt.

Public Utility Commission Continues Review of Storm Power Outages

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Between the end of August and end of October, Pennsylvania was hit by a hurricane, tropical storm and October snowstorm.  The state Public Utility Commission is still reviewing the impact on the power grid.

The PUC held a special electric reliability forum in October.  While the majority of customers had service restored in 48 hours, some people were out of service for days. During a recent house budget hearing, the commission was asked about right-of-way maintenance. 

Commissioner Wayne Gardner says trees in the right-of-way are not the only problem.  He says on average more than 40% of the time customers are without power is due to trees and vegetation outside of the right-of-way.  He says he has personally viewed trees that were out of a right-of-way by some 60 feet that were about 100 feet high and capable of taking down three or four poles at a time.

Utilities already have right-of-way maintenance programs.  They’ve been asked to look at the issue of trees that are outside of their control, and make some recommendations to the PUC for how to approach the problem.  Gardner hopes the commission will have some recommendations this summer.

One state representative suggested that tree and vegetation issues might be better solved locally by a Shade Tree Commission.

Governor Corbett Heads Overseas This Month

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As Pennsylvania’s St. Patrick’s Day festivities begin winding down, Governor Tom Corbett’s international trade mission will be ramping up.  Corbett is leading a trade mission to France and Germany, two of the state’s most important trade partners. 

“The goals are to establish a stronger tie with our trading partners that we already have that do business here in Pennsylvania from France and Germany, but also to look for more people to come over and do business here in Pennsylvania.” Corbett said on Radio PA’s Ask the Governor program. 

Combined, French and German companies already employ 53,400 people in the Keystone State.  Corbett thinks they can entice more foreign companies to invest in Pennsylvania based on its cheap power supplies and strong workforce.  “We’re making ourselves much more business friendly than we were before,” he adds. 

Site Selection magazine has ranked Pennsylvania third in the nation with 453 new or expanded corporate facilities in 2011, according to a recent news release from the governor’s office.  That’s an increase of more than 100 projects from 2010. 

Corbett will be joined on the trade mission by a delegation of Pennsylvania business leaders.  The mission is being privately funded and organized by the Team Pennsylvania Foundation.