|
| |||||||||||||||||||
|
INSIDER INFO -- MAY 2008
Bonusgate guessing game
Turnpike topsy-turvy
Gay marriage ban
Return to Harrisburg
|
We
welcome and appreciate any feedback
you may OPT OUT
The views contained in The Insider are those exclusively of its editor, Al Neri, unless an article is specifically authored by another writer. | ||||||||||||||||||
| Insider's Stories | |||||||||||||||||||
|
Bonusgate guessing game
As holiday weekend approaches all eyes are on AG Corbett and whether he will do something soon
It’s become a question of when something is going to break on the Bonusgate scandal rather than if.
Some House Democrats report that staffers of Rep. Todd Eachus, D-Luzerne, were questioned by investigators for Attorney General Tom Corbett, and then provided some evidence regarding the 2006 elections.
What that evidence was or whom it implicated is unsure, but Eachus is a close ally and friend of former House Minority Whip Mike Veon, D-Beaver, and House Majority Leader Bill DeWeese, D-Greene.
Veon gave up his registration as a lobbyist last month that was seen as another signal that Veon could be indicted by Corbett. The former House minority whip from Beaver County and some top House Democratic aides were quoted in e-mails discussing and agreeing to give higher bonuses to certain staffers based on their work for House Democratic campaigns in 2006 when the caucus took the majority by one vote. Some of those e-mails were published by the Pittsburgh Post-Gazette.
The scandal began when DeWeese wrote an e-mail to House staffers early in 2007, asking them not to talk to their colleagues about the five-figure bonuses many got in and after 2006 and the memo was leaked to the news media.
It turned out that while other caucuses gave out more of such bonuses in the past, House Democrats in 2006 dwarfed all others combined. In 2005 and 2006 combined, House Democrats gave $2.3 million in bonuses. All other caucuses gave out $1.3 million.
During 2006 alone, House Democrats shelled out $1.9 million in bonuses.
Corbett began his investigation and soon charged former state Rep. Frank LaGrotta, D-Lawrence, for having two relatives (his sister and a niece) in no-show jobs on the state House payroll.
Then Corbett seized some boxes of records from a House Democratic office marked “opposition research” and DeWeese fought for weeks in courts to keep Corbett from opening them. That effort failed, and Corbett was able to use the records in his probe.
After that, the emails among top House staff and Veon emerged. In the wake of that disclosure, DeWeese fired or secured the resignation of Mike Manzo, his then-chief of staff, Scott Brubaker, the caucus’s director of administration and five others.
Until the Post-Gazette published some those emails, Corbett was successfully attacked for concentrating his probe only on Democrats. After the emails and the LaGrotta charges, that din died down, because even Democrats privately conceded they didn’t realize what good evidence Corbett was sitting on.
Recently the Post-Gazette broke another story in this tale, claiming that Louis DeNaples, the embattled Poconos casino owner being prosecuted for perjury when he got his slots license, gave blank checks to a House leader who then gave them to House members needing financial help in their campaigns.
Since the Post-Gazette’s other investigative stories have all proved to come from investigative material, many are waiting for the names of those DeNaples blank check recipients to emerge. And some claim that House leaders were involved in that as well.
Finally, rumors are intensifying among House Democrats and also among Senate Republicans close to Corbett’s staff that indictments could come right around the Memorial Day holiday, give or take a few days.
Depending on who is implicated or indicted, and speculation abounds on that point, it could roil the House as it tries to pass a budget and other major priorities of its own members and Democratic Gov. Ed Rendell.
Corbett’s office is staying mum, but the buzz of rumors about this in the capital may be reaching a crescendo.
Gov. Ed Rendell acknowledged when he rolled out the winning bid for a potential lease of the Pennsylvania Turnpike this week that the $12.8 billion offer was not up to the high expectations of the price the pike would fetch when he first proposed this more than a year ago.
But, still, he argued that the deal he is proposing will give the state $150 million or more a year than the current plan to toll Interstate 80, the east-west highway in northern Pennsylvania. Every dollar additional, he says, will be used to fix deteriorating roads and bridges and provide state subsidies for mass transit.
Senate Majority Leader Dominic Pileggi, R-Delaware, said the lease proposal was a low priority for the Senate, while federal approval was still pending on the I-80 tolling application. Senate President Pro Tempore Joe Scarnati, R-Jefferson, is said to be preparing his own plan and it will not include I-80 tolling because of local opposition to the idea.
“I don’t see this as an item that is a higher priority than passing the budget or dealing with the other issues that are well advanced in the General Assembly that we’re trying to close before the end of June,” Pileggi told reporters after Rendell’s announcement Monday. “So this looks like something that would more likely be taken up in more detail when the budget is closed into the fall.”
