w w w. c a p i ta l - wat c h .
c o m
CapitalWatch
VOL. 3 NO. 10 OCTOBER 2010
inside
House passes natural gas
Governor candidates
challenge each other
during debate
tax, setting up negotiations
PAGE 4
Big Brother is
on compromise bill
The House of Representatives
watching you approved a natural gas extrac-
tion tax proposal Sept. 29 that
PAGE 6 the top Senate Republican said
is “ridiculous” and will not
receive a vote.
Gas industry split Lawmakers voted 104-94 on
over severance tax the long-awaited extraction tax,
two days before their deadline
PAGE 10 to pass a bill on or before Oct.
1. The measure now heads to
the Senate, whose GOP lead-
EDITORIAL: If you ers say they plan to negotiate
with their House counterparts
hated the Rendell to reach agreement on a final
years, you’ll loathe tax plan.
“The deadline won’t be
what comes next reached, but we’re not slam-
PAGE 14 ming the door,” said Senate
President Pro Tem Joe Scarnati,
R-Jefferson, during a news con-
ference Wednesday.
Scarnati said he believes
agreement can be reached this
month: “We’re going to con-
tinue to negotiate in good faith.
… Next week, we can negoti-
ate. We’ll be back the following
Check us out online at week. Whether or not adults
www.capital-watch.com can come together and have
something reasonable is yet to
Have a news tip or story be seen.”
suggestion? New hires? Births, House Democratic leaders
engagements, sightings? Got a said they too hope to come up
better idea? Know of an interesting with a compromise that has sup-
port from House and Senate
state or local government program
lawmakers as well as the indus-
that addresses a real need or solves try. They added that “all issues”
a problem in an innovative — will be up for discussion in those
and widely replicable — way? negotiations.
Know of a study, report, The Marcellus Shale Coalition,
guidebook, website or other which represents drilling com-
resource that would be helpful panies, released a statement after
to your peers in state or local the vote, saying those voting for
government? Tell us about it. the tax are “against job creation
E-mail the information to and the responsible development
of clean-burning domestic natu-
goodwinpin@comcast.net.
ral gas.”
Anonymity is assured. “A competitively structured
tax in Pennsylvania, that allows
LANC., PA 17604
PERMIT 280
PAID
U.S.POSTAGE
PRSRT STD
THE RACE FOR GOVERNOR—PAGES 8-9
for critical capital reinvestment,
coupled with smart regulatory
and legislative modernizations,
is key to ensuring that this his-
toric opportunity is realized in
ways that benefit each and every
Pennsylvanian,” said Kathryn
Klaber, the coalition’s president.
The vote followed five hours
of debate, during which law-
makers voted to increase the
amount of tax revenue allo-
cated to the Environmental
Stewardship Fund, decreasing
the percentage for state general
fund coffers.
The House-approved bill
would impose a 39-cent per
thousand cubic feet levy on
extracted natural gas, with an
exception for low-producing
wells. The tax is projected to
produce $120 million in revenue
during the six months that it
would be in effect this fiscal
year, with $88.1 million of that Rep. Scott Petri, R-Bucks, said gas pumped in from other states
going to the general fund. that after the amendment on also pay that tax.
Of the revenue, $5 million Tuesday, he was “now only qua- “They’re paying it to the
would be used for job-train- si-vehemently against this bill.” other states where we get our
ing programs, $7.2 million to Petri said the question for gas from,” said Rep. David
local governments in communi- him is, “will we have the dollars Levdansky, D-Allegheny. “Why
ties with drilling activity, $10 to enforce up-front and on the shouldn’t they pay a severance
million for a job-creation tax back end the consequences of tax here so we can invest it in
credit, and $14.5 million to the this industry’s actions?” our communities and our envi-
Environmental Stewardship He criticized the 1.6 percent ronment and our conservation
Fund. The remainder would of revenues that would go into programs?”
go to conservation districts, the disaster recovery account, After an hour and a half
the Hazardous Sites Cleanup which would total $724,000 this of debate, House Democrats
Fund, the Game Commission, year and about $4 million next moved to suspend the 24-rule
the Fish and Boat Commission, fiscal year: “That doesn’t go so the bill could be voted before
the Low-Income Home Energy anywhere to remediate. Four 8:20 p.m., but that motion failed.
Assistance Program, an envi- million out of $300 million to Lawmakers returned to suspend
ronmental disaster recovery actually take care of the prob- the rules and then vote the bill
account, and dam projects. lems that you and I know are around 5:30 p.m., after taking an
Several House Republicans going to occur? That’s irre- hour break from floor action.
reiterated concerns about the sponsible.” Petri and Rep. Kathy Watson,
measure’s constitutionality, Democratic supporters noted R-Bucks, asked after the final
potential to discourage drillers that drilling companies pay an vote to be recorded in support
from investing, and distribution extraction tax in other states, of the bill, not against as they
formula for tax revenues. and that consumers that pay for were initially recorded. CW
Capitolwire com a service of GovNetPA, Inc.
Pennsylvania’s #1 Online Source for Political, Legislative and Public Policy News
For a free trial subscription, please visit our web site at www.capitolwire.com.
 Governor Rendell Expands
Consumer Workforce Council
On September 14th, Governor
Rendell signed an Executive
Order allowing the Consumer
Workforce Council to move
forward on an expanded
statewide basis.
This means more control and
more freedom for
Pennsylvania's seniors and
people with disabilities using
Attendant services.
www.libertyresources.org
The Consumer Workforce Council will:
1) Further Consumers' ability to stay in
their own homes and in their own
communities by stabilizing the Attendant
workforce.
2) Preserve Consumer Control by
providing a unified Consumer voice on
negotiations with the Pennsylvania
Homecare Workers Union in addition to
making policy recommendations
regarding Attendant services.
3) Recognize the right of Attendants to
unionize if they choose, which will lead to
improved wages, group purchasing of
health insurance, and other benefits, while
ensuring that the Attendants cannot go
on strike or other work stoppages.
Better benefits and pay will reverse the
high rate of Attendant turnover, and will
improve the lives of both Consumers and
their Attendants.
4) Ensure Consumer Direction by
maintaining Consumers' rights to hire,
direct, schedule, train, and dismiss
workers, as well as providing Consumers
with a comprehensive Attendant registry,
giving them more choice as to whom they
can choose as their Attendants.
For more information, visit:
www.choosehomecare.org
OCTOBER 2010 CAPITAL WATCH
CapitalWatch
www.capital-watch.com
Rep. Solobay fends off attack by
four teens, one with gun
PUBLISHER/AD DIRECTOR
Jim Laverty
(717) 233-0109, ext. 122
EDITORIAL
Editor-in-chief
Jacqueline G. Goodwin, Ed.D. State Rep. Tim Solobay fended off four
goodwinpin@comcast.net teenage boys, one armed with a gun, who
(717) 418-3366 attempted to rob him on Sept. 28 as he
was returning to his Harrisburg home
Contributing Writers
Peter L. DeCoursey after a late legislative session on the
Deena C. Malley Marcellus Shale extraction tax.
Laura Olson The incident began after the House
Jim Quirk adjourned for the evening after 9:30 p.m.
and a group of legislators went to a local
News Service
Capitolwire restaurant for a late dinner. Solobay and
Rep. Harry Readshaw of Carrick were
Graphic Design returning to the house they share with
Lisette Magaro six other legislators when they saw the
Production group of four teens wearing hooded
Shawn Skvarna sweatshirts walking several blocks away.
I said, “That’s a group that’s probably
Capital Watch is published every month. out for no good, not knowing we were
Reproduction of this publication in whole going to get it front and center,” Solobay
or part is prohibited except with the
said.
written permission of the publisher. Capital
Watch is non ideological and nonpartisan. Solobay pulled his vehicle into a park-
ing space about eight houses away, and
he and Readshaw began walking toward
their home when Solobay spotted a clos-
er space and went back to get his car
while Readshaw went inside.
“I see these four guys I had seen ear-
lier coming at me and we meet up at my
(717) 233-0109, ext. 114
vehicle,” said Solobay who is also chief
“We’re not only fighting for legislation,
we’re fighting crime down here,” said
Rep. Tim Solobay after the attack.
of Canonsburg’s volunteer fire depart-
ment. “Not only do they have hoodies
on but they have handkerchiefs across
their faces, and I’m thinking, ‘Oh, man,
here we go.’”
news 3
Solobay said one came up behind him
and said, “I want all you got,” while two
more were between him and his car. “I
lunged out toward them and pushed
them into my vehicle.”
Three of the men took off, and Solobay
jumped into his car. He said the teen who
had spoken pointed a gun at him through
the window. “I’m looking at the gun,
thinking he is going to fire this thing.
I’m leaning back as far as I can, hoping
the post might protect me.”
Solobay said he got the key in the
ignition and hit the siren that is on his
vehicle for emergency fire calls. The teen
ran off, and Solobay called police.
Police apprehended two of the teens
a short time later, and Solobay was able
to identify their clothing. He said police
told him that they also had the other
two in custody.
“We’re not only fighting for legisla-
tion, we’re fighting crime down here,
Solobay joked, sounding little worse for
the experience. We’re the all-around
legislators.”
Solobay is currently running for retired
Senator J. Barry Stout’s Senate seat. CW
Rendell names nurse
to head PA Health
Department
A registered nurse will take over as the
head of the Pennsylvania Department of
Health.
Gov. Ed Rendell has announced that
Michael K. Huff will become acting
Health secretary when the current
secretary, Everette James, leaves the
post. Huff will be the first nurse to
hold the job.
Huff most recently has served as
deputy secretary for health planning
and assessment and has worked for the
Health Department in various capacities
for two decades.
New PA National
Guard chief to
replace Wright
Gov. Ed Rendell is appointing a new
National Guard commander to replace
the departing Adjutant General Jessica
Wright.
Rendell has announced that Wright is
leaving Oct. 29 to become a deputy assis-
tant secretary in the U.S. Department of
Defense. She’ll be a manpower adviser on
reserve affairs. CW
4 news OCTOBER 2010 CAPITAL WATCH

