Tag Archives: lobbyists

Exit Strategy: Harrisburg seeks assistance as it eyes leaving Act 47.

State Street in Harrisburg

As 2017 draws to a close and Harrisburg officials negotiate next year’s budget, they’ve already set their sights on another deadline: the end of 2018, when the city’s Act 47 status expires.

The city recently enlisted the help of a lobbying firm to craft an exit strategy, which might include new laws specific to the capital city.

Harrisburg entered Act 47 in 2011. Cities and townships under Act 47 are designated as “financially distressed” by the state Department of Community and Economic Development and given special provisions for consolidating debt and setting tax rates.

Without those provisions, city officials say, it would be impossible to balance Harrisburg’s budget and maintain basic local services. Exiting the program would require them to lower current tax rates – unless legislators amend state laws.

“My general gut tells me unless there’s legislative change, I don’t think it’s possible for us to leave Act 47,” said Ben Allatt, a City Council member and chair of the budget and finance committee.

The need for new tax laws led the city to hire local lobbying firm Maverick Strategies, which they will pay $60,000 for services in 2018. While the deal won’t guarantee a specific legislative outcome, officials hope that Maverick will convey to lawmakers the unique challenges of funding a capital city.

“I don’t think that the leaders in the House fully understand what it means for a city to be in and leave Act 47,” said Allatt. “We think if they are fully informed, it could lead to legislative change that could affect Harrisburg or other cities across the commonwealth.”

Harrisburg’s status as the state capital simultaneously drives up its expenditures and reduces its revenue base. The daily influx of commuters means that the city infrastructure serves a large population of commuters who do not pay income or property taxes. What’s more, the city cannot tax state land.

Act 47 allowed Harrisburg officials to set earned income tax and local services tax rates higher than what is allowed under the state’s constitution.

Currently, Harrisburg taxes every individual working in the city $156 a year, or $3 a week, for local services such as police, road and traffic signals, and utilities.

The $8 million annual revenue from the local services tax helps maintain the city’s infrastructure and emergency services. If Harrisburg exited Act 47 today, it would have to adjust its tax rates according to the state constitution and third-class city code.

Harrisburg finance director Bruce Weber said lowering the rates would be impossible.

“It’d mean massive layoffs,” Weber said. “We wouldn’t balance the budget.”

Mayor Eric Papenfuse said that the city will seek an exemption from these tax codes due to its capital city status.

“We’re certainly in solidarity with other third-class cities across the commonwealth that are struggling, but we’re a third-class city that is also the state capital city,” he said.

Papenfuse could not say whether the lobbyists would seek amendments to the third-class city code or the creation of new laws entirely. He did add that legislative changes could provide Harrisburg an alternative to a home rule charter, which would let the city create set its own rates on income and property taxes.

Papenfuse also confirmed that one objective of the lobbyists will be annualizing the state’s yearly payment to Harrisburg. Since the city cannot collect taxes on state property, the state has routinely made an appropriation to Harrisburg for emergency fire and police services, which, in recent years, has amounted to $5 million.

That payment is subject to debate in each round of state budget negotiations and has fluctuated in size. Papenfuse hopes that legislators, with prodding from Maverick lobbyists, will make the $5 million appropriation a requirement by state law.

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Capitol Capital: To fight real and perceived corruption, we must strengthen our campaign fundraising rules.

Last year, we authored an article discussing the conflict of political consultants as registered lobbyists in Pennsylvania—those providing services to the same lawmakers they seek to lobby.  

Despite the mostly positive feedback, the legislative process in the commonwealth moves slowly on issues that impact the business of politics and so, a year later, no meaningful action has occurred on the legislation discussed or introduced on the topic. We remain hopeful that these issues will be a priority in the next legislative session.

As this year’s presidential election illustrates, the perception of government and elected officials amongst the public may be at its lowest point. Both federal and state elected officials collectively endure low ratings and remain the target of public criticism and dissatisfaction. Many elected officials are well intentioned and whole-heartedly committed to their constituents. However, the perceived arrogance and entitlement pervading Washington and Harrisburg alike reveal a woefully unbalanced system.

