Should Family Businesses Pay the “Death Tax”?

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Family farms are now exempt from the Pennsylvania inheritance tax under a new state law enacted last year.  Now there appears to be bipartisan support for doing the same thing for family businesses.  “When we tax these assets in a small business… at the death of one of the principle owners, oftentimes what happens… is critical business assets have to be liquidated in order to pay the tax bill,” explains state Rep. Stephen Bloom (R-Cumberland), the prime sponsor of a bill to eliminate the so-called death tax on mom & pop shops. 

Bloom’s bill has already advanced out of the House Finance Committee with a vote of 20 – 4, and has since been re-referred to the Appropriations Committee. 

While the bill would nix close to $10-million dollars in state revenue, Bloom believes the economic activity it would create can more than make up for the cost.  “We want to reward our folks who’ve been frugal and generated assets and are growing jobs in this state we don’t want to punish them.”    

Opponents have several complaints in addition to the lack of offsetting revenue.  The Pennsylvania Budget & Policy Center believes the bill would create a new set of inequities and loopholes, thereby shifting more of the state’s tax burden onto middle-class families. 

The House has recessed for three weeks of budget hearings.  Session is scheduled to resume on March 11th.

Lottery Debate Dominates Several Budget Hearings

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As Governor Tom Corbett mulls his next steps, Revenue Secretary Dan Meuser spent the bulk of his House budget hearing defending the recently-rejected Lottery contract.  Meuser remarked that the premise for much of the opposition is wrong.  “There’s no plan to sell the Lottery.  We cannot by federal or state law.  There is no plan to relinquish control of the Lottery.  We maintain full control of the Lottery,” he emphasized.

At issue is the private management agreement the Corbett administration negotiated with Camelot Global Services, in which the private company has guaranteed record profits over the next 20-years.  The administration has been working on this for nearly a year, because the demand for senior services is growing at a pace that’s too rapid for the Lottery Fund to sustain. 

On Valentine’s Day Attorney General Kathleen Kane called that contract illegal and unconstitutional, and she rehashed that decision in front of the Senate Appropriations Committee on Wednesday.  Kane’s main points were: 1) the contract infringed on the legislature’s authority, and 2) KENO is not an authorized game under the Lottery Act. 

“I am not an economist and I don’t pretend to be, I am a lawyer, and we went through the statutory construction of the Gaming Act, the Lottery Act, as well as the General Assembly’s authority,” Kane said as she told the panel this was not a policy decision. 

Revenue Secretary Dan Meuser

Revenue Secretary Dan Meuser

But Secretary Meuser disagreed with both of Kane’s major points at his House hearing one day earlier.  “The law clearly states – laws granted by the legislature – granting the Department of Revenue the ability to hire vendors for the effective and efficient growth of the Lottery, and to promulgate new games. 

Meuser also contends that KENO – which was rolled out in nearby Ohio a few years ago – falls within the scope of the Lottery’s terminal-based game regulation, not the “slot machine” definition of the Gaming Act.  He says KENO would us the same algorithm as some exiting Lottery games. 

In lieu of a protracted legal debate, some Democratic lawmakers are calling on Governor Corbett to work with the General Assembly to maximize Lottery revenues in-house.  Also, one Republican lawmaker plans legislation to authorize KENO while barring online, interactive Lottery games.

Budget Hearings Kickoff with Medicaid Debate

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The Governor’s Office and Senate Democrats aren’t on the same page when it comes to expanding Medicaid under the federal Affordable Care Act.  Based on the exchanges that played out on the opening day of state budget hearings, they may not even be reading from the same book. 

When pressed for answers as to why the administration isn’t planning to expand the Medicaid program, Budget Secretary Charles Zogby told the Senate Appropriations Committee that it would cost the state an extra $200-million dollars next year and more than $4-billion dollars within the next decade. 

“I don’t know where that money comes from,” Zogby said while noting that not enough attention is being paid to the cost side of the Medicaid equation. 

