State Roundup: Lawmakers Back in Action, Sort of

By PA Independent Staff

HARRISBURG – Mitt Romney has slipped farther behind Barack Obama in recent polling, but the U.S. Senate race in Pennsylvania is growing tighter, and the three state row offices figure to be hotly contested as well.

Meanwhile, lawmakers are considering a new tax incentive program to lure jobs to Pennsylvania from other states – but at a cost – and spiraling debt on the Pennsylvania Turnpike and in the state’s public pension systems is drawing increased scrutiny.

Polls suggest Senate race tightening 

Pennsylvania’s U.S. Senate race wasn’t high on the list of toss-up races. But the battle between first term U.S. Sen. Bob Casey Jr. and Republican challenger Tom Smith, a former coal mine executive, seems to have tightened considerably in recent weeks.

Whereas Casey once had a solid lead, poll numbers released Wednesday show Smith closing in. The shift comes after a rousing round of televised attack ads throughout September.

A poll released Wednesday by Quinnipiac University, CBS News and The New York Times shows Casey leading with 49 percent of the vote against Smith’s 43 percent, a margin of six percentage points.

The poll, conducted Sept. 18 through Sept. 24, surveyed 1,180 likely Pennsylvania voters with a margin of error of 2.9 percentage points.

But it shows a marked leap in Smith’s likely supporters. In August, a similar poll from Quinnipiac had Casey ahead by a margin of 18 percentage points.

The numbers pushed The Washington Post’s “The Fix” blog to classify the Senate race as “lean Democratic,” as opposed to “solid Democratic.”

While Smith is making a comeback, recent polls have shown GOP presidential candidate Mitt Romney slipping further behind President Barack Obama, by an average of eight points. Romney campaigned in Pennsylvania on Friday, his first visit to the state since July.

Six weeks out, row office fundraising favors Democrats

Campaign finance reports due this week, six weeks before the general election, show the three Democratic candidates for th statewide offices of attorney general, auditor general and treasurer have slim fundraising advantages.

In the attorney general’s race, Lackawanna County prosecutor Kathleen Kane, the Democratic nominee, raised more than $1.4 million since May and has more than $1.2 million on hand in her race against Cumberland County DA Dave Freed, a Republican. Freed raised more than $807,000 since May and has $1.2 million on hand.

Outside dollars may be just as important in the attorney general race, which is regarded as the most important of the row office contests.

Freed already benefitted from a $500,000 advertising blitz against Kane that was funded by the Republican State Leadership Committee, a national campaign organization. Kane can tap into personal wealth – as she did with a $1.8 million loan during the primary campaign – because her husband is an executive with the Kane Is Able trucking firm.

In the auditor general race, state Rep. Eugene DePasquale, D-York, reported raising $243,000 since May and has $182,000 on hand. His opponent, state Rep. John Maher, R-Allegheny, reported raising $152,000 since May and has about $86,000 on hand with six weeks remaining in the campaign.

Both men are running for re-election to their state House offices.

Treasurer Rob McCord, a Democrat seeking his second term in office, has more than $2 million on hand, well ahead of Republican challenger Diana Irey Vaughn, who has only 22,000 on hand, according to campaign finance reports.

Moody’s says pensions costs, economic slowdown means more downgrades for PA municipalities

A report released Thursday by Moody’s Investors Service suggests Pennsylvania municipalities may be heading toward a credit ratings downgrade.

The credit rating agency’s new report says municipalities in the Keystone State face more downgrades than upgrades through early 2014 as a result of weak economic recovery, rising pension costs and other factors, such as declining state aid. Downgraded credit ratings result in increased borrowing costs.

The report cited “mixed results” for Act 47, the state’s program for distressed municipalities that lawmakers have targeted for reforms.

Moody’s said the program’s shortfalls are due to voluntary cooperation provisions that allow municipalities to reject a recovery, implementation failures when public officials fail to stick to a recovery plan, and limited new revenues made available to municipalities in the program.

Since Act 47 was implemented in 1987, 26 municipalities have entered the program and only six – all relatively small boroughs – have existed.

Turnpike debt out of control, says auditor general

Auditor General Jack Wagner on Tuesday accused the Pennsylvania Turnpike Commission of using “flim-flam financing” to pay off its $7 billion debt.

But Roger Nutt, CEO of the commission, said its finances are sound — as long as it increases tolls for the next decade and beyond.

And if the motorists don’t pay, Wagner said, “that debt is guaranteed to be paid … by the taxpayers of Pennsylvania.”

Wagner told a joint hearing of the House and Senate transportation committees that the turnpike’s unsustainable debt, which is spiraling out of control, will drive up tolls and eventually drive motorists away from the turnpike completely.

Nutt argued that the tipping point — when increased toll revenue is cancelled out by drivers diverting to other roads — will never occur, referring to the turnpike’s own forecasts that consider gas prices and the additional travel time of diverting to other roads.

But Wagner said that tipping point will arrive sooner than later as the turnpike is on pace to be the most expensive toll road in the United States, when its next toll increase takes effect in January 2013.

State Sen. John Wozniak, D-Cambria, minority chairman of the Senate Transportation Committee, said the turnpike’s practice of borrowing $450 million annually was not sustainable.

“Tolls keep going up and it’s clear we can’t maintain the status quo forever,” he said.

Business incentive would funnel tax dollars to private companies

Pennsylvania could have a new pitch for companies looking to relocate: Settle in the Keystone State, and keep the heaping pile of money your employees pay as state income tax.

The proposal, called the Promote Employment Across Pennsylvania Program, or PEP, would let qualifying businesses keep 95 percent of personal income tax that their employees would otherwise pay to the state. The other 5 percent would go to the state.

Typically, those personal income tax dollars go right to the state’s general fund, with all wage-earners chipping in to fund the state services.

“If the goal is to try to make the tax system more transparent and comprehensive to not only businesses but individuals, a program like this could take the system in the opposite direction,” said Pete Sepp, executive vice president at the tax reform advocacy group National Taxpayers Union in Alexandria, Va.

State Rep. Kerry Benninghoff, R-Centre, sponsor of the bill, said fixing the state’s economy means reforming the tax code for existing businesses and figuring out how to attract new ones.

“We all benefit if a new company moves into our area. We see that in growth in the economy. We see that in jobs that are growing our community,” he said.