Senate GOP debating if they’ll make House

Democrats do gas tax bill again By Peter L. DeCoursey, Capitolwire

After a lengthy caucus when Senate
Republicans were advised a House nat-
ural gas tax bill was a “sham” and
extremely vulnerable to being thrown
out by state courts, GOP leaders are
pondering their next step.
“My advice would be to tell the House
to go back, do it over right this time,
so it will pass constitutional muster,”
said Senate Appropriations Committee
Chairman Jake Corman, R-Centre. “It
is silly to go through a negotiated pro-
cess and get to a bill when we know the
courts are very likely to throw it out
due to clear constitutional problems. But
that may be difficult for them, and we
understand that, so I would expect that
decision to be made pretty quickly.
“But that was discussed by our caucus
and now our leaders are deciding.”
Corman and other GOP senators
stressed that the final decision rested with
Senate President Pro Tem and Lt. Gov. Joe
Scarnati, R-Jefferson, and Senate Majority
Leader Dominic Pileggi, R-Delaware.
Scarnati’s chief of staff, Drew Crompton,
wrote in an e-mail: “We are looking at all
our options… We think [Senate Bill]1155,”
the House-altered gas tax bill, “is seriously
flawed but continue to speak with the law-
yers from the House Democratic caucus as
well as the Legislative Reference Bureau to
get differing input.”
Crompton also referred to an e-mail
to Capitolwire by Matt Brouillette of the
Commonwealth Foundation, which said
the Senate should refuse to move for-
ward on this issue until the House passed
a constitutionally valid bill.
“Another option, as Mr. Brouillette
suggests, is to have the House pass a
better vehicle.”
Scarnati responded by e-mail: “we are
still reviewing all our options, including
doing nothing to starting from scratch.”
Working with the existing bill shell
of Senate Bill 1155 is among the least
attractive of those options, Scarnati
wrote: “Using the current vehicle will
almost ensure a court throwing it out. I
suspect the House knew that when they
passed it. It’s an option ....not the best.”
Scarnati then noted that the fiscal bill
deal also included a Senate GOP demand
the House agreed to pass, creating an
independent fiscal office.
“The fiscal office is a must,” if this pro-
cess is to go forward, Scarnati wrote.
House and Senate Democrats remained
confident and said they would hold the
Senate GOP to their tax-hike pledge
contained in this year’s fiscal code bill.
“We are confident the bill we passed
out of the House with bipartisan sup-
port would withstand a court challenge,”
said House Democratic spokesman Brett
Marcy. “The House kept its commitment
to pass a reasonable and fair natural gas
extraction tax by Oct. 1. It’s now time
for the Senate to act. We look forward to
continuing negotiations to reach a com-
promise this session.” CW

Governor candidates challenge each other

during debate By Laura Olson, Capitolwire

The two candidates for governor sparred a misstatement.

