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Auditor General Says Business Owe Millions In Corporate Taxes

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In rolling audits of the Pennsylvania Department of Revenue, Auditor General Eugene DePasquale says they’ve found that Pennsylvania is owed more than 40 million in underpaid corporate taxes. At the same time, the state owes businesses over 5 million from over payments.

DePasquale says it’s not a new problem. The audits have been finding a 6-7% error rate for the last four years.  The latest review found more than 12 hundred returns with errors.

He’s calling on the department to step up its efforts to collect the underpayments as well as return the over-payments and forward the difference to the Treasury. He says the net amount of 35.4 million could be factored in to the ongoing budget debate

He says the 35.4 million dollars should be part of the state budget to offset some of the cuts made over the last year. He says it could be used for variety of needs from environmental to education and health programs.

DePasquale could not name the companies that had underpaid, but said two of them were responsible for nearly half of the money owed. He says we should be doing everything we can to collect that revenue to offset tough budget cuts.

He says there are working families all over the state paying their taxes,  who are probably asking why corporations did not pay what they fully owed.

The audit results were announced on Tax Day.

State Capitol Packed as Row Officers Take Oaths

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It seemed like around every corner at the state capitol complex, Tuesday, was a Democrat taking the oath of office.  Hundreds filled the rotunda and spilled into the hallways to catch a glimpse of Kathleen Kane being sworn-in as the first Democrat and the first woman elected Attorney General in PA. 

“I’m proud, I’m excited and I’m just thrilled that everyone came out to support us the way that they did,” Kane told reporters afterward.  “It wasn’t just the election, they’re here today too.”  Kane has vowed to launch an investigation of the way the Jerry Sandusky case was handled at the AG’s office, and says she’s close to naming a Special Deputy Attorney General whose sole job will be that probe.

Across the street at the Pennsylvania State Museum, Eugene DePasquale became the state’s independent fiscal watchdog when he took the oath of office as Auditor General.  He’ll start by reviewing internal operations to ensure everything is running efficiently.  “I think it is entirely wrong to go out and start banging away at other agencies, and saying they need to become more efficient, if we’re not going to look at ourselves as well,” DePasquale said in his inaugural address. 

While DePasquale is the first York County resident to hold statewide office since Governor George Leader in the 1950s, he’s downplaying any historical significance.  “That’s kind of some fun talk, but – at the end of the day – if you do your job people will remember you well, if you don’t do your job they won’t.” 

Both DePasquale and Kane are serving in new positions, but Treasurer Rob McCord took the oath of office for a second time on Tuesday.  Looking ahead to his second term, McCord says he will continue to find innovative ways to save and make money for the people of Pennsylvania.  Under his watch, McCord says, the Treasury has produced $1.6-billion dollars in investment returns and averted $300-million dollars in erroneous state payments.

United Way Calls for Review of Welfare Savings

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As state lawmakers enter the 2013 budget cycle, the head of Pennsylvania’s United Way wants an independent review of a 2011 law that paved the way for $400-million dollars in savings at the Department of Public Welfare.  United Way of Pennsylvania President Tony Ross says Act 22 gave the DPW secretary unprecedented authority to implement new regulations in order to achieve the savings.  “We think it’s very important for policymakers and others to have information about what those cost containment measures meant – in terms of waste, fraud & abuse, and also impact on vital services,” Ross says. 

Ross tells Radio PA there’s anecdotal evidence on both fronts, but an independent review can get to the bottom of it.  “We don’t particularly have a preference,” he says of whether it comes from the Auditor General, Independent Fiscal Office or the Legislative Budget & Finance Committee. 

DPW spokeswoman Donna Morgan says a lot went into the attainment of the $400-million in savings, not just Act 22.  She points out that no legal challenges have been filed since the law passed the General Assembly and was signed by the governor.  “It’s not about just cutting here and cutting there,” Morgan explains.  “It’s about making these programs more efficient, breaking down the barriers between different programs and providing more flexibility so that tax dollars can be used more efficiently.” 

Welfare spending accounts for over 38% of the current General Fund budget, and mandatory medical assistance costs alone are expected to increase by $650-million dollars in the new fiscal year, according to the Mid-Year-Budget Briefing.

Special Elections Pending in State House

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A pair of Democrats won higher office, earlier this month, while simultaneously being reelected to their state House seats.  Allegheny County’s Matt Smith is moving across the capitol to the Senate, while York County’s Eugene DePasquale will set up shop in the nearby Finance Building as the state’s next Auditor General. 

The development will leave two vacancies in the GOP-controlled chamber when the 2013-2014 session gets underway in January, but DePasquale says the transition has not affected the work of his legislative office.  “We were being pretty adamant and keeping up with that stuff even during the campaign,” DePasquale explains.  “We don’t have much of a backlog here.  I mean certainly there’s some work that needs to get done, and we’re going to make sure it gets done.” 

There’s no word yet on when the special elections may be scheduled. 

DePasquale, who will tender his resignation in the House just before he’s sworn-in as Auditor General on January 15th, broke new ground by taking the Majority Party PA’s public service pledge during the campaign season.  “It commits them to using their position of leadership in service to the priorities of the majority of the Pennsylvania voters, as determined by scientific public opinion research,” says Majority Party PA chairman Tim Potts. 

