By Patrick Kerkstra

Every so often, when Mayor Nutter opens his mouth, a little gem tumbles out that captures matters perfectly. Yesterday, it was a five carat diamond.

“We are caught in a vortex of political hell with no way out,” Nutter told reporters. Later, he mentioned ping pong.

At issue is the cigarette tax for city schools, which is a questionable policy on its own, but also the closest thing the district has right now to a lifeline. Yesterday morning, it looked like a lock. But that was before the State Senate voted to put its growing feud with the House of Representatives and the tender concerns of the tobacco lobby ahead of the School District of Philadelphia and its 191,000 students, adding a five-year sunset provision to the tax and putting its final passage at risk.

How did this happen? Didn’t the Senate approve the tax sunset-free on June 30?

Well, yes. But then the House got the bill, and while the House shocked all by accepting the cigarette tax, its version of the legislation gave an assist to city charter schools and took out a few provisions unrelated to the cigarette tax but near-and-dear to the hearts of Senate Republican leaders like Majority Leader Dominic Pileggi (see here and here).

That gave the Senate a second chance to tinker (ping pong), gave the tobacco lobbyists the entree they’d been looking for (which is definitely political hell), and now everything the district thought it had won, meager though it was, is suddenly at grave risk (a vortex of, say, potential doom).

Now it’s back to the House, which has scheduled a rare summer session to take the matter up again.

Philadelphia Democrats in Harrisburg are howling about all of this, with the peculiar exception of State Senator Anthony Williams, the Democratic whip. On Monday, he claimed credit for his role in moving the cigarette tax (Williams introduced the tax authorization bill) in a joint appearance with Mayor Nutter. On Tuesday, he was the lone Democrat in the Senate to vote for the amendment sun-setting the tax after five years.

Yesterday, shortly before the votes on the bill, Williams told me that “the tobacco lobbyists are up here, not trying to kill it but inflict pain upon it.” He described the five-year-sunsetting as a better option than “more egregious” alternatives the lobby was pushing.

“We basically said, look, we need to vote it out of there, we’ll accept a five year sunshine,” Williams said, when asked why he would support the sunset provision. “A cigarette tax is not a permanent funding solution for the schools, and if it works, it’ll probably get renewed.”

I suspect some version of the cigarette tax will ultimately pass. But that’s obviously not a sure thing. And if the district does get a tax with a five-year lifespan, it’ll be difficult for Superintendent Hite to do long-term fiscal planning. One of the Philadelphia school district’s many problems is the lurching about it’s been forced to do each year to find stopgap funding, instead of being able to rely on a predictable stream of revenue, like the rest of the districts in the state.

A five-year cigarette tax would also be a far, far cry from the grand bargain that seemed, fleetingly, to be in the works earlier in budget negotiations. According to sources, the proposed framework of the deal looked roughly like this:

• A new tax on Marcellus Shale gas extraction, with annual revenue of between $200 million (which Republicans were willing to accept) to $600 million (which Democrats were angling for).
• The issuance of pension obligation bonds, both to shore up the state’s pension fund and free up short-term cash for school districts like Philadelphia’s that are buckling under extreme pension payments.
• A rollback on pension benefits for new state employees, either in the form of mandatory 401(k)-type plan, or a mandatory hybrid plan.
• New funding of around $70 million for the “charter reimbursement” line of the state budget, which would have translated into significant new funds for school districts like Philadelphia’s that have a lot of charter operators.
• In all likelihood, the cigarette tax would have been included in a final deal as well.

If that framework had held up, the district would have been looking at more than $60 million in new state funding, plus the $80 million or so the cigarette tax is estimated to net the district in its early years.

That’s the kind of investment that shuts off the sirens at district headquarters, the kind of money that returns counselors and nurses and librarians and aides to city schools. It’s the sort of cash that gives Hite and his team a fighting chance to make schools better.

But the framework, which was being assembled principally by Pileggi and Williams, fell apart before it matured into a concrete proposal, and it’s not hard to see why. There’s a pretty vast spread between a $200 million shale tax and a $600 million one. I think it’s unlikely many Republicans in the Senate or the House would have accepted $600 million in new taxes, and I doubt many Democrats in either chamber would have been willing to cross their allies in the public employee unions, certainly not on the cheap.

Perhaps, if it was not a gubernatorial election year, Philly Democrats in safe seats would have been freer to vote in the interests of the school district, and perhaps they would even have had the silent blessing of party leaders. That might have been enough to clear the Senate and give the deal a soupcon of bipartisan flavor.

But it is an election year. And it would surely take a lot of Democratic votes in a Republican House as conservative as this one to pass any budget that included hundreds of millions of dollars in new taxes.