during their first general election
debate over who has more honestly and
consistently portrayed their record and
stances to voters.
Republican gubernatorial candidate and
Attorney General Tom Corbett said his
opponent doesn’t give complete answers
and would increase spending by $4
billion. Democrat Dan Onorato returned
fire, calling Corbett inconsistent on his
no-tax pledge, budget requests as attorney
general, and tax votes as a local official.
Both called each other “career
politicians,” and both referenced each
other’s resumes to prove that point.
Corbett and Onorato exchanged
shots during a debate at the annual
Pennsylvania Chamber of Business &
Industry dinner in Hershey on Sept. 27.
The hour-long forum was moderated by
former Nightline anchor Ted Koppel.
Republican U.S. Senate candidate Pat
Toomey participated in an hour-long
interview with Koppel in the afternoon.
His opponent, Democratic U.S. Rep. Joe
Sestak, declined an invitation to debate
Toomey at the chamber event.
One early blast came from Onorato,
as the two discussed various reforms to
the state’s unemployment compensation
system. Corbett said it is reasonable to
ask those receiving benefits to show that
they are looking for work, and that he
believes “the vast majority are looking
for work.”
Onorato responded: “I’m glad that
Tom has changed his view,” a reference
to a July comment from Corbett that
he heard from business owners that
unemployed residents would rather
collect benefits than take one of the
available jobs.
Corbett did not reply to Onorato’s
remark, but since his initial comment
has both defended it and said that it was
In their opening statement, where
Koppel asked each to describe the other’s
policies, Corbett pointed to what he said
was an example of Onorato telling “half
the story and not the full story.”
Corbett said Onorato as Allegheny
County executive is correct in saying he
did not raise property taxes, but leaves
out that he “created the single largest tax
increase” to pay for the Port Authority.
“I think when you give answers you
“Here’s somebody who asked for more Onorato noted both had pledged
should try to give complete answers,”
money for his office every year. Here’s billions in new spending or tax cuts
Corbett said.
somebody who says he’s going to cut that would have to be phased in as they
After the debate, Onorato said that tax
cars but his fleet is up. Here’s somebody became affordable.
– a levy on alcoholic drinks and rental
who talks about fiscal responsibility, To the claims that he has spent a
cars – the fault of state lawmakers.
but when you look at what he’s done career running for office, Onorato said
“I didn’t want it,” Onorato said. “I
locally when he had the one chance to he “had to run for office and won those
went to Harrisburg with a proposal to
balance a budget – meaning, let’s attack offices” and Corbett was appointed to
raise no revenue. We wanted to use the
expenditures – he voted for a 20 percent most of his positions.
existing sales tax to fund transit. Of
property tax increase.” Corbett was appointed U.S. attorney in
course, Harrisburg said no. That’s what’s
Corbett did not respond on those 1989, serving four years, and was selected
wrong with it. When I’m governor, I’ll
charges during the debate, and was in 1995 to serve the remainder of Attorney
give my county the option that I wanted.
unavailable for questions afterward. General Ernie Preate’s term. He also
You won’t need that drink tax.”
His running mate, Bucks County appointed chairman of the Pennsylvania
Corbett touted his no-tax pledge, and
Commissioner Jim Cawley, asked after the Commission on Crime and Delinquency,
criticized his opponent for not doing the
forum if Corbett has been inconsistent in serving from 1995 to 2003.
same. He said that while Onorato says
those positions, replied: “No.” Corbett said his experiences in public
campaign pledges are “hokey,” Onorato
Corbett also questioned whether his office have shown his ability to make
made one when he was running for office
opponent would meet the requirement of decisions, which the governor will have
in 2003.
balancing the state budget. He referenced to do on a variety of difficulty issues.
Onorato explained afterward that
Gov. Ed Rendell’s recent budgets, saying “While my opponent would like you to
the pledge Corbett referenced was from
they were “made up on a wing and think that I’m only a prosecutor, that I’m
the League of Women Voters, asking
prayer,” before adding that Onorato not an executive, I have spent my career
candidates not to “go negative.”
would need to increase spending by $4 making tough decisions,” Corbett said in
“That was sort of a fun pledge,”
billion to pay for the programs he is his closing remarks.
Onorato said. “We’re talking about
proposing. “If you want another four more years
governing one of the largest states in
Onorato said that he has presented seven of taxes, another four more years of
the country. I can see why he has to
balanced budgets as county executive, spending, another four more years of
sign a pledge. If I had his track record,
and described how he renegotiated labor Gov. Rendell, then vote for Dan Onorato.
I would want someone to sign a pledge
contracts and downsized county row But if you want a governor whose going
too. I don’t need to sign a pledge because
offices. to make the tough decisions, who’s going
I’m going to tell you what I did.”
“Dan’s not listening,” Corbett shot to cut taxes, who’s going to cut the
During the debate and after, Onorato
back, explaining that he was referencing spending, who’s going to create the jobs
described Corbett as flip-flopping on
the expansion of programs that Onorato in Pennsylvania, then I ask that on Nov.
his no-tax pledge and other positions:
describes in his policy papers. 2, you vote for me,” Corbett said. CW
 October 2010
OCTOBER 2010CAPITAL
CAPITAL WATCH
WATCH
Greg Bentley
CEO
Bentley Systems
When Greg Bentley, CEO, joined
his four founding brothers at Bent-
ley Systems in 1991, the company
had 35 colleagues. Today, Bentley
Systems is the global leader dedi-
cated to providing comprehensive
software solutions for architects,
engineers, constructors, and op-
erators of the infrastructure that
sustains the world's economies
and environment. Under his lead-
ership, the company has grown to
nearly 3,000 colleagues and an-
nual revenues of $500 million.
Prior to joining Bentley Systems,
Mr. Bentley founded and served as
CEO of Devon Systems Interna-
tional, Inc., a provider of financial
trading software. In 1987, that
company was acquired by Sun-
Gard Data Systems, Inc. Mr. Bent-
ley served as a director of Sun-
Gard, one of the world's largest IT
vendors, from 1991 until its $11-
billion+ going-private transaction in
2005.
Mr. Bentley earned a bachelor's
degree in Decision Sciences from
the University of Pennsylvania and
an M.B.A. in Finance from the
Wharton School. He is a member
of the Board of Overseers for the
School of Design at the University
of Pennsylvania and is a Trustee of
the National Building Museum.
Greg and his wife Caroline live on
a farm in Chester County, Pennsyl-
vania, where they have raised their
four children.
advertorial
Policy Roundtable Spotlight
The PBC Policy Roundtable, like its national counterpart in Washington, is a forum in which CEOs meet on a peer-to-peer basis to formulate public
policy proposals to the most pressing issues of competitiveness. The Policy Roundtable provides senior managers the opportunity to interact
extensively with policymakers, policy experts, media, and other stakeholders; participate in policy evaluation; decide upon long-term public policy
strategy; and guide policy education/advocacy efforts. Corporate Chairpersons, CEOs, COOs, CFOs, and Presidents are invited to become members
of the PBC Policy Roundtable. For more, see: www.pabusinesscouncil.org.
CW: What are your major products?
GB: Bentley Systems
(www.bentley.com) is an engineering
software company providing products
and solutions to design, build, and oper-
ate the world’s infrastructure—
everything built to improve the planet
and to sustain our economy and environ-
ment. Bentley’s solutions address every
major category of infrastructure and
span and connect the work of the engi-
neers, architects, GIS professionals,
constructors, and owner-operators who
collaborate over the project and infra-
structure lifecycle. In the quarter-century
since our founding, the company has
grown to almost 3,000 colleagues and
$500 million in annual revenues, with
operations in 45 countries and over 60%
of revenues from outside the U.S.
Bentley Systems now is the world leader
in software for civil engineering includ-
ing road and rail design, structural engi-
neering, bridge engineering, water sys-
tems modeling, operating process and
power plants, generative architecture,
geospatial engineering including utility
networks, and engineering collaboration
servers.
CW: Tell us the history of your firm.
GB: Bentley Systems was founded in
1984 by my brothers Keith and Barry
Bentley. They started the company in
California, where Barry was finishing
his Ph.D. degree at Caltech, but soon
relocated to the Philadelphia area. This
was made possible by virtue of the Uni-
versity City Science Center in Philadel-
phia being able to offer them access to
the VAX minicomputer that their first
software version required.
My other two brothers, Scott and Ray,
joined the company in 1985. And in
1986, Bentley Systems developed the
first version of its MicroStation software
for infrastructure design and visualiza-
tion. Barry, Keith, and Ray continue to
lead our technical direction, while Scott
has moved on to create another very
successful entrepreneurial company,
Video-Ray.
In the late 1980s, the company moved
from leased space in Lionville to our
owned building at what has become our
corporate headquarters campus in Exton,
Pa. When I joined the company in 1991,
having just sold my financial trading
software company to SunGard Data
Systems, Bentley Systems had 35 col-
leagues. I initially came onboard to head
up business development and was for-
mally designated CEO in 1995.
By then, revenues had progressed to $95
million, and we opened offices around
the world, establishing our European
headquarters near Amsterdam. We also
began aggressively developing and ac-
quiring new software applications that
support the design, construction, and
operation of infrastructure. Since 1999,
Bentley Systems has invested more than
$1 billion in research, development, and
acquisitions.
The company is currently leading the
way in addressing today’s most critical
infrastructure challenges through a num-
ber of new initiatives, including software
solutions to: sustain our world’s water;
sustain transportation infrastructure;
design, build, and operate high-
performance buildings; engineer the 21st
century; deliver inspired buildings using
generative design; simulate construction
activities to improve efficiencies and
mitigate risks; and empower structural
engineers to participate in integrated
project workflows. And just this year we
announced our new AssetWise initiative
to create a new platform for operations
information modeling that will substan-
tially increase owner-operators’ return
on investment.
CW: How did you grow the firm?
GB: So far as we know, we’re the sec-
ond-largest software company in the
world that has remained privately held
from inception. Our growth has been
essentially internally financed, and we
have virtually nil net debt. Subscription-
driven stability, fiscal conservatism, and
healthy liquidity have characterized our
business approach, and have enabled our
investments to focus on growth in the
long-term value we provide to our users,
and thus to our shareholders.
CW: Would you invest more in PA?
GB: We are, in fact, currently planning
an expansion of our headquarters cam-
pus, though its timing will depend on
improvements in the business outlook.
Our Pennsylvania colleagues benefit
from distinctive quality of life factors in
Chester County, but we face challenges
in recruiting and retaining the best and
brightest younger colleagues to work
here. Pennsylvania needs to focus on
outward opportunities for its private
sector to participate and succeed in the
world economy, and must reverse its
disadvantageous and unsustainable pub-
lic-sector growth. The hundred fine jobs
we’ve recently added in Ireland are a
direct reflection of that country’s ex-
plicit and effective commitment to an
advantageous business-friendly climate.
NEWS 5 news 5
CW: Talk about doing business in PA?
GB: As a software company, the suc-
cess of our business is critically de-
pendent on the quality of our work-
force. Pennsylvania’s exceptional
quality of life, affordable cost of liv-
ing, and the unique combination of
proximity to the urban and cultural
centers of the mid-Atlantic with great
outdoor environs are key advantages
for attracting world-class talent.
Moreover, Pennsylvania’s world-class
higher educational institutions offer a
sustainable pool of talent from which
we should be able to draw young peo-
ple interested in working creatively
with computers to improve the world.
But frankly, in comparison to opportu-
nities we and they encounter else-
where in the world, it too often feels
in Pennsylvania that the prevailing
culture is to look inward, with global-
ization and businesses that can and do
compete for and on talent seen as the
source of Pennsylvania’s problems,
when in fact they are the only, and
compelling, solution.
CW: Do you have public policy
changes to make PA more competitive?
GB: Pennsylvania’s relative success
will depend upon the degree to which
it can provide an auspicious and pre-
dictable long-term climate to encour-
age and reward free enterprise. Corpo-
rate taxation and litigation in Pennsyl-
vania increasingly encroach upon the
growth potential that could be nur-
tured here, given the other advantages.
In the short term, Pennsylvania’s own
infrastructure needs should be ad-
dressed through policy changes, as
elsewhere, to invite private investment
to participate in the superior returns
that, at Bentley Systems we’re par-
ticularly aware, can be achieved
through intelligent technologies.
CW: What are your expectations or
hopes in the next elections?
GB: We must elect legislators and
executive-branch leaders who recog-
nize that the only source of sustain-
able wherewithal, to apply towards
any and all of our aspirations, is pri-
vate-sector economic growth. A real
premium should be placed on practi-
cal business experience, either as to
the candidates or those whom they’ll
rely upon when elected.
6 news OCTOBER 2010 CAPITAL WATCH