House Democrats, meanwhile, firmly oppose leasing the turnpike. And even Rendell said he expects lawmakers will want to see the results of the I-80 process before acting on a lease plan.
The winning bidder for a potential turnpike lease, Rendell announced Monday, is an investment group led by Citi Infrastructure Investors and Barcelona, Spain-based Abertis Infraestructuras. Abertis would hold a 50-percent interest in the lease, and Citi a 41 percent interest. The remaining 9 percent would be held by Criteria CaixaCorp, a major shareholder of Abertis.
Rendell said the group’s $12.8 billion bid, once the state pays off existing turnpike debts and a $16 million success fee to Morgan Stanley, its advisor on the turnpike deal, could be invested with the State Employees Retirement Fund, which has posted an average rate of return of 12 percent on its investments over the past 20 years.
At a 12-percent rate of return from the proposed lease, Rendell says such a plan would generate $1.1 billion annually over the next decade. (That $1.1 billion must be less the cost of funding state police patrols on the turnpike, which the state will have to cover: about $33.5 million in the first year, and growing by about 3 percent each year after that.)
The I-80 plan, signed into law last summer as Act 44 of 2007, is expected to generate an average of $946 million in new annual funding over the next 10 years, but federal approval is still pending on tolling that interstate.
Rendell believes that the turnpike lease plan will provide more money for highways, bridges and mass transit. He also is suspicious of semi-government authorities such as the Turnpike Commission, which has long been a source of patronage jobs for political insiders and politicians’ relatives.
For Rendell, insiders say, the turnpike lease deal is true reform and a financial winner – something that will build his legacy in national circles.
Brimmeier, like many House Democrats and senators from both parties, believe it makes little sense to give up a major state asset, like the turnpike, especially for the relatively small difference in payouts between the two plans.
Several lawmakers also have said that offer is too low, and on the less impressive end of the $12 billion to $18 billion projection Morgan Stanley offered up last year in its initial evaluation of leasing the turnpike.
Rendell said the bid came in lower than expected because of market conditions, and because of the toll restrictions included in the lease. To get into the higher range of the Morgan Stanley estimates, Rendell officials say, the state would have had to relinquish more controls over future toll hikes and made the lease terms longer than 75 years.
Brimmeier said in a statement this week that it made sense to stay on track with the I-80 tolling plan, and the other pieces of Act 44, before wading too far into a lease deal.
But Rendell officials contend that over the next 50 years, a turnpike lease plan will bring in about $96 billion, $12 billion or so more than the $84 billion the Pennsylvania Turnpike Commission says tolls on Interstate 80 and Act 44 will generate.
Of course, that assumes an average rate of return of 12 percent on the turnpike lease investments over the next 75 years, which several lawmakers and insiders dismissed as too pie-in-the-sky.
“I’m not a financial analyst, but I’ve never heard of an investment that guarantees 12 percent for 75 years into the future,” Pileggi said.
Many are skeptical of Rendell’s claim that the money invested from the he lease can earn 12 percent annually in SERS as the governor claims. While indeed, SERS did have a 12 percent annual growth over the past 20 years that included the boom years of the 1990s which there is no guarantee will reoccur.
Brimmeier and Turnpike Commission staff are also emphasizing that so far, the commission has already sent $750 million to the Department of Transportation under Act 44, and will send another $850 million between now and next spring.
But turnpike lease proponents note that if the federal government nixes the plan to put tolls on I-80, Act 44 will come up woefully short in the out years, casting the turnpike lease as an option that would raise more than double Act 44’s long-term numbers without the I-80 toll revenue.
The problem, though, for Rendell is the low $12.8 billion bid, which after debts and fees are paid, comes in more around the $9 billion range. And his own 12-percent rate of return is much more ambitious than the 7-percent to 9-percent range Morgan Stanley estimated on such an investment last year.
A look at the rates of returns on SERS’ funds going back 28 years, to 1980, seem to support Rendell’s 12-percent rate of return. Going back much before 1982, however, it’s difficult to compare, since the SERS’ board was more limited in those days as to what it could invest in.
Still, insiders question whether a 12-percent rate can hold up over 75 years, especially considering the last 20 years that Rendell cites include the remarkable economic boom of the mid- to late-‘90s.
Even Senate President Pro Tem Joe Scarnati, R-Jefferson, expressed major doubts about this plan, despite being much more open to a turnpike lease than Pileggi, given that Scarnati represents a swath of I-80 and Pileggi is squarely in turnpike territory.