And that’s to say nothing of Gov. Corbett, who resisted the shale tax throughout (though I do think he would have had little choice but to sign off on a grand bargain if it had made it to his desk in an election year).

You get the drift. Republicans say Democrats wouldn’t bend, Democrats say the same of Republicans, and in the end we have a still-unsigned, status-quo budget and the prospect of no new money for city schools.

It would be simplistic and reductive to proclaim a pox on both their houses. Republicans control state government top-to-bottom, full stop. But I don’t see any profiles in courage on the Democratic side of the aisle here either.

“A vortex of political hell” indeed.

Source: http://www.phillymag.com/news/2014/07/09/cigarette-tax-fail/

By Kevin McCorry

– The passage of the Philadelphia cigarette tax hit a major setback Tuesday.

The Pennsylvania Senate approved the tax, but added provisions as part of an omnibus package that will yet again need the blessing of the House of Representatives, which is not scheduled to return to a voting session until the fall.

The Philadelphia School District had been desperately hoping the Senate would allow the House version of the cigarette tax – approved in dramatic fashion last week – to pass unscathed.

But Senate Majority Leader Dominic Pileggi, R-Delaware, added an amendment to the bill that would “sunset” the tax after five years and prohibit the school district from borrowing against cigarette tax proceeds.

Philadelphia Schools Superintendent William Hite immediately blasted the move in a written statement, calling it an action that “throws us back into uncertainty.”

“At full implementation, the cigarette tax was estimated to generate more than $80 million annually,” said Hite. “Ending the tax in five years will exacerbate our structural deficit, complicate our long-term planning efforts, make it harder to access the capital markets, and strip our schools of educational services and supports.”

The district currently faces a $93 million budget gap merely to provide last year’s admittedly “insufficient,” bare-bones level of services.

“With schools scheduled to open in less that two months, it is crucial that we secure the needed funding to support our students and schools,” said Hite. “We implore the House and Senate to come to agreement immediately on cigarette tax legislation that does not include a sunset provision.”

Delays, amendments could shorten school year

Philadelphia Mayor Michael Nutter was in Harrisburg lobbying for the measure to pass without changes.

Nutter spokesman Mark McDonald said the amendments threaten the district’s ability to operate a full school year.

“Every week without this tax in place will cost the district money,” he said. “It is a terrible situation for the district and one that the mayor hopes can be resolved by House and Senate coming together and abandoning this sunset provision.”

Stephen Miskin, spokesman for House Republicans, said it was “unclear” when the House would come back for a voting session.

He also expressed displeasure with the fact that the bill as passed by the Senate added other provisions, including various hotel taxes and monies for City Revitalization and Improvement Zones.

“It will very difficult to pass House Bill 1177 if it is loaded with all these hotel taxes and new CRIZs, which could cost the state up to $70 million,” Miskin said. “We certainly preferred legislation focused on quality education for the kids in Philadelphia.”

State Sen. Vincent Hughes, D-Philadelphia, had tried to force an up-or-down vote on an older version of the bill, sans amendments, but the motion failed.

“It’s very possible we could be in a pingpong effect, where the bill goes back and forth, back and forth,” said Hughes, “because the House could make further amendments and send it back to the Senate.”

Senate Democrats estimate that the school district loses $1.6 million every week that the implementation of the cigarette tax is delayed.

As the cigarette tax theater has unfolded, both legislative bodies have been waiting for Gov. Tom Corbett to sign the budget plan they passed. Corbett has so far refused to do so, demanding the General Assembly to tackle pension reform before giving his blessing.

Corbett, who has expressed support for the cigarette tax, could attempt to lure the Legislature back into session by vetoing all or parts of the budget.

Tobacco lobby mobilizes

The Senate passed a version of cigarette tax a week ago that didn’t include the new provisions.

Hughes blamed the influence of the tobacco lobby.

“This is a cigarette tax. You have to assume that the cigarette lobby got engaged in this process and tried to make changes in the legislation,” he said. “All our information indicates that those are the individuals who drove the process.”

Sen. Anthony Hardy Williams, D-Philadelphia, echoed that sentiment, referencing the tobacco lobby’s influence with Senate President Pro Tempore Joseph Scarnati, R-Jefferson, who represents tobacco growing districts in western Pennsylvania.

“They have a relationship. He represents them to some capacity, so they I guess they lobby him on behalf of his constituents,” said Williams.

A spokeswoman for Senate Republicans said she could not comment.  Pileggi declined an interview request. Appropriations chair Jake Corman, R-Centre, could not be reached.

Pileggi’s amendment was added in the Senate Rules Committee,  which has three members of the Philadelphia delegation, Hughes, Williams and Sen. Christine Tartaglione, also a Democrat.