Perhaps now is the ideal time for serious introspection and constructive self-criticism. Society, admit it or not, comprises the haves and the have nots; those in power reside in the obvious. Arrogance and entitlement led to recent investigations and prosecutions against various members of the General Assembly, an attorney general and state treasurers. Conflicts of interest permeate government operations and the public largely ignores it.  

On any given day when the Pennsylvania General Assembly is in voting session, Harrisburg is flooded with a small army of “suits” bustling about downtown. The business of political fundraising and the proximity of lawmakers to viable fundraising sources provide an exceptional casting opportunity to snag lobbyists, interest groups and each other in a quest to fund their political action committees (PACs) and, in some cases, their own elections. In Pennsylvania, this has become a “cost of doing business” in the lobbying community.  

To be fair, getting elected is expensive and message delivery is vital. Full-color mailers, television and radio advertisements, door hangers, stickers, yard signs, billboards and the like are not cheap. To compete, many times a candidate will hire someone who knows how to best maximize available resources, a political consultant. Getting money for all this is no easy task either. It can be full-time work, so candidates better hire a fundraiser to help coordinate donors back in the district and in the target-rich environment of Harrisburg—full of lobbyists and special interests willing to help fill the coffers.

During the course of 2016, the General Assembly scheduled 65 House session days and 54 Senate session days, days when the 253 members traveled to Harrisburg to deliberate, subsequently act upon legislation and conduct the business that the citizens of Pennsylvania elected, and entrusted, them to do.

Nevertheless, fundraisers have become a regular part of session days in Harrisburg. Keep in mind: The legislature travels to Harrisburg to focus on the people’s business and not to raise monies for their own campaigns. Their time in the Capitol is funded by taxpayers in the interest of those taxpayers and the commonwealth. To equalize the travel for some lawmakers, per diems on top of salaries, and, in some cases, additional expenses, are allowed so lawmakers may address the plethora of challenging issues facing the state. The increasing perception in Harrisburg and Washington is that discussions of issues and policy are pushed aside for the business of fundraising, especially during election years.

One solution to prevent distractions during legislative session days would be to change the campaign finance laws to prohibit PAC events during those session days. Why, you might ask? Pretty simple, according to the Maryland Joint Legislative Committee on Ethics Advisory Commission from March 13, 1989:

“The purpose (of Section 13-235 of the Election Law Article) is to curtail corruption or the appearance of corruption by eliminating financial quid pro quo contributions in return for a vote on legislation during the regular session of the General Assembly.”

This proposal removes intimations of impropriety between legislative action and fundraising without an outright prohibition of fundraising in Harrisburg. Events currently held in legislative districts routinely draw many from Harrisburg and will continue to do so, muting the perceived financial impact on fundraising.  

Second, focus on how monies are raised and how funds are reported. Demand stringent penalties for ethics violations and resources for the State Ethics Commission to investigate elected officials, lobbyists, fundraisers and political consultants. Enable the commission to enforce a strengthened law. Ignorance of the law is not the issue; beguiling and complacency in a broken system is.  

Several pieces of legislation were proposed this session to address related ethical dilemmas, none specifically on the timing of fundraisers, mind you, and none saw the governor’s desk. Among the many challenges required to restore the image of government, the prohibition of fundraisers on session days lacks complication and addresses part of the perception of elected, governmental and political professionals. Will we see action on these proposals in the next session of the Pennsylvania General Assembly? Only time will tell.

The authors are partners and associates with Greenlee Partners, a community publisher of TheBurg.

Authors: Stan Rapp, Matt Steck, Clint Cullison and Ken Rapp

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Leashing the Lobbyists: Tighter rules, greater transparency needed for fourth branch of government.

The operations of Pennsylvania government certainly are not inexpensive, nor are the industries that endeavor to influence those operations. It is incredibly big money, annually north of $25 billion on the government side alone. When there is that much money at play, there will always be opposing interests on how to spend those dollars. The mechanics of how that money gets spent is an interesting one, but surprisingly few people actually pay any attention at all, until something drastic occurs.