Pa. homeland security chief testifies that

tracking activists was ‘error in judgment’
By Angela Couloumbis and John P. Martin, Inquirer Staff Writers

The state’s homeland security director
says “an error in judgment” led him
to hire a Philadelphia-based terrorism
intelligence firm to monitor activists
statewide, including antiwar protesters,
environmentalists, and other groups
with no history of violence.
In written testimony, James F. Powers
Jr. says his office paid for the intelligence
bulletins because other state and federal
agencies weren’t providing information
about local activity that he thought was
critical to protect nearly 4,000 sites in
the commonwealth.
“I sincerely apologize to any individual
or group, regardless of their views or
affiliation, who felt their constitutional
rights infringed upon because they were
listed in the bulletin,” Powers says in his
testimony, a copy of which was obtained
by The Inquirer. “That was never the
intention.”
The remarks amount to Powers’
first public comments since news of
the bulletins sparked an uproar among
activists and legislators two weeks ago.
Gov. Rendell ordered the $103,000 con-
tract with the Institute on Terrorism
Research and Response terminated, say-
ing he was unaware of the arrangement
and appalled to learn that state officials
were tracking groups that pose no obvi-
ous threat to public safety.
The bulletins, circulated to law enforce-
ment and private companies, described
meetings of groups including tea party
activists, student protesters, and oppo-
nents of natural-gas drilling. Powers and
five other law enforcement officials are
among the witnesses to be questioned
by the Senate Veterans and Emergency
Preparedness Committee.
“At a time when public confidence in
state government is already plumbing
new depths, this controversial matter . .
. is toxic to public trust,” said State Sen.
Lisa Baker (R., Luzerne), the commit-
tee’s chair.
Powers, a former colonel in the Army
Special Forces, has served as home-
land security director since 2006. His
office was folded into the Pennsylvania
Emergency Management Agency three
years ago.
In his own testimony, PEMA Director
Robert French wrote that officials sought
the terrorism research institute contract
to fill “an identified gap” in intelligence
information so local emergency person-
nel and agencies could prepare for any
incident. “Unfortunately, we fell short,”
French wrote.
Another witness is expected to be
Virginia Cody, a northeastern Pennsylvania
opponent of natural-gas drilling, who first
learned of the bulletins when Powers
mistakenly e-mailed her one, along with
a note that seemed to suggest he favored
the drilling companies.
“We want to continue providing this
support to the Marcellus Shale Formation
natural gas stakeholders, while not feeding
those groups fomenting dissent against
those same companies,” Powers wrote.
Powers’ prepared testimony makes no
reference to Cody or his comments to her.
While Powers has remained silent
these last few weeks, some who have
worked with him say he has been
unfairly tarnished.
Jack Tomarchio, a former ranking intel-
ligence officer at the U.S. Department of
Homeland Security, said Powers is the
victim of a misunderstanding by state

Official at center of officials and a notorious lack of coop-

eration among agencies when it comes
Institute’s Center on Terrorism and
Counterterrorism, said the center

terror-alert flap quits

to intelligence.
“What I saw was an office that was
trying to do its level best in understand-
ing the threat or threats that may be pre-
The director of the Pennsylvania Office of senting itself to the commonwealth,” said
Tomarchio, who was deputy undersecre-
Homeland Security is quitting, saying the tary for intelligence operations in 2007 and
decision comes after he reflected on the 2008 and is now a private consultant.
uproar over anti-terror alert bulletins that The institute isn’t the only private
tracked actions of peaceful citizens’ groups. contractor the state has paid to focus on
James Powers submitted his letter of res- terrorism.
ignation to Gov. Ed Rendell on Sept. 30. Since 2003, state records show,
Powers’ three-paragraph letter says he Pennsylvania has paid out more than $2
decided to quit after thinking over “emerg- million to help fund counterterrorism
ing events surrounding the credibility of studies at the Foreign Policy Research
the Pennsylvania Emergency Management Institute, a Philadelphia-based think tank.
That total includes a $250,000 grant
Agency,” and his office and their “public/pri- this year for research into “populations
vate-sector information sharing programs.” demonstrated to be prone to radicalization,
Anti-terrorism bulletins distributed by such as prison inmates and ex-offenders.”
Power’s office included information about The state’s homeland security office
an anti-BP candlelight vigil, a gay and and PEMA are among the public and
lesbian festival and other peaceful gather- private entities that receive the think
ings. Gov. Ed Rendell said he was appalled tank’s bulletins and briefings.
when he learned of the reports. CW Gregory Montanaro, executive
director of the Foreign Policy Research
focuses on exploring trends and causes
related to terrorism and sharing its
findings in briefings, seminars, and
publications.
He said the center does not gath-
er intelligence on activists, but focuses
instead on the rise of radical Islam
within prisons.
“We’re not in the business of col-
lecting specific data about any individ-
ual or groups - and we don’t do that,”
Montanaro said.
Asked about the Foreign Policy
Research Institute, Rendell spokesman
Gary Tuma said its continuing funding
reflected a policy decision by state offi-
cials after the Sept. 11, 2001, attacks to
support scholarly research on the topic.
“Beyond being a resource to keep up to
date on the latest state-of-the-art activity
and thinking in the field, I don’t know
that they’ve produced anything tangible
specifically for us,” Tuma said last week.
“But I think that people at homeland
security and PEMA find value in what
they do.” CW
OCTOBER 2010 CAPITAL WATCH opinion 7
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A Capital Watch Confidential Report: Rent-a-cops gone wild

