Tag Archives: legislature

Are Lavish Pensions Fostering Corruption and Ineptness in the Legislature?

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As the reports of Bill Deweese’s sentencing were being written, it became obligatory for those penning the stories to mention that the convicted Representative would be forfeiting $2.8 million in pension benefits. Those benefits would have continued to increase if he had not been convicted of the felonies he was charged with. The legislative pension formula provides legislators 3 percent of their highest salary for every year served. If Deweese had kept his seat for several more years his pension would have gone up commensurately. Note that state employees get only 2.5 percent for each year employed. Money contributed to pensions by legislators is not forfeited but can be held for restitution.

Nor is Deweese the only high profile forfeiter of pension benefits. John Perzel, Vincent Fumo and Mike Veon among many others have done so earlier. Presumably Jane Orie is about to join the group. And Robert Mellow who left office in 2010 is under investigation and is at risk as well. Mr. Mellow would lose an annual pension of $138,958 after taking a lump sum of $331,025.

Needless to say, for those who stick around, legislative service can be quite lucrative. Thus the question: does the promise of a lucrative retirement lead members of the Legislature to engage in questionable behavior that attempts to insure their perpetual re-election? The numbers of Pennsylvania legislators that have been convicted of election related crimes and money related malfeasance in office aimed at securing reelection suggest that the lure of power and lucrative pensions are certainly at work.

But just as important, does the desire to stay in office lead to a lack of intensity in pushing needed reforms because it is better for reelection not to rock any boats? How else explain the failure of the Legislature to fix the grotesque assessment problems, reform the state’s labor laws that are so inimical to economic growth and cost efficient government, or even to do the simple job of putting liquor sales in the private sector? Obviously, fear of voter rejection plays a major part. If there were no lucrative pension or generous health benefits, would legislators be so enamored of keeping their seats?

And given the extravagant pension package the Legislature adopted for itself, is there any wonder that it keeps kicking the state employee and teacher pension problem down the road? To deal with that impending financial debacle, they would have to act in a way that might cut their own pension benefits-a very unlikely development.

All the talk of reducing the size of the Legislature is a smoke screen to keep the public’s view away from the real problems. The Legislature is hamstrung by member desires to remain in office and the need to protect the largesse these offices provide.

We will know the legislators are serious about pension reform when they vote to adopt a 401k type plan for themselves.

Will the message be heard?

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The grand jury listening to the evidence emanating from the Bonusgate trial has issued a report calling for reforms to Pennsylvania’s Legislature. This is certainly an unusual move for a grand jury as their job is to listen to the evidence and recommend that a defendant be held for trial or not. But after eighteen months of listening about abuses and corruption by our Legislators, they had heard enough.

So these thirty three ordinary Pennsylvanians put together a thirty four page report calling for reforms. The reforms include moving the Legislature to part-time, eliminating questionable caucus funds, merging partisan offices and eliminating per diem payments. Surely these are ideas that have been bantered about in nearly every barber shop, diner, café, and gathering place across the Commonwealth. That it came from a grand jury with an up close view of the Harrisburg "sausage factory" has made it news worthy.

But will it signal the beginning of meaningful reforms to state government? Naturally each gubernatorial candidate has seized on this sentiment and is making reform part of their platform-as does everyone who runs for this office. However it is very unlikely those in the Legislature will be willing to go along in any meaningful way. After all Bonusgate is not the first scandal to hit Harrisburg and sadly it will likely not be the last.

Is the Casino Being a Good Citizen?

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When Pittsburgh’s casino license passed from Don Barden to Neil Bluhm, the latter agreed, as a condition to the transfer, to honor all obligations associated with that license-which includes an annual $7.5 million payment for the new hockey arena. The original agreement called for the first payment to be made October 2009. Mr. Bluhm first balked at making this payment earlier in the summer and while negotiations with the Sports and Exhibition Authority continue, this deadline looms closer. If his casino doesn’t honor this obligation, state taxpayers will be on the hook.

Through an arrangement of leases and subleases, the Commonwealth of Pennsylvania-i.e. the taxpayer-is responsible for paying the debt for building the new Penguins’ palace if the casino is unable. But here’s the catch: the money has to be appropriated by the Legislature. This is an interesting situation considering the State doesn’t have a full budget and is lamenting falling revenues. It’s highly unlikely the Legislature will approve the gubernatorial request to cover the casino’s first payment.