Senate Minority Appropriations Chair Vincent Hughes (D-Philadelphia) noted a “huge gulf” between the analysis of the administration and the analysis of legislative Democrats. “Our analysis indicates that the implementation of Obamacare saves $200-million because the feds are now paying for state dollars on the General Assistance population, saves about $140-million in state payments for county health services, and saves about $100-million in uncompensated care costs.” 

Hughes pressed Budget Secretary Zogby for a public vetting of the numbers the administration has been crunching.

State Senator Larry Farnese (D-Philadelphia) later found irony in Zogby’s complaints about how unresponsive the Obama administration has been to the governor’s Medicaid questions, while the Corbett administration has not responded to Senate Democrats’ request to see their fiscal analysis.

The House and Senate Appropriations committees will continue to hold budget hearings through March 7th.

Institute Offers Awards for Work to Promote Love and Forgiveness

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The Fetzer Institute was founded to promote the power of love and forgiveness   More than 200 non-governmental organizations worldwide have entered the institute’s competition for two 25 thousand dollar grants to continue their work on projects that do just that.  One grant will be awarded to an organization in the United States and the other will go to an international organization.

There’s  a  smaller award of five thousand dollars which will be given at the same time. The Institute wants people to vote on which of the entries touched them most. Stories of all of the applicants can be found at www.tellusworld.org.  The awards will be announced on February 28th.

Thomas Harvey of Notre Dame University’s Mendoza School of Business is an adviser to the institute. He says the entrants do a wide variety of work to further love and forgiveness, including educational experiences, development and outreach across cultures.

There are at least five entrants with ties to the Pittsburgh area; A Mother’s Wish, Southwinds, Haitian Families First, Hekima Place and South Side Anglican Church.

Hekima Place is in Kenya but was founded by a Pittsburgh native and has U.S. contacts in Pittsburgh.

A Mother’s Wish  serves poor communities in the Dominican Republic and is based in Arizona. But it was founded by a woman whose daughter underwent a life-saving liver transplant at Children’s Hospital of Pittsburgh.

Haitian Families First provides support to needy families in Haiti and was founded by two Pittsburgh sisters.

Southwinds provides residential care for with developmentally disabled adults in southwestern Pennsylvania.

South Side Anglican Church does outreach in a part of Pittsburgh known for late night reveling and violence.  

Grassroots Movement Behind Bills to Expand FMLA

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The federal Family Medical Leave Act was enacted 20-years ago this month.  While the anniversary is considered a milestone, and millions have used the FMLA, many believe it’s time for an update. 

The law allows employees to take unpaid leave to care for a child, parent or spouse.  But Anne Marie Pearson of Chester County was thrust in the role of caregiver for her sister, who had nobody else to help her battle late-stage gynecologic cancer.  “Our father is deceased and our mother is elderly with medical conditions of her own,” Pearson explains of the situation in 2008.  “Joanne was not married and she did not have any children, so there really wasn’t anyone to help take care of Joanne, and get her back-and-forth to those chemotherapy appointments, radiation appointments and so many doctor visits.” 

Pearson was immediately turned down through the Family Medical Leave Act because it does not cover siblings, and her attempts to obtain a special exemption went nowhere.  Ultimately she had to quit her job of 16-years; a decision Pearson says she’d make 100-times over. 

Joanne has since passed away, but Anne Marie Pearson has taken up a grassroots movement to expand the FMLA in Pennsylvania for others in similar situations.  “I figured no one law out there can dictate who’s considered family anymore.  There’s death, divorce, separation, single people – they all play a role in everybody’s family unit.” 

While the FMLA is a federal law, the best chance for action is the state-level, and Pearson’s local legislators have taken up the cause.  State Rep. Dan Truitt (R-Chester) and State Senator Andy Dinniman (D-Chester) have introduced companion bills in Harrisburg, which would – under special circumstances – provide up to six weeks of unpaid leave for an employee to care for a sibling, grandparent or grandchild. 

Such individuals would only be eligible if the person being cared for has no living spouse, child (over 17-years-old) or parent (under 65-years-old).  The bills would mirror the federal law, which means that small businesses would be exempt. 