Two other newly reelected state Reps also took Potts’ pledge: Scott Conklin (D-Centre) and Mario Scavello (R-Monroe). 

While critics dismiss the idea of a pollster setting the agenda for the state, Potts tells Radio PA somebody has to represent the public if we’re going to have a representative democracy.  He says nothing is added to their agenda until the public opinion is settled.

Democrats Sweep State Row Offices

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For the first time, Pennsylvania Democrats have swept the three state row offices on election night. Kathleen Kane has been elected Attorney General; Eugene DePasquale will be the next Auditor General; and Treasurer Rob McCord was re-elected to a second term.

Kane’s victory is particularly historic. She becomes not only the first Democrat to be elected Attorney General since it became an elected office in 1980, but also the first woman selected for the post by voters. Two women have served as Attorney General, but both were appointed, including Linda Kelly who is currently serving out the remaining term of Tom Corbett.

DePasquale defeated fellow State Representative John Maher to become Auditor General and McCord bested Republican challenger Diane Irey Vaughan in the Treasurer’s race.

Two State Reps Vie to Become Auditor General

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No mud-slinging in this race; just two elected officials touting their own credentials.  Take Republican John Maher of Allegheny County.  He was a certified public accountant long before he became a member of the state House.  “In these difficult fiscal times, there’s undoubted need to ensure that waste and fraud is squeezed out, so that every dollar of taxpayer money actually goes to the purposes that are intended,” Maher explained, as he told Radio PA the state needs a bona fide auditor to ferret out waste and fraud. 

Democrat Eugene DePasquale of York County was a deputy secretary at then-Governor Ed Rendell’s Department of Environmental Protection (DEP) before he was elected to the House.  “I was the first legislator to post my expenses online, I have the lowest expenses of any legislator in the state,” DePasquale said while touting his track record of eliminating wasteful spending.

DePasquale is pledging to prioritize audits of the state’s water protection and job creation programs to find out what’s working and what’s providing taxpayers with a ‘bang for their buck.’  Maher wants to address the backlog of required school district audits as a part of his effort to produce timely audits, and thus timely results for taxpayers. 

Both men are also on the ballot for reelection to their respective state House seats, but each has also pledged not to seek higher office while serving as Auditor General. 

Libertarian Betsy Summers will round out Pennsylvanians’ choices for Auditor General on November 6th.  All three are vying to replace Democrat Jack Wagner who is leaving office after serving his maximum two terms.

Auditor General Wants Controls on Tattoo Industry

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The state Auditor General is calling on lawmakers and the state Health Department to step up the state’s role in regulating the tattoo industry.

Auditor General Jack Wagner believes Pennsylvania needs to license and regulate tattoo parlors and artists.  He says it’s an invasive procedure that presents the risk of infection if equipment is not properly sterilized.

Wagner says the state has upwards of 750 tattoo parlors or artists.  He believes all parlors should be licensed by the Health Department with regular safety and sanitation inspections.

Wagner would also require training for tattoo artists, which may include apprenticeships, first aid and CPR training.  He wants to require liability insurance for tattoo establishments.

A bill was introduced in the state house last month that would address some of those concerns. HB 2617 would direct the state Health Department to establish health standards for tattooing, body piercing and corrective cosmetics.

New Voter ID Requirements?

Auditor General Candidates to Debate

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Three candidates vying to become the commonwealth’s fiscal watchdog will debate in suburban Harrisburg this Friday.  The Pennsylvania Cable Network (PCN) and Pennsylvania Legislative Correspondents’ Association (PLCA) have teamed up to host the debate at the Widener School of Law. 

Democrat Eugene DePasquale, Republican John Maher and Libertarian Betsy Summers are all confirmed.  There is no incumbent in the race as Auditor General Jack Wagner is currently wrapping up his second and final term.  

The public is invited to the debate, which will take place in room A180 of the Law School Administration Building.  Doors open at 6pm, and the debate begins at 7pm on Friday, September 21st.  If you can’t make it in person, the event will be broadcast live on PCN TV.

Lawmaker Calls on Turnpike Officials to Resign

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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”

Pennsylvania Finance Building

Budget Hearings: Straight Talk from the Auditor General

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Continued budget cuts could cost the state’s independent fiscal watchdog its bite.  Under next year’s proposed spending plan, the Auditor General’s Office is slated for a $2.2-million dollar (or 5%) cut.  It would make it an aggregate 25% cut over the past four years, according to Auditor General Jack Wagner. 

“I’m not complaining.  We realize that there had to be substantial cuts in state government across the board.  But, yes, we are at the bone,” Wagner told the Senate Appropriations Committee on Wednesday.

Jack Wagner

Auditor General Jack Wagner

Wagner’s office conducts 4 – 5,000 audits a year, which have pointed out billions of dollars in wasteful state spending.  Now, he’s warning lawmakers that it’s becoming difficult to fulfill the mandates of the office.  “I’m not going to be here for this next budget – for half of it – but in the process you are harming information flowing, or audits flowing, that help you make decisions.” 

Due to term limits, 2012 will be Wagner’s final year as Auditor General.  The Democrat received bipartisan praise from members of the Appropriations Committee throughout the hearing.  “Whether it was a Republican administration or Democratic administration, I think you were on the side of the taxpayers,” said Chairman Jake Corman (R-Centre).