PA Universities, Legislative Spending Get Scrutinized, State Roundup

By PA Independent Staff

HARRISBURG – The state House took the first step to closing a transparency loophole at Pennsylvania’s largest public universities, but at the same time a new audit report says the lawmakers themselves need better transparency and accountability over how they use special legislative expense accounts.

Meanwhile, Medicaid costs are projected to go up, and the unemployment rate and size of the labor force in the Keystone State are down.

Transparency loophole at state universities could be shut

The House State Government Committee approved a bill Monday afternoon to end the right-to-know exceptions for Pennsylvania’s four so-called “state-related” universities – Penn State, Pittsburgh, Temple and Lincoln.  The bill moves to the full House for a vote that could come as soon as Wednesday.

Under current law, all state and local government agencies – including the 14 state-owned universities that are part of the State System of Higher Education – are required to respond to right-to-know requests.  Only the four state-related universities, which received more than $514 million in state taxpayer funds this year, are exempted.

The four schools get between 5 percent and 15 percent of their annual budgets from the state, which they have argued is not enough to qualify as a state agency.  They have also expressed concerns about how the right-to-know law would handle sensitive information like records on private donors and research data.

State Rep. John McGinnis, R-Blair, a professor of finance and economics at Penn State’s branch campus in Altoona, said the schools should either comply with the Open Records Law or become wholly private institutions.

“I think it is incumbent upon the state-related universities, if they want to accept state tax dollars, that they be accountable to the taxpayers,” McGinnis said.

Audit: Changes needed for lawmakers’ $140 million slush fund

The state legislature spent more than $300 million during the 2011-12 budget year, including more than $228 million for employees’ salaries and benefits, according to a new internal report.

The new audit report was released by the Legislative Audit Advisory Commission report on Wednesday.  It shows that the General Assembly’s spending increased by $8 million from the previous year and the amount the legislature keeps tucked away in a special slush fund dropped by $43 million.

Even so, the legislature still has more than $140 million in its special reserve account. Legislative leaders maintain that they need that stash of cash so they can continue to operate in the event of a budget impasse.  The last time such an impasse occurred, in 2009, the legislature spent $89 million from the fund.

The report also offered suggestions on how to streamline the 36 different checking accounts the legislature maintains. Auditors say those checkbooks are riddled with errors and lack proper oversight, but lawmakers seem disinterested in changing their expense procedures.

New sales tax break for private jets

The state General Assembly appears to be on the way to passing a new sales tax exemption for airplane parts and maintenance, meaning private plane sales and repair expenses would go untaxed. The change would mean a loss of $12 million dollars in tax revenue for the state General Fund.

Proponents of the new exemption say it would generate more jobs in Pennsylvania by attracting companies that make and repair airplanes.

An independent analysis suggests more than 2,000 direct jobs and 2,600 indirect jobs would need to be created – bringing in a total of about $265 million in income – in order to neutralize those losses with other taxes.

Opponents of the proposal say it is little more than a giveaway to those who own and use private jets and will further complicate the state’s sales tax code that is already riddled with dozens of irrational exemptions.

Conservatives launch media blitz against key state senator in liquor privatization battle

A conservative campaign organization that has made a name for itself by going after left-leaning Republicans made a splash this week with a new television ad attacking state Sen. Chuck McIllhinney, R-Bucks.

McIllhinney is the chairman of the Senate Law and Justice Committee, which will have the first say on a House-passed liquor privatization bill.  The committee has a hearing scheduled for Tuesday.

The Citizens Alliance of Pennsylvania sponsored the ad, which will run on cable networks in the southeast corner of the state where McIllhinney’s district is located.  The head of CAP said the group has enough resources to keep up the ad campaign throughout the summer and to target other senators, if necessary.

McIllhinney has previously been lukewarm about passing liquor privatization – a major priority for Gov. Tom Corbett and House Republican leaders – but this week he told a Philadelphia radio program he intends “to put forth a proposal to privatize the state stores.”

Unemployment falls to 7.9 percent in March after two months of increases

Unemployment in Pennsylvania for the month of March fell to 7.9 percent, two ticks down from February’s mark of 8.1 percent, according to data from the state Department of Labor and Industry.

Though the unemployment rate declined, the number of Pennsylvanians working also dropped, as did the size of the state’s labor force – the measure of people actively employed or seeking employment.

The number of Pennsylvanians with jobs slipped just below 6 million for the first time since October 2012.

Still, the two point drop from February was praised by Julia Hearthway, Secretary of the Department of Labor and Industry, as a positive sign that Pennsylvania was “cautiously, but steadily” growing out of recession.

Also on the jobs front, Democrats blasted Corbett over a report that said Pennsylvania was 49th in the nation in job growth during March – only Wyoming created fewer jobs in the month.

The national unemployment rate was 7.6 in March, marking the seventh consecutive month that Pennsylvania has performed worse than the national average.

Medicaid expansion to cost feds billions in Pennsylvania

Taxpayers will be on the hook for additional costs if Pennsylvania decides to expand Medicaid in accordance with the federal health care law, but the those additional tax dollars will flow from the federal government, not from the state.

A new report from Pennsylvania’s Independent Fiscal Office – a nonpartisan number-crunching agency that serves as the state’s version of the Congressional Budget Office – said Pennsylvania would save about $220 million annually over the first eight years of the expansion, which would begin in 2014.  Most of those savings would be concentrated in the first three years, according to the analysis.

However, federal spending on Pennsylvania would increase by about $3.2 billion over the same period.

“Most of the Commonwealth’s savings under expansion would be generated by transferring individuals currently served by General Assistance to the federally-funded Medicaid program,” said Matt Knittel, executive director of the Independent Fiscal Office.

Corbett is still undecided on whether he will accept the Medicaid expansion, which states must voluntarily accept or reject, the U.S. Supreme Court ruled last year.

Follow @PAIndependent on Twitter for more.