“The votes aren’t there politically to get this done,” Scarnati told the Harrisburg-based Capitolwire Internet news service. “I think the governor’s counting on Republican zeal for privatization, but that doesn’t include, in my view, a bad deal on the turnpike.”
So what’s next?
First, Rendell wants to light a fire under the Turnpike Commission to respond to questions and requests for more data from the Federal Highway Administration, which is reviewing the I-80 toll plan. After that information is forwarded to the feds, Rendell plans to ask federal Transportation Secretary Mary Peters, with whom he is on good terms, to expedite the process.
Once the verdict is in on I-80, then Rendell – and lawmakers – will start to get a better sense of where the turnpike lease is likely to go.
Rendell will also work hard to convince naysayers that a turnpike lease is not the same as the sale of a major commonwealth asset, as Scarnati and Pileggi like to say. He’ll focus on the controls the state has placed in the lease – on tolls, maintenance requirements, road conditions, etc.
Still, time will be of the essence. Citi/Abertis' bid expires on June 20, although Rendell has said he believes they’ll extend it beyond that time, as the Legislature reviews the matter. Company officials said Monday they could be flexible over “a matter of weeks.”
Rendell is realistic enough to know this won’t get done by June 30, but he did say the Legislature must act on this by September at the latest. That’s still a tall order, considering that after the budget is put to bed in June or July, along with all the attendant legislative matters, the General Assembly will be on break for two months or more, and won’t come back to Harrisburg until mid-September.
But a lot can happen between now and then. For now, though, all eyes will be on what happens with the I-80 tolling application and whether a potentially lame-duck U.S. transportation secretary will make such a crucial decision when a new administration is just around the corner in January.
Gay marriage ban It’s not as simple as defining it as between a man and a woman as the bill’s sponsor has learned
First, an effort to put a gay marriage ban constitutional amendment on the November ballot failed in the Pennsylvania Senate.
Then came California where the state Supreme Court revved up the controversy by issuing a split 4-3 decision allowing gay couples to marry in the Golden State.
Below is the wording of Brubaker’s bill and the key words, “functional equivalent of marriage.”
Option 2 is to bring that bill back as is, and let those Senate Republicans cast what they view as a “pro-tolerance” vote to allow civil unions, hospital visiting rights and some inheritance rights for gay couples, but still define “marriage as between a man and a woman.”
Because Brubaker, knowing that he had strong support defining marriage as “between a man and a woman,” unwittingly tripped over the new third rail in Pennsylvania politics: potential civil unions or some diluted version of them.
While it is well known that wide margins of voters in polls support defining marriage as among heterosexuals, it is becoming increasingly clear in legislative bodies that wide-ranging bans of civil unions and parallel gay rights are now very unpopular.
Gays sending thousands of emails to their lawmakers also made the point that some had secured benefits for gay partners and any such amendment using the phrase marriage-equivalent relationships could end those benefits.
Ignoring that din and the growing unease of 10-15 Senate GOP colleagues, Brubaker underestimated the strength of the support among voters and lawmakers in this state for some future level of civil unions or gay rights to such things that married couples enjoy such as hospital visitation, inheritance, power of attorney and other rights.
And once it was clear to him that the “equivalence” language would be stripped out by an amendment led by Fumo, Brubaker pulled the bill back from floor action. He blamed it, however, on the state House, saying the lower chamber would not approve it.
That action, GOP strategists said, left them in the worst of all possible worlds: the anti-gay conservatives were furious, the regular Republicans who prefer the heterosexual definition of marriage got nothing, and it looked like the House was telling the Senate what to do.
So expect this issue to return, either as is, with an amendment vote to let some Republican senators and many Democrats have it both ways on this legislation, or without the “equivalent” language.
Either way, it was a big win for gays, as they may lose the right to get formally married, but took a big step forward as 30 state senators followed the majority of the House in the past in showing themselves unwilling to outlaw civil unions.
The issue was also notable for being a great example of what Capitolwire’s Pete DeCoursey termed “Fumo … in full plumage.”
For the first time in years, Fumo snuck up on another senator to derail a bill.
DeCoursey wrote of Fumo, “First, sounding angry, he told a black Philadelphia minister testifying in favor of Brubaker’s bill that if the Legislature would take away the rights of gays, it might secretly vote to reinstate slavery.
He ended up having to clarify and explain that remark. That counter-attack and his later mocking maneuver, of saying he too would protect the “beleaguered institution of marriage” by banning most kinds of divorce, seemed more driven by emotion and anger than tactics or strategy. But there was a method in Fumo’s “madness.”
One Republican senator told Capitolwire: “I am fine with defining marriage as being between one man and one woman. I am not fine with taking away rights gays have now, from the government or from their employer, because they are people.”