Truitt’s bill has been assigned to the Aging & Older Adult Services Committee.  Dinniman’s co-sponsorship memo is currently being circulated.

Radio PA Roundtable 02.15.13

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On this week’s Radio PA Roundtable, Matt Paul catches us up on the Attorney General’s disapproval of the controversial lottery management contract. He’ll also chat one-on-one with State Rep. Scott Conklin (D-Centre) about all of the latest developments in the Penn State scandal. Plus a Pennsylvania Bishop discusses Pope Benedict XVI’s big announcement.

Radio PA Roundtable is a 30-minute program featuring in-depth reporting on the top news stories of the week.

Click the audio player below to hear the full broadcast:

[audio:https://s3.amazonaws.com/witfaudio/radiopa/Roundtable02-15-13.mp3]

Reactions to Lottery Decision Pouring in

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The contract to privatize Pennsylvania Lottery Management has failed Attorney General Kathleen Kane’s “form and legality” test.  Reactions abound from stakeholders and elected officials, and their statements are providing a few hints as to what’s next.  Check them out for yourself:

Governor Tom Corbett:

“I’m deeply disappointed. I don’t agree with the attorney general’s analysis and decision, and we will review our legal options.

My job is to protect Pennsylvania’s seniors, and we will continue to do that.

We have a growing population where one in four Pennsylvanians will be over the age of 65 by 2017. My goal is to ensure that funding for senior programs keeps pace with that growth.”

(note that in his public comments in Pittsburgh, Governor Corbett said that one in four Pennsylvanians will be over the age of 60 in the next 17-years)

Camelot Global Services:

“We are disappointed with Attorney General Kane’s decision to reject the private management contract. We guarantee our proposal will produce unprecedented profits for senior programs and we have backed our investment in Pennsylvania with $200 million – transferring all risk from state taxpayers. Camelot has indicated it would headquarter in Pennsylvania, pay all taxes required of any commonwealth business, and keep all lottery jobs in the state. We have also publicly stated we would not oppose union organization by our employees. We have no further comment at this time.”

Speaker of the House Sam Smith / House Republican Leader Mike Turzai:  

“The administration’s interest was always about growing Lottery proceeds to increase funding for programs, thus helping the state serve its expanding senior population. We also realize many may feel this action by the attorney general ‘saves the Lottery.’ However, given that the Lottery has contracted out significant portions of its current operations, and has done so for many years, we hope the attorney general’s decision does not set the current operations back.   

“The legislature passed the lottery law in 1991, giving broad powers to the Secretary of Revenue to manage the operations. Right or wrong, it’s the legislative branch of government that should decide if the governor has too much say.  Consequently, we expect that the legislature will be reviewing the attorney general’s determination with great interest.”

House Democratic Leader Frank Dermody:

“The effort to outsource management of the Pennsylvania Lottery to a foreign corporation was done largely out of public view and it was wrong. In confirming the legislature’s authority in this matter, the attorney general made the right decision and followed the law.

“Because of her decision, lottery proceeds will continue to benefit older Pennsylvanians rather than being sliced up to benefit corporate shareholders.

“The governor is wrong when he claims the rejection of this improper contract will cost seniors money. I will push during the upcoming budget process to provide even more money than the governor proposed for senior programs and it can be done with the lottery’s current revenue.”

Treasurer Rob McCord:

“I commend the Attorney General for her independent review and subsequent rejection of the administration’s attempt to expand gambling through the state contracting process.

“The administration was repeatedly warned, as early as last year, that the proposed contract would permit new forms of gambling not currently authorized by the Legislature and not regulated by the Gaming Control Board

“Expanding the Lottery is a policy decision that should include the General Assembly, not be done through a closed-door contracting process.  Beyond the legal issues, this proposal also raised serious questions about how best to serve seniors efficiently with the programs that the Lottery pays for.”

Auditor General Eugene DePasquale:

“While I have not opposed all privatization, in the case of the Pennsylvania Lottery, Attorney General Kane and her team of lawyers made the right decision after identifying the legal flaws in the contract that would have led to an unprecedented expansion of gambling without legislative and public input.

