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PA Week in Review: 2012 ends with Harrisburg debt under scrutiny

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By PA Independent

HARRISBURGAs 2012 draws to a close, it’s clear municipal finances will be a hot topic in 2013.

Lawmakers from both sides of the aisle said this week they want an investigation of the bad debt that has buried Harrisburg, the state capital. Other cities in the state, such as Scranton, are also crippled by debt and pension obligations to municipal employees.

Dealing with those costs will be a major part of next year, as the state faces increasing debt and pension costs combined with lower levels of federal funding.

Harrisburg financing triggers bills, investigation requests

Following a set of state Senate hearings this fall about the Harrisburg incinerator, changes may be coming to how Pennsylvania municipalities can borrow money.

MONEY TO BURN: Harrisburg’s incinerator is more than $300 million in debt.

A retrofit of the Harrisburg incinerator brought with it some $340 million in debt, caused by multiple bond issues, derivative deals and other financial decisions made throughout Mayor Stephen Reed‘s administration.

One change could be banning the use of interest rate swaps for municipal authorities, which is a way for borrowers to hedge against future interest rates. Proponents of a ban say swaps are too risky for taxpayer dollars, as a deal gone bad can end up costing millions.

In addition to changes to borrowing rules, lawmakers have asked Dauphin County District Attorney Ed Marsico to review the documents from their hearings to determine if any further investigation for criminal wrongdoing is needed.

Marsico told PA Independent on Friday that he would review the case to see if there is a threshold for a violation of a criminal statute. Marsico acknowledged that people he is personally familiar may be with involved in the financing deals, potentially triggering the need for a referral to the state attorney general.

But first, Marsico said, the case will have to be reviewed to determine whether any matter merits further review.

Green energy mandate proving costly

A state mandate that requires electric providers to use more renewable and alternative sources in coming years will drive up the cost of electricity for all Pennsylvanians by $16 billion over the next eight years, according to a new study.

COSTLY SUNSHINE: Solar energy mandates are driving up energy prices

The state mandates were created by the Alternative Energy Portfolio Standards Act of 2004, which requires utility companies to include increasing amounts of alternative energy in their overall production totals.  The law requires that 18 percent of all energy sales in Pennsylvania come from alternative sources by 2021.

It requires that 8 percent come from renewable energy resources – like solar and wind – and another 10 percent come from alternative energy sources, including waste coal and large-scale hydroelectric power.

The problem for consumers is that those types of energy are more expensive to produce than such traditional types as natural gas or coal.

“The law mandates that you use a more costly form of energy production, which will drive up costs,”said Michael Head, a research economist for the Beacon Hill Institute at Suffolk University, a free-market think tank that conducted the study.

All told, the energy mandates will cost Pennsylvania consumers and businesses about $16 billion over the next eight years, the study concludes.

That means more than just pricier electric bills for residents of the state. The study projects a loss of about 17,000 jobs as companies either leave the state or are prevented from hiring because they have to spend more money on electricity.

Senate Democrats call for bipartisan, comprehensive transportation funding plans

Gov. Tom Corbett has said he’ll introduce a transportation funding package early in 2013. Specifics about the plans are still under wraps, though it hasn’t stopped lawmakers from laying out their priorities.

UNDER THE BRIDGE: State continues looking for revenue stream for infrastructure

Senate Democrats were the latest group of legislators to feed the anticipation, laying out their priorities for long-term transportation needs at a Wednesday morning press conference. The lawmakers said they’re hoping to see a long-term plan that addresses highways, bridges, mass transit and rail.

And, they want the conversation to be bipartisan, while encompassing both urban and rural needs, said Sen. John Wozniak, D-Cambria, who is minority chairman of the Senate Transportation Committee.

“We’re asking the governor to square his shoulders. We’re willing to sit and work and negotiate side-by-side with all four caucuses and the administration,” Wozniak said. “This is too important to let slide by for one more construction season. The time is now for us to make a very bold decision.”

Administration officials have said that the starting point for Corbett’s plan is a report from the Transportation Funding Advisory Commission. That report, about two years old, offers ideas for $2.5 billion in annual new revenue aimed at repairing roads and bridges.

This week, Kelli Roberts, a spokeswoman for Corbett, said the TFAC report is a starting point for the plan, and that “everything is on the table.”

PennWATCH puts state data online

The state’s new transparency database, PennWATCH, is now live.

PennWATCH operates like an interactive spreadsheet separated into four categories – budget, spending, revenue and employees.

Information includes state allocations, revenue breakdowns and what payments state agencies are making, and to whom. Users can navigate through drop-down menus and search functions, and download the reports in PDF form.

Gov. Tom Corbett said PennWATCH displays “everything from how we spend our money to who we employ.” The data is the kind citizen’s request most often under the Right-to-Know law, such as salaries, he added.

Electoral College meets, officially votes for Obama

Pennsylvania’s 20 presidential electors unanimously backed President Obama on Monday during the 57th meeting of the state’s Electoral College.

PURPLE STATE: Pennsylvania could be the first state to split electoral votes on a proportional basis

But it might be the last time the highly ceremonial yet official process for electing a president is done in such a uniform way.

A Republican-penned proposal already making waves weeks before the new legislative session begins would change how Pennsylvania awards its electoral votes. In place of the current winner-take-all system, in which the winner of the statewide popular vote gets all 20 of the state’s electoral votes, Senate Majority Leader Dominic Pileggi, R-Chester, is proposing a proportional system that would tie electoral votes to the results of the popular vote, at least in Pennsylvania.

Monday, as hand-picked Democratic electors gathered in the state House chamber to officially stamp Obama’s second victory in Pennsylvania — and the sixth consecutive Democratic victory in the Keystone State during a presidential election cycle – many said they were opposed to Pileggi’s proposal.

“It would just unilaterally disarm our influence on the national scene,” said Clifford Levine, an attorney for the Senate Democrats.

This year, Obama won about 2.9 million votes in Pennsylvania, compared to 2.6 million for Mitt Romney. In the current winner-take-all system, Obama gets all 20 electoral votes, and those millions of people who supported Romney are essentially voiceless in the national vote tally.

In a proportional system, Obama would have collected 12 electoral votes in Pennsylvania, while Romney would have won eight votes.