The main reason for the casino’s objection is that they just opened in August and hasn’t had time to earn the money to make the payment. Since its initial opening the casino has earned gross terminal revenues of $20.1 million-well below their projections-of which 55 percent must be paid in taxes. That leaves roughly $9 million to pay expenses such as personnel, maintenance and operations, and debt service.

But the payment is coming due and the taxpayers should not be saddled with his problem. The Rivers Casino could more easily find the money by perhaps borrowing against future revenues. When he took over the slots license Mr. Bluhm promised to be a good citizen. Stepping up and making the payment would be a great first step in keeping that promise.

Constitutional Crisis Threatened by Legislation on Assessments

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Members of the state House of Representatives have voted nearly unanimously to order a moratorium on court ordered re-assessments, unless they are being done voluntarily.

Here’s the problem. How can the House, for all intents and purposes, vacate a
Supreme Court ruling based on a constitutional issue? The Court has ruled
Allegheny County’s system is unconstitutional and must be fixed in line with
Judge Wettick’s May 2008 order.

If the Legislature wants to change the Uniformity Clause provision of the PA
Constitution, it has an amendment process it can use. Until then it seems logical
that a Supreme Court ruling based on that clause must be carried out as
expeditiously as possible to stop the unconstitutional favoritism the system is
imposing on Allegheny County property owners with some folks suffering irreparable financial harm by having to pay more taxes than they should have to pay. They can never get that money back.

It appears a constitutional crisis is in the offing. If the House bill becomes law and there is a lawsuit-which is inevitable and probably before the ink is dry-it will go straight to the Supreme Court where it be will declared unconstitutional and therefore unenforceable. Then what?

One can hope the Senate will steer well clear of this legislation. It is simply unimaginable that Congress would pass a law telling states they do not have to enforce Miranda rights or that they can ignore Roe vs. Wade with impunity if they so choose. Or more recently the Supreme Court ruling that overturned the District of Columbia’s prohibition of the lawful ownership of firearms in the home as unconstitutional: what would state legislators say if Congress passed a law telling Pennsylvania it could ignore the Supreme Court decision on second amendment rights and Philadelphia and Pittsburgh proceeded to pass a DC type prohibition on personal gun ownership?

The legislative branch cannot be allowed to overturn Supreme Court decisions, especially those based on the Constitution. The precedent, if allowed to stand, would throw Pennsylvania into chaos as far as the separation of powers is concerned. Courts serve a clear and vital function as a check and balance on the other branches of government. If their power to issue enforceable rulings and judgments is taken away, the legislative and executive branches will have destroyed the balance of power and woe betide the Commonwealth when that happens.

Governor’s Veto Creates Fiscal Drag on the State’s Economy

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The Governor has signed the Senate’s budget and immediately started to veto most of its line item spending. He only kept those items that would allow the State’s 77,000 member workforce to get paid-such as public welfare, state parks, and inmate education and training. He even allowed his office to receive it’s funding of $6.5 million. While he has authorized $11 billion of the $27.3 billion budget sent by the Senate, Commonwealth citizens are still paying taxes which are being collected and not spent. This is creating a fiscal drag on the State’s economy.

Considering that the Commonwealth collects more than $2 billion per month in tax revenues, this skeleton budget is only accounting for less than half, which leaves more than $1 billion per month languishing in the State Treasury. As this money goes unspent, it is not generating economic activity across the state. Even with a simple multiplier effect, this lack of spending is having a dramatic financial drag on the economy. Thus this budget battle is doing more harm than originally estimated.

Here’s an idea. While the Governor and Legislature battle it out, they could do the state a favor and provide a tax holiday at least until the budget stalemate is over. Cutting the state’s tax rates in half, which would still provide enough revenue to cover the skeleton budget, would put more money into the pockets of the citizens and remove the fiscal drag on the economy.

Giving people more money in their pockets to spend as they wish may create more economic activity and result in more tax revenues than anticipated. Who knows, maybe the people will realize just how much better off they are without all this government spending and demand real cuts to the state’s budget and tax rates.