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Legislative Update

Week Ending Oct. 31, 2008

• Don’t Forget to Vote on Nov. 4!
• Governor Announces Spending Freeze
• Congress Discussing Second Stimulus Package
  

Don’t Forget to Vote Nov. 4!

As PICPA members are no doubt aware, Election Day is fast approaching. On Tuesday, Nov. 4, Americans will be asked to make decisions ranging from who will be the new President of the United States to voting “yea” or “nay” on a ballot question regarding Pennsylvania’s water and sewer systems. The process leading up to the general election has been a particularly long and grueling one for many of the candidates – as well as for the legions of constituents receiving campaign literature, listening to seemingly endless television and radio advertisements, and answering automated phone calls from various interest groups. 

Obviously, the political culture has changed, both nationwide and at home in Pennsylvania. Recent economic downturns have made for dissatisfied constituencies; allegations of corruption and misuse of funds stemming from an ongoing grand jury investigation into the state House and Senate overshadow incumbent legislators and renew the outcries for reform; and expected record-breaking voter turnout at the polls means anything could happen.

This is particularly true in the state House of Representatives, where the last election left the chamber divided almost evenly – 101 Republicans to 102 Democrats. The GOP sees 2008 as an opportunity to regain the majority; Democrats believe they can gain an even stronger foothold in the House, particularly considering the thousands of Pennsylvanians who have flocked to their party in the wake of the Presidential primary. However, these same Democrats were the subject of a grand jury investigation that resulted in a series of indictments handed down from the Attorney General’s office. Attorney General Tom Corbett – also up for re-election and facing staunch opposition – has announced that his office is still investigating the other three caucuses, and that further indictments will be handed down following Election Day.

The state Senate is less unsettled, with the Republicans firmly in the majority and far fewer contentious open seats. Of note, however, is the number of open seat races – seven in all. Among these are retiring Senate Appropriations Chairman Sen. Gib Armstrong (R-Lancaster) and his Democratic counterpart, Sen. Vince Fumo (D-Philadelphia), who now stands trial on fraud and corruption charges. Also retiring are Sens. Gerald LaValle (D-Beaver), Roger Madigan (R-Bradford), Terry Punt (R-Franklin), Connie Williams (D-Montgomery), and Bob Regola (R-Westmoreland). Sadly, as reported in last week’s Legislative Update, Sen. James Rhoades recently passed away following a tragic car accident. While his name will remain on the ballot, a win will result in a run-off for the Senate seat in the early part of 2009.

Perhaps the most overlooked of the races in 2008, however, are those for “row” offices – Attorney General, Auditor General, and state Treasurer – each of which carries a four year term and considerable responsibilities. The most prominent of these is no doubt that of Attorney General, in which incumbent Tom Corbett will do battle with Democratic nominee John Morganelli, a DA from Northampton County. Current Auditor General Jack Wagner also faces Republican candidate Chet Beiler on the ballots, and the state Treasurer’s office is also up for grabs between Democrat Rob McCord and Republican Tom Ellis. (For more information regarding these candidates, please visit the Pennsylvania Prosperity Project Web site.)

CPA-PAC, the political arm of PICPA, has played an important role in this election year through its financial support of pro-business candidates. CPA-PAC supports political candidates who understand the importance of a sound Pennsylvania economy and the critical role of the CPA in preserving the state's business climate. Investing in CPA-PAC is your best opportunity to have a positive impact on the public policy making process.

PICPA urges all of its members to vote at their local polling place on Nov. 4.

Governor Announces Spending Freeze 

On Thursday, Oct. 30, Gov. Ed Rendell announced his administration’s intention to cut $350 million in current-year spending to address the growing concern of increased economic distress on both a state and national level. The end of September showed revenues at 4.7 percent below estimates for the fiscal year, and those below-anticipated numbers are not expected to improve in the months to come.

“The revenue situation may get worse before it gets better,” said Gov. Rendell in a press release issued Thursday. “We will continue to monitor these volatile economic conditions in order to maintain the Commonwealth’s balanced budget. Any dire predictions about next year’s potential budget shortfall are premature and counterproductive. We need to focus on the spending reductions announced today and use the expertise we developed in the past six years to continue improving government efficiency to save taxpayer money.”

Rendell asked cabinet officials to cut their budgets by approximately 4.25 percent, which would result in $289 million, or about one percent of the overall budget. Additional savings would be found in cuts to the state legislature, the court system, the Pennsylvania State System of Higher Education (SSHE), and the Pennsylvania Higher Education Assistance Agency (PHEAA).

 “It is my hope and expectation that every branch of government will do their part. I look forward to their cooperation and prompt response,” Gov. Rendell said. “Pennsylvania’s revenue shortfall is of no single branch’s making, and it will take the work of all branches of government to respond to this challenge.”

The administration announced that it will continue to monitor revenue collections closely in the coming months, and will work to keep the budget balanced. 

Congress Discussing Second Stimulus Package

Discussions are underway in Congress regarding the scope and timing of a second stimulus package to help Americans face a growing nationwide economic crisis.

During a meeting of the House Ways and Means Committee this week, Congressional Democrats and Republicans sparred over the direction government intervention should take: Democrats eyeing a “Main Street” economic recovery plan that is estimated would cost upwards of $150 billion, while Republicans favor an alternative “pro-growth” package of tax cuts to stimulate job creation.

Although the House is expected to return following the elections, the scheduling of an official “lame duck” session to further discussion and debate regarding these alternatives will not be made until after the Nov. 4 elections, at which time Democrats will know whether they have gained the White House, and if – as predicted by many – they also gain filibuster-proof majority of the Senate.