In 2005, a state government pay raise sparked cries from the public for reforms to what was seen as “business as usual” in Harrisburg. House and Senate rule changes prohibited voting past 11 p.m. and addressed other aspects of the legislative process; a Right to Know law was established and improved; and a new Lobbying Disclosure Act was adopted. Most recently, Gov. Tom Wolf enacted a gift ban for all employees under his control. The measures seemed to quell, at present, the public’s concerns over government openness and transparency. But has it really changed anything?

For our government to truly operate in the best interests of the people, it must be accountable to those it serves. Equitable and accountable application of the rules should not be a disguise or superficial. The rules must exist, carefully articulated in the law and crafted with their practical application in mind for the full impact of transparency and openness to carry prominence both in law and in cultural acceptance.

Many government outsiders say the influence of lobbyists should change. While one might argue the mindset of elected officials themselves necessitates change, lobbying and lobbyists seem like as good a place as any to start.

The current lobbying law set up a framework to continue discussions on how we hold accountable the actions of lobbyists in their interactions with elected officials. However, current law requires lobbying firms and principals (clients) to report aggregate amounts spent on direct and indirect communications, as well as aggregate totals for meals, entertainment, gifts and the like. So what? The numbers provide little accountability or context. For the public to find out what they really want to know (e.g., who the lobbyist is spending money on), an elected official must reach aggregate thresholds of $250 in gifts or $650 in meals and entertainment annually. Firms with many clients oftentimes spread expenses incurred with elected officials among all of their clients. By way of example, Lobbying Firm buys Senator X a $200 meal, which is then spread out among all 50 of the firm’s clients so each client accrues only $4 of aggregate spending on Senator X. Using this method, Lobbying Firm would have to take Senator X out for a meal in the same amount 163 times before a lobbying expense report would specifically name Senator X as a recipient of said entertainment.

What is the solution? So-called “dollar one reporting,” whereby lobbyists report every expense incurred with every elected official from the very first dollar. Some may opine that this would be overly burdensome on lobbyists; the truth is they should already have this system in place. If they don’t, how do they know when they hit the aggregate thresholds already in law?

The Lobbying Disclosure Act not only required the reporting in terms of dollars, but also in terms of representation of interests before elected officials. To that end, conflicts of interest are rightly prohibited—lobbyists are prohibited from representing two clients with conflicting interests. A lobbyist cannot fairly and justifiably represent People for Taxing Stuff and People Against Taxing Stuff. It is just common sense.

Utilizing the same concept, why does the law not prohibit the lobbyist from having other conflicts? The law does not prohibit a lobbyist from running political campaigns of elected officials. Lobbyists can represent People for Taxing Stuff and undertake political consulting work for Representative Y who opposes any taxes simultaneously, paid by two opposing interests, and yet the law allows it. Who is the lobbyist truly accountable to?

The solution is simple: prohibit lobbyists from also serving as paid political consultants, ensuring lobbyists are not utilizing either capacity to shortchange their clients. Further, give the law teeth and aggressively enforce. Penalties are prescribed in ethics laws not only to serve as a punishment, but, and perhaps more significantly, to serve as a deterrent to not adhering to that law. Penalties without enforcement are similarly no deterrent to not following the law. Even if deterred by the penalties, if one reasonably assumes nobody is watching, the law possesses little, if any, impact. The penalties in the current law are too lenient on would-be scofflaws, exacerbated by limited enforcement. Combined, the weakness in compliance leads to poor information available to the public, which naturally breeds further distrust. Providing stiffer penalties and adequately funding proper oversight and enforcement is a must if the law intends to promote transparency and accountability.

Not until we acquiesce to these and many other changes will Pennsylvania achieve meaningful culture changes in the state’s Capitol. Changes incur resistance as they impact the status quo and create real transparency in the process—and yes, even force elected officials to modify their thinking and behaviors. Regardless, one way or another, we all pay the cost absent meaningful change.

The authors are partners and associates with Greenlee Partners, a community publisher of TheBurg.

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