Capitolwire wrote “… Brubaker had the option to bring up the bill and lose that equivalency language provision to an amendment Fumo would craft and enact with Republican support. When Brubaker wouldn't do that, Fumo exposed that Brubaker’s amendment wasn’t about defining marriage, but banning civil unions and marriage-like benefits for gays. Once that was impossible, Brubaker pulled his bill back.”
The news here was simple: banning marriage for gays is popular: limiting their current or future potential benefits is not. As the House did years ago under Speaker John Perzel, R-Philadelphia, the Senate showed caution on this issue, not wanting to move forward on the issue of gay benefits, while being willing to ban gay marriage.
This makes gay benefits a new third rail in state politics.
Return to Harrisburg Lawmakers will return to the Capitol next month with a long “to do” list courtesy of Gov. Rendell
June is when the Legislature digs in for a long haul in passing the state budget and its accoutrements. Extra shirts and underwear are the order of the day.
Gov. Rendell and legislative leaders also hope to deal with a host of issues left unresolved in the long months leading up to the budget.
A public indoor smoking ban, statewide energy strategy, expanded health care program and transportation funding are just some of the leftovers being served up by the Rendell administration as the Legislature works toward passage of a 2008-09 budget.
There are other issues, as well, including a six-year plan to step up basic education funding and billions in new borrowing to promote redevelopment, build infrastructure and fund energy programs, that the Legislature and governor will grapple over.
Smoking ban: One big leftover that many insiders are watching is the standoff within a Senate-House conference committee over legislation to enact a comprehensive public smoking ban.
Sen. Chuck McIlhinney, R-Bucks, has a plan that largely resembles a Senate smoking ban bill that exempts bars and parts of casinos, much to the frustration of strict ban proponents like Sen. Stewart Greenleaf, R-Montgomery, and Rep. Mike Gerber, D-Montgomery.
But the sticking point, according to insiders, is whether cities, like Philadelphia, that have enacted smoking bans stricter than the would-be state law, can keep those local laws in place.
And the key conference committee vote on that issue is Senate Minority Leader Robert Mellow, D-Lackawanna, who, after hearing loud and clear from his caucus that the local option is a must-have, has said he won’t support McIlhinney’s plan if it doesn’t allow Philadelphia, and a few other cities, to enact stricter bans.
Reps. Robert Belfanti, D-Northumberland, and Ron Miller, R-York, along with McIlhinney, favor one statewide law, and no local carve-outs. With Greenleaf, Mellow and Gerber favoring the local option, the committee could deadlock.
Throw into that Rendell’s recent promise to veto any smoking ban law that doesn’t let Philadelphia keep it’s stricter law.
This one will likely come to a head in early June, insiders believe, when one side or the other will have to compromise, or the issue will end up on the legislative cutting room floor.
Alternative Energy Plan: In another key legislative area, most insiders agree that the upcoming budget negotiations will yield an agreement on Rendell’s push for a strategy to invest in alternative energy, promote conservation and stem the expected electric rate hikes on the horizon.
The final product there will likely be an investment of somewhere between $650 million and $850 million in alternative energy and conservation programs – Senate Republicans favor a plan that spends $650 million over 10 years, including $250 million in up-front borrowing, while Rendell prefers a more ambitious $850 million in up-front borrowing, to be driven out over the next couple years.
A companion piece to that will be legislation to put more smart electric meters in Pennsylvanians’ homes, requiring utilities to reduce energy output and phase in expected hikes in electric rates when caps expire in 2010.
The smart meters requirement is one Rendell-favored initiative that the Senate GOP for months had scoffed at, but appear to be warming up to more recently.
After a Senate Consumer Affairs and Professional Licensure hearing last week, the committee chairman, Sen. Robert “Tommy” Tomlinson, R-Bucks, said of the smart meter piece: “It will definitely be a part of it, if I have anything to say about it.”
Health Care: One much less certain legislative leftover from last year is the expected tussle between Rendell and the Senate GOP over his and the House Democrats’ health care initiative.
In February, the House of Representatives, with the votes of Democrats and a handful of Republicans, passed legislation to enact the Pennsylvania Access to Basic Care plan. It would extend state-subsidized health coverage to those earning up to 200 percent of the federal poverty level – about $42,000 for a family of four. Proponents say it would insure up 272,600 uninsured Pennsylvanians within five years.
Senate GOP leaders have promised to hold a hearing on the bill, after blasting House Democrats repeatedly for not holding a hearing on the final version of the bill, before voting on it. Look for that to happen at some point in June.
But Senate Republican leaders have made it no secret that they don’t think the state can afford the program, which will cost $1.1 billion by Year Five after its enactment.