Williams, who on Monday with Mayor Nutter urged swift passage of the cigarette tax, departed from his Democratic colleagues in joining Pileggi to vote for the amendment.

Williams defended his vote as a “good will” nod to the realities of the political process.

He reasoned that Pileggi’s amendment also reintroduced language that allows some counties to increase their tax on hotel room rentals.

This language was stripped in the House version of the bill, upsetting senators who represent those districts.

“It’s a balance. You have to take into consideration other members’ concerns and their priorities as you’re advancing your own,” said Williams. “Whatever their needs are, I think they should be addressed, and that’s why we voted for it the first time.”

Things may have been different if his were the deciding vote on the matter.

“If I thought it was the deciding vote, I may have made a different decision,” Williams said. “But it wasn’t.”

Adding a sunset provision to the cigarette tax was a far better alternative than some of the other amendments being pushed by the tobacco lobby, including measures that would have further slowed the implementation of the tax and reduced the rate of collection, Williams said.

Source: http://www.newsworks.org/index.php/homepage-feature/item/70165-philly-cigarette-tax-for-schools-stalled-in-legislative-pingpong-match?linktype=hp_impact

Source: http://talkingpointsmemo.com/news/nea-arne-duncan-should-quit

By The Associated Press

– HARRISBURG, Pa. (AP) — The Democratic nominee for Pennsylvania governor said Wednesday he is suspicious about revenue numbers in the budget passed by Republican majorities in the Legislature that now awaits action by Gov. Tom Corbett.

Source: http://lancasteronline.com/news/local/wolf-says-pa-budget-numbers-built-on-smoke-and-mirrors/article_fe7235dd-fc08-5c26-b65d-adcd1d95ce31.html#.U7VZaQJgqu4.facebook

By Dennis Owens

– It was a freezing January day in 2011 when Tom Corbett was sworn in as governor.

But conservatives were warmed by the great promise of the day, and the promises.

There would be school choice, liquor privatization, and pension reform; they were certain, because a Republican House, Senate and Governor now controlled the Capitol.

Three-and-a-half years later, those promises are unfulfilled, and the hope is fading.

And conservative lawmakers blame one source for the dis-union in the GOP ranks.

“The unions have far too much power in our legislature,” said Representative Rick Saccone (R-Allegheny). “They have a stranglehold on our legislature.”

“The unions still have an awful lot of political clout,” said Representative Stephen Bloom (R-Cumberland). “They have more influence in this Capitol than almost any other interest group, including the taxpayers.”

“The public sector unions have too much influence up here,” said newest Senator Scott Wagner (R-York).

“The unions control this state right now,” insists Representative Dan Moul (R-Adams). “Make no mistake about that, and they do it with money.”

Public sector unions—AFSCME, UFCW, PSEA, SEIU—don’t support the conservative agenda and fund politicians that oppose it. That includes several Republicans in moderate districts who won’t vote against union interests.

“It takes a lot of courage, and we have a lot of people up here that don’t have the courage,” said Wagner. “And again, it’s on both sides. It’s here in the Senate and over in the House. Everybody wants to get reelected.”

“It amazes me,” said Saccone. “With a group so few in number in this state, but with so much money flowing in through PAC donations, can have such an influence on us.”

The unions call that nonsense. “I wish we were that powerful,” said Wendell Young IV, President of the United Food and Commercial Workers Union. “The reality is it’s the issues that are powerful. The reality is there are some people in this building, not all but some conservatives, that spend a lot of time rallying around certain issues that they’ve just been wrong about.”

On Wednesday, when asked why his own party wasn’t supporting pension reform in the House, Governor Corbett alluded to members being swayed by “special interests.” When asked, what special interests?

“Special interests are the unions, the public sector unions,” Corbett said.

But the unions blame Corbett, and his failed leadership, for the lack of accomplishment.

“We would come to the table with a Governor Corbett if he would show up,” Young said. “But he started out this crusade years ago with a he knew it all, he understood it all and he was gonna tell us what was gonna happen.”

What’s likely to happen, conservatives now fear, is Tom Wolf, heavily backed by those unions, becoming governor and all of those conservative dreams left unfulfilled.

“Immediately after [Wolf] won the nomination, look how much money was pumped into his campaign account from the special interest unions,” Moul said. “Do you think we can get things like pension reform done when he’s here? There isn’t a chance. At least here (with Corbett), we thought we had a chance.”

According to the Department of Labor Statistics, union membership in Pennsylvania in 2013 was 12.7%. It has steadily declined since 1989, when it was 20.9% but still leads the national average of 11.3%.

Source: http://www.abc27.com/story/25937539/conservatives-blame-union-clout-for-lack-of-gop-accomplishment