Since the “talk first, think later” phenom-
enon we have come to know and love as
cable news seems to have infiltrated all
forms of journalism down to the local
print media, we feel we have to weigh in
on the “terrorist in a teapot” brouhaha
over the state’s now defunct $125,000-a-
year contract with something or some-
place called the “Institute for Terrorism
Research and Response.”
Before you read what we have to say
below and wonder whether we know
squat about anything, do yourself a favor
and go to www.terrorresponse.org and
see what you make of it. As far as we can
tell – and why would they publish any-
thing at all on a website when they are,
of course, a secret organization research-
ing and tracking terrorists and jihadists
worldwide from offices (or, at least, post
office boxes) in Philadelphia, London
and Jerusalem. Do they know anything
about terrorism? Well, they could tell
you, but then they’d have to shoot you.
But they do have an office in Israel,
right? Can you spell M-O-S-S-A-D?
After you’ve mined all you can from
the website, you’ve got to come away
with the feeling that these guys have
told you nothing about themselves or
what they really, really do. (By contrast,
visit the website for what used to be –
at the height of the Iraq War – called
Blackwater Security -- http://www.
xeservices.com/ -- which is as much as
an open book as a private, confidential
army can be.)
There are several things about the
ITRR website that tend to persuade the
casual visitor that they are not a bunch
of hucksters working out of an internet
café in Uzbekistan. The English is cor-
rect and un-idiomatic – although liber-
ally sprinkled with obtuse acronyms for
surveillance processes most of which
seem to boil down to “surfing the web.”
(This, at least, allays our fears that if you
called the Philadelphia phone number,
the person on the other head would be
a guy with a heavy Eastern European
accent saying, “Hello, this is Peggy,” ala
the Discover Card commercial).
The ITRR website lists a phone num-
ber, by the way, which according to one
of the World Wide Web’s “reverse-look-
up” web applications indicates is actually
the number of a Center City Philadelphia
personal injury lawyer. (The ZIP code
of the postal box for ITRR listed on
the website indicates that it is at a post
office located in the Oxford Circle area of
Northeast Philadelphia.)
So where are we? Could it be that
the state Senate Republicans are bark-
ing up the wrong tree, as it were? If
you read the excerpts from the so-called
terrorism alerts submitted, the verbs
used appear to be all carefully selected
to be accurate yet broad in meaning.
The ITRR “monitors” communications.
It “intercepts” e-mails and messages.
Nowhere in the published reports is it
indicated that anyone from ITRR ever
went outside of the company’s offices
or wore out shoe leather tracking down
suspected terrorists.
But, then again, how much could you
expect from a service which cost about
as much on an annual basis ($125,000) as
an individual K-Mart store would spend
on rent-a-cops.
We’re not suggesting fraud here. You
get what you pay for and, if you asked
someone to monitor the chat rooms and
blogs on the Internet 24 hours a day, 365
days a year, that $125,000 would work
out to about $14 per hour.
Now, it looks like – from the ITRR web-
site – that they were using their TAM-C
(Targeted Actionable Monitoring
Center) to provide THM (threat and
hazard monitoring) to develop AIBs
(Actionable Intelligence Briefings) for
the Commonwealth of Pennsylvania
Office of Homeland Security – all for
$14 an hour.
Leaving aside the whole issue of tar-
geting – or reporting on – groups almost
universally perceived as mainstream pub-
lic interest and advocacy groups exercis-
ing First Amendment rights, the more
interesting question to ask might be:
“How much can you expect to get for $14
an hour?” CW
8 CAMPAIGN 2010
oooooooooooo
The Race for Governor…
Capital Watch Editor Jacqueline Goodwin recently talked to both
candidates for governor—Dan Onorato and Tom Corbett—about key
issues and what they plan to do for Pennsylvania if elected in November.
Dan Onorato Tom Corbett
Here are their responses to questions posed by Dr. Goodwin.
1. Voters really want to know who you are.
What do you stand for? What do you believe
in? Please tell me about yourself.
Dan Onorato: My wife and I live in the City of
Pittsburgh and chose to raise our three children
just a few miles from where I grew up. I have been a
Pennsylvanian all my life – I was born in Pittsburgh
and attended Penn State as an undergraduate and
then the University of Pittsburgh Law School. My
professional background is as a certified public
accountant and lawyer.
I am running for governor for the same reason I have
run for every office since my first campaign for Pittsburgh
City Council: to help the private sector grow the economy
so that more Pennsylvanians get family-sustaining jobs. My
service on City Council, as Allegheny County Controller
and as Allegheny County Executive have taught me that
if government lives within its means, is responsible to
taxpayers and creates the environment for businesses
to succeed, then we can create strong communities and
improve the quality of life for our residents.
Tom corbett: I have been a teacher in our schools,
a prosecutor at the county, state and federal levels, a
businessman, a Captain in the National Guard, and
an executive in charge of a statewide agency with
operations in every community in the Commonwealth.
This breadth of experience has allowed me to see
Pennsylvania’s public and private financial interests
from multiple perspectives.
I am running for governor because I believe
Pennsylvania is at a crossroads; the next governor
will face difficult policy decisions and a dire budgetary
outlook. However, I believe that with such challenges
comes a great opportunity. For too long, Harrisburg
has been governed by “what’s in it for me” instead of
what’s best for the taxpayers. As governor, I will change
that culture and put the taxpayers ahead of political
agendas.
During my tenure as Attorney General, I have sent a
message that our state’s political culture has to change
if we are going to make our government accountable to
the people. It is this record of reform and accountability
that I will bring to the office of the governor, and it is
the need for leadership in Harrisburg to improve our
economic outlook that has led me to run for the office.
2. Taxes are a sore spot for Pennsylvanians.
If the 2011 budget mirrors its predecessor
will you raise taxes to balance the budget? If
so, how will you proceed? What will you tax?
Please be specific.
Onorato: This is no time to be talking about raising
taxes. We need to start by looking at the expenditure
side – just as I have done while running the state’s
second-largest county. Programs that do not work
or that are unnecessary will not be funded in my
Administration. Instead, we will prioritize the programs
that have the greatest impact and we will find ways to
be more efficient with taxpayer dollars. The state must
live within its means, and I have the experience to fix
the state’s budget problems.
How do candidates for
I faced budget challenges as Allegheny County
Executive similar to what the state is facing now, and
through tough fiscal management, consolidating elected
row offices and eliminating waste, we balanced six
budgets in a row without once raising property taxes.
corbett: No. I have signed a pledge not to increase
taxes, because our families and job creators can no
longer afford to foot the bill for the out of control
spending in Harrisburg.
3. The housing industry in Pennsylvania is in a
critical situation. The unemployment rate of con-
struction workers is over 35 percent and thou-
sands of small contractors and numerous large
ones have gone out of business. How will you
help businesses and their ability to create jobs?