The state would have to fund $213 million of the $501 million cost of the program in the first year, and $370 million by the firth year, while the federal government, small employers and plan participants would pay the rest.
The problem is that Rendell wants to fund the state share in part by using about half of a $500 million surplus in a state-run medical malpractice insurance subsidy fund, a 10-cent-a-pack hike in the state cigarette tax and a new 36-cent-a-unit tax on cigars and other tobacco products. So far, those ideas aren’t flying with the Senate GOP.
Rendell also will advocate for various health insurance reforms that the House has passed, including one that would prevent health insurers from basing rates on a member’s health, age, gender or other demographic factors.
While these issues are ancillary to the larger health care plan in Rendell’s book, he will push on both initiatives, arguing that they work in tandem with each other to make health care more affordable.
Meanwhile, Senate Republicans will continue to engage the administration on legislation that would give state officials and the Legislature more oversight of the proposed merger between Independence Blue Cross in Philadelphia and Pittsburgh-based Highmark Inc.
The Blues merger oversight bill has hit roadblocks as Rendell and lawmakers have differed over what role a lawmaker-appointed board should have in advising the Insurance Department as it reviews such a merger. Of course, this issue will also likely be tied up with Rendell’s larger health care and insurance reform efforts.
Transportation, the turnpike and borrowing: Transportation funding could also play a bit role in the coming weeks, as lawmakers and other officials and insiders continue to wade through Rendell’s proposal to lease the Pennsylvania Turnpike to a Spanish-American consortium. But this is unlikely to be one of the issues on the budget checklist, unless news comes down quickly on the feds’ decision regarding tolls proposed for Interstate 80 in Northern Pennsylvania.
Rendell and the Senate GOP will likely reach some agreement, though, on some borrowing and more concentrated investment in infrastructure repair, including a step up in funding for bridges and hazardous dams. Among those proposals is one Rendell is touting to borrow $2 billion to fund bridge repairs over the next decade.
Rendell also has a series of economic stimulus proposals, some of which include the infrastructure borrowing and investment. Other programs, like increasing the borrowing cap on the Redevelopment Assistance Capital Program by $750 million and expanding the Keystone Opportunity Zone program, will be key pieces of the upcoming budget talks.
Borrowing, however, will be an issue in negotiations between Rendell and the Senate GOP. The Associated Press reported this week that there are a total of $4 billion in new borrowing tucked away within various proposals and programs, and while Senate GOP leaders are open to some borrowing in the budget, they say plans have to be scaled down to prevent the need for future year tax hikes.
Education funding: Not all of the upcoming negotiations between Rendell and state lawmakers are old news. Rendell, in his budget proposal, is proposing to increase basic education funding by $499 million, or 4.2 percent, the first step in a six-year plan to funnel an additional $2.6 billion to schools. A panel commissioned by the Legislature recently found that there is a $4 billion gap in funding the education needs of the state’s K-12 schools.
Senate Majority Leader Dominic Pileggi, R-Delaware, said that the Senate would closely scrutinize that proposal, which, he said, gives some districts a 1.5 percent increase in basic education funding, while others get boosts of up to 22 percent.
“When you look at the result and you look at the districts that are 1.5 [percent] and those that are at double digits, up to 20-some percent, it argues for a reexamination of the process, at least to that result,” Pileggi said. “That’s what we’ll be doing and have already invested some substantial effort in doing.”
And then there is the budget itself, which will, of course, feature the usual tussle between Rendell and lawmakers over how much of the Legislature-favored programs that Rendell routinely cuts from his budget proposal will be restored, and how much pain that will cause to Rendell’s preferred funding programs.
Mixed in there will be a question over whether the Department of Public Welfare should carve-out the management of prescription drug benefits for Medicaid patients, which are now handled by private health care providers and pharmacy benefit managers. This idea, actually, can be filed with the leftovers, since Rendell has proposed doing this in the past several years, and has been foiled each time by lawmakers who don’t think the department is up to the task.
Another Welfare Department fight will be over whether non-medical service providers should get a cost-of-living boost. Several providers – most vocally, nursing homes – have decried Rendell’s budget proposal for flat-funding them in the 2008-09 budget.
Public Welfare Secretary Estelle Richman has responded by saying that such a COLA is simply unaffordable in a tight budget year. She said earlier this year that it would cost $108 million to give a 2-percent COLA to nursing homes, mental health and mental retardation treatment programs, childcare facilities, community-based family centers and a variety of other service providers.
Insiders, however, expect providers will get something, as lawmakers lobby for them to get some kind of cost-of-living boost.
| |||||||||||||||||||