“I am concerned that the benefits from the private management agreement would not meet or exceed what the current, very well run Lottery could produce in the same time frame. That concern, and the decision to expand gaming, need to be addressed with input from the public and Pennsylvania General Assembly before we go any further.

“I suspect today’s decision will not be the end of this story, but I hope Gov. Corbett will carefully weigh the cost to taxpayers before he decides to pursue this matter further. My office will continue to monitor the situation and be prepared to conduct and fair and independent audit should the contract eventually be implemented.”

 

Attorney General Rejects Lottery Contract

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Like thousands of state contracts every year, the Professional Management Agreement with Camelot Global Services is subject to review for “form and legality.”  But Attorney General Kathleen Kane says it failed that test.  She says it’s in violation of both the law and the state constitution. 

Kane addressed the media for about five minutes this afternoon.  Listen to her entire statement by clicking below:  KaneLottery

Governor Tom Corbett entered into the contract in hopes of generating billions of additional dollars, over the next 20-years, for state programs that benefit senior citizens. 

A recent Franklin & Marshall College Poll found that 64% of Pennsylvanians oppose the move.

New Poll Shows Support for LGBT Rights in Pennsylvania

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The Pennsylvania legislature’s growing LGBT Equality Caucus has unveiled a new poll as members call for legislation to protect members of the community.   The membership in the caucus has doubled and is bicameral and bipartisan.

Representative Dan Frankel (D-Allegheny) says the growth of the caucus represents  the changing will and mood of the people of Pennsylvania when it comes to simple fairness for LGBT people.

The poll conducted for Equality Pennsylvania finds 62% of the state’s residents believes gay, lesbian, bisexual and transgender citizens should be entitled to the same civil rights and protections as other minority groups.  69% agree that LGBT workers should be protected from being fired. 73% agree that it should be illegal to refuse service to someone based on their sexual orientation, gender identity or expression. The poll was conducted by CivicScience of Pittsburgh.

State Senator Daylin Leach (D-Montgomery) says Pennsylvania does not have laws to offer those protections.  He says we don’t even have anti-discrimination legislation that has been passed.  He says the hate crimes bill was struck down on technical grounds and not replaced.

Bills being reintroduced in this session would ban discrimination in employment, housing, credit and public accommodations.

Representative Brian Sims (D-Phila), the first openly gay person elected to the legislature, says he’s seeing signs that more colleagues in the state Capitol are finally beginning to recognize that common sense protections are long overdue.

Representative Mark Painter (D-Mont), whose wife is a Methodist pastor, says he believes firmly that discrimination, bullying and hatred are not Christian values.

Senate Votes to End Philadelphia Traffic Court

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With unanimous votes late Wednesday morning the Pennsylvania Senate signaled its intention to put the brakes on Philadelphia Traffic Court.  The chamber has advanced a pair of bills.  One would gradually transition the responsibilities of the Philadelphia Traffic Court to Philadelphia Municipal Court; the other would erase the traffic court from the state constitution completely. 

“One of the key distinctions between the municipal court judges and the traffic court judges, of course, is that the municipal court judges must be licensed attorneys in the commonwealth,” explains Senate Majority Leader Dominic Pileggi (R-Delaware), the prime sponsor of both measures.  “The traffic court judges need not be.” 

In recent weeks the Pennsylvania Supreme Court has released a scathing report on Philly’s traffic court, citing a culture of dysfunction and favoritism.  That document was soon followed by the indictment of a dozen people – including nine judges – who were caught up in an alleged traffic court “ticket fixing” scheme. 

Pileggi says Philadelphia has the only traffic court in the state, and it’s not worth saving.  The city’s Senate delegation supports Pileggi’s bills, but Senator Anthony Williams (D-Philadelphia) believes this should be the first step of a sustained effort to clean up the judicial branch of state government. 

“If people think that Philadelphia Traffic Court is the only place that somebody may walk in… and a magistrate may give some kind of favoritism, based upon your affiliation, then there are actually green men on Mars,” Williams says. “We’re the first guys willing to pony up and say we’re willing to fix ours.”    

Up next for the bills is the state House.