Onorato: The economy is my number one priority.
I have laid out an economic development plan that
includes: 1) Making Pennsylvania’s business tax
structure more competitive, including by reducing
the Corporate Net Income Tax which is currently the
second highest in the nation; 2) Making state agencies
more business friendly – expediting the permitting
process that companies can invest, while ensuring
that environmental and other standards are met; 3)
Taking full advantage of our infrastructure and location
as an asset for economic growth; and 4) Ensuring
Pennsylvania’s workforce is properly trained and ready
for the jobs of the future.
corbett: Creating and maintaining an environment
in which good, family-sustaining jobs can grow will be
the top priority for my administration. For far too long,
Pennsylvania has consistently ranked at the bottom of
every job creation indicator and near the top of every
tax burden list. The policies of Harrisburg have driven
jobs to other states, and unless we change our business
philosophy, Pennsylvania will continue to have one of
the worst tax burdens for job creators in the nation.
I will jump start Pennsylvania’s economy by restoring
fiscal discipline, reforming government and encouraging
free enterprise. As governor, I will institute significant
changes to Pennsylvania’s tax climate, such as: reducing
the Corporate Net Income Tax; completing the phase out
of the Corporate Stock and Franchise Tax; eliminating
the cap on Net Operating Losses and making them
tradable; and eliminating the inheritance tax. I will
also institute reforms in our regulatory environment,
and reposition our agencies as partners with business
enterprises rather than as adversaries.
4. How will you address the pension funding
crisis?
Onorato: We need to explore a range of ideas
in order to come up with a long-term solution that
meets three criteria: 1) employees pay a reasonable
contribution; 2) the employer – such as state or local
governments – pays a reasonable contribution; and
3) sustainable benefits. I have dealt with pension
challenges as Allegheny County Executive, and my
experience shows that it is possible to solve problems
like this while being accountable to the taxpayers.
OCTOBER 2010 CAPITAL WATCH
corbett: The pension crisis is a tsunami headed
straight for Pennsylvania and many other states across
the country. For far too long, Harrisburg has decided to
put off the tough decisions and ignore the problem -- and
I believe that it is time for action to protect the financial
future of all Pennsylvanians. The pension system for
public employees is not sustainable in its current form.
I am committed to bringing together all stakeholders
– state government leaders and employees, local school
districts, municipalities and others – to devise plans to
meet the current pension obligations, cover the coming
multi-billion dollar spike and determine the best course
of action for the future. I support creating a “lock
box” to collect dedicated funding sources to cover the
pension spike and maintain that spike in the coming
years. I also believe that we need to address the pension
plan itself. I support freezing the current plan and
protecting employees and pensioners in the system. For
future employees, I believe that we should contemplate
moving to a defined contribution or even a defined
benefit/defined contribution hybrid plan and consider
changes to things such as the multiplier, vesting age
and assumption rate.
This is why I have called upon the Governor to call
a special session on Pennsylvania’s economic recovery
to address the state’s unfunded liabilities, specifically
the pension crisis. If the current government does not
address this issue, one of my first acts as Governor
will be to call for that special session. I believe it is
time to take the partisanship out of the discussion for
the retirement security for hundreds of thousands of
Pennsylvanians and bring all stakeholders to the table to
make sure it is done right.
5. Transportation experts say more than $5
billion will be needed to maintain and upgrade
roads, bridges and pubic transit in Pennsylvania.
How do you plan to fund this amount?
Onorato: Pennsylvania faces significant challenges
relating to infrastructure, and I recognize the importance
of infrastructure to the state’s economic vitality and public
health. As Governor, I will explore the options necessary
to improve our infrastructure, such as eliminating waste;
public-private partnerships; and dedicated funding.
corbett: A comprehensive revenue plan is needed to
provide for the long-term maintenance and enhancement
of our transportation infrastructure. Declining revenue
projections and the looming deficit will mean that state
expenditures must be prioritized according to the return
we can expect in terms of supporting an economic
recovery. Expenditures for our infrastructure should be
maintained or enhanced wherever possible to help make
Pennsylvania more competitive in attracting job-creators.
I have released a comprehensive transportation plan
which involves leveraging local and private contributions
to support specific projects, directing PennDOT to
reduce costs through the incorporation of best practices,
conducting research to extend infrastructure longevity,
exploring the uses of new capacity projects, developing a
transportation trust fund and evaluating the potential of
public-private partnerships.
OCTOBER 2010 CAPITAL WATCH
oooooooooooo
Compare the Candidates
governor measure up on the issues?
6. The state spends nearly as much on prisons as
it does on schools. Do you have a plan to cut the
costs of incarceration?
Onorato: Two of the most important strategies
for shrinking our corrections budget are to focus on
reducing recidivism and to avoid incarceration in
the first place. As Allegheny County Executive, my
county jail system has become a national model for
rehabilitation programs and for making recidivism
significantly less likely. In addition, my support for
early childhood education, dropout prevention and
dropout recovery will all result in fewer Pennsylvanians
entering the criminal justice system.
corbett: Throughout my career, I have embraced
the notion that smarter spending that prioritizes
prevention and rehabilitation can prevent more costly
expenditures on incarceration down the line. In 2008,
the governor signed legislation, which implemented
a program within the Department of Corrections
to identify offenders who are viable candidates for
rehabilitation and to develop evidence-based programs
to prevent recidivism. While I had some serious
reservations about the legislation, as governor, I would
study what progress the Department has made thus far
in its implementation. Based on that evaluation, I will
determine what strategy is necessary to maximize the
Department’s outcomes.
7. What are your views on legalizing medical
marijuana?
Onorato: I do not support legalizing marijuana.
corbett: While I have the deepest compassion for
those who suffer from chronic illness and pain, I oppose
increasing access to a drug that continues to have
destructive effects on our society. As Attorney General,
I have encountered tragic examples of the devastating
consequences of drug abuse. The legalization of such a
substance, even under limited conditions, could serve
to compound the dangers that drugs already present to
the health, safety, and welfare of every Pennsylvanian.
8. Medical assistance is the second most
expensive item in the state budget after educa-
tion. How do you plan to deal with this item?
Onorato: I have balanced Allegheny County’s budget
for six years in a row without ever raising property
taxes, and I’ve done it while effectively addressing the
human services needs of our residents. I am the only
candidate who can bring this experience to Harrisburg
to make government live within its means. I know how
to effectively manage Medical Assistance in order to
find efficiencies, root out waste and abuse, and provide
services to taxpayers.
corbett: While it will be incumbent upon the
next administration to restore fiscal discipline, crucial
responsibilities of state government such as providing
assistance to those in need must be prioritized. Reduced
overall spending will not necessarily translate into
reduced support for medical assistance. On the contrary,
the need to rein in state spending through measures
such as streamlining administration and eliminating
wasteful discretionary spending will drive available
resources toward programs that are involved in direct
service delivery. Greater adherence to eligibility
guidelines has the potential to result in hundreds of
millions of dollars in savings, which will help ensure
that resources will be available to provide assistance to
more Pennsylvanians in need.
9. There is a movement to privatize the state’s
liquor store system. Do you believe state govern-
ment should be in the business of selling alcohol?
Onorato: The liquor store system currently provides
the General Fund with hundreds of millions of dollars that
helps balance the budget, which has to be our first concern.
Recent examples – like Virginia – show that the costs of
privatization are often more than advocates estimate, and
the benefits to taxpayers are lower. I believe we should make
the system more customer-friendly and accessible.
corbett: The liquidation of Commonwealth assets
may be an option to help address budget deficits as the
state continues to struggle to find new revenue streams.
A plan to privatize Pennsylvania’s wine and spirits
system must demonstrate a reasonable advantage
relative to maintaining the ongoing revenue stream,
and I would require appropriate measures to minimize
any impact on current workers who depend on jobs
provided by the Pennsylvania Liquor Control Board.
10. Do you support a moratorium on natural
gas drilling in the Marcellus Shale fields?
Onorato: The Marcellus shale can be a powerful economic
engine for the Commonwealth – creating hundreds of
thousands of jobs, providing affordable clean energy
and spurring new business creation. I do not support a
moratorium, but I believe that it must be done right or we
will lose out on this once-in-a-lifetime opportunity.
Getting it right means two things: We need to make
sure Pennsylvanians get the jobs thatthe industry
creates. And we need to protect our communities and
the environment. That’s the difference between me and
Tom Corbett. I know that we can – and must – do both,
because that is exactly how I’ve run Pennsylvania’s
second-largest county. But Tom Corbett sees only one
side of the issue: the industry’s side. Tom Corbett thinks
these drillers should be allowed to police themselves; I
don’t. Tom Corbett thinks the taxpayers should foot the
bill to clean up and protect the environment; I think the
drillers should pay for it.
That’s why I support a competitive severance tax, which
I would prioritize for three purposes: 1) to create an Impact
Fund that provides resources to the local communities
that are impacted by Marcellus shale extraction, including
to address the wear-and-tear on local infrastructure; 2)
to reverse the cuts to the Department of Environmental
Protection’s operations and to ensure that the agency
has adequate resources to effectively and efficiently
regulate Marcellus shale development; and 3) to fund
Growing Greener 3 – an extension of the state’s essential
environmental conservation and preservation programs.
corbett: No. I have recently called for the
implementation of comprehensive state standards to
protect Pennsylvania’s natural environment to ensure
that the utilization of our gas resources progresses with
high standards of environmental stewardship. This can
be accomplished without imposing a moratorium.
11. Governor Rendell raised education funding
during the eight years he was in office. Will
you try to match or exceed his record?
Onorato: I have my own detailed plans for prek-12
education and for higher education, which you can find
on my website: www.voteonorato.com. I support the
Legislature’s Costing-Out Report for school funding,
because it will keep the burden off of local property taxes
while increasing achievement in our classrooms. I am also
a strong supporter of early childhood education. Our focus
can’t just be on funding, though: what matters most is
CAMPAIGN 2010 9
making sure that every family has access to a high-quality
education for their children.
corbett: Although education spending has
increased every year in Pennsylvania under the current
administration, we have not seen a corresponding increase
in student outcomes. Rather than simply increasing the
amount of tax dollars we send to underperforming
schools, I would prefer to see a comprehensive approach
to revamp our education system. I will seek to enhance
school choice by ensuring that education dollars can
follow the student to an educational option that works
for the student and the family, and will pursue new
measures to promote accountability among educators.
12. If elected, what will your top priority be?
Onorato: The most important issue in this year’s
campaign is the economy. Voters are looking for
a candidate who can help create jobs, and I am
the only candidate for Governor who has a track
record turning around the economy and running a
government. When I took over Allegheny County,
we were hemorrhaging jobs and facing a substantial
deficit; today our unemployment rate is far lower than
the nation’s and the state’s, and I have presided over six
balanced budgets with no property tax increases.
I will also bring real reform to Harrisburg – and
again, I am the only candidate in the race who has proven
experience on this issue. Under my leadership, Allegheny
County consolidated 10 elected row offices into four,
streamlined government, and saved taxpayers money
while improving public services.
corbett: Jump starting Pennsylvania’s economy to
spur job growth and development is my top priority if
elected governor. Pennsylvania’s uncompetitive tax and
regulatory environment is driving job creators out of our
state. We will revive our economy by creating a business
climate in which jobs can grow and families can thrive.
Pennsylvania needs a governor committed to working
towards reduced tax burdens and fewer regulatory
barriers that are crushing job creators and keep us from
competing on a level playing field with other states.
13. Is there anything else you would like to add?
Onorato: Pennsylvania is facing a serious budget
crisis, and I will use my experience as County Executive
and County Controller to bring fiscal responsibility to
Harrisburg. I have run the state’s second-largest county for
six years and each year I have enacted an on-time balanced
budget without ever increasing property taxes. I know how
to make government live within its means – because that is
exactly what I have done in Allegheny County.
corbett: As I’ve previously highlighted, unfortunately,
our state is losing many of our best and brightest working
Pennsylvanians to other states. Families are leaving
Pennsylvania not because they want to, but because they
could not find the economic opportunities that provide
good, family-sustaining jobs. The American Dream is a
promise that our children will enjoy more possibilities
and opportunities than we and those who came before
us. Today, in Pennsylvania, many people believe that the
American Dream is a broken promise. As governor, I
will change that, by changing the current environment
that says to businesses that they’re not wanted here,
shouldn’t expand here, and entrepreneurs and innovative
thinkers should look elsewhere. Under my administration,
Pennsylvania will once again be open for business.
Editor’s Note: First published in the October 2010 issue of
Harrisburg Magazine. Reprinted with permission.
10 news OCTOBER 2010 CAPITAL WATCH

Gas industry split over severance tax

Gas industry officials are divided over and Gas Association, which represents before they drill,” Onorato told reporters.
whether Pennsylvania lawmakers should both Marcellus and conventional indus- His Republican opponent, Tom
approve a gas tax. tries, opposes any tax, said Lou D’Amico, Corbett, the state attorney general,
Members of the House approved and president and executive director. opposes any tax on the gas industry but
sent the Senate a plan that would add a “We’re totally opposed to it certainly has called for stricter regulations that
39-cent tax for every thousand cubic feet at this time,” D’Amico said. “Our biggest would require companies to disclose the
of gas extracted. concern is that we are competing with chemicals they use, limit water with-
Drillers should pay something but the every other shale play in the country for drawals and increase fines for violators,
proposed tax is too high and “onerous,” investment capital.” an aide said.
said former Gov. Tom Ridge, a consul- Candidates for governor they are Separately, the Marcellus Shale
tant for the Marcellus Shale Coalition, a divided on the issue, too. Coalition released a list of guiding prin-
trade association. Dan Onorato, the Allegheny County ciples for members to voluntarily create
“You want to socialize the benefit of chief executive and the Democrat running safe working areas, protect the environ-
this transformative opportunity,” Ridge for governor, said he supports a tax lower ment and operate with transparency.
said. “Some of that obviously needs to be than the House version but higher than a “We’re in this collectively,” said
shared with the county governments and Senate proposal for a 1.5 percent tax that Kathryn Klaber, president of the coali-
local governments.” ramps up to 5 percent after three years. tion. “It’s not about bad or good. It’s
The Pennsylvania Independent Oil “I’m going to put in a severance tax about making everything better.” CW
Tom Ridge

Hardy holds conference on Marcellus shale

According to Pittsburgh Tribune-Review, Joe Hardy, founder of the 84 Lumber
Co. homebuilding chain and Nemacolin Woodlands has jumped on the Marcellus
shale bandwagon.
Nearly 300 people from the natural gas industry, state and local government and
community leaders attended a two-day event that Hardy intends to be an annual
event -- the Marcellus Shale Conference and Golf Tournament.
Doug Benns, a spokesperson for Hardy, said his boss wants to create the
Nemacolin Institute, a think tank, to provide state-of-the-art research and dialogue
about Marcellus shale and the role it plays in energy production. No one has been
hired to run the institute, but eventually it will have a small staff that would work
in collaboration with others involved in the shale gas exploration. Hardy has yet
to set a budget for it, Benns said.
The institute would bring together industry executives, policy makers and envi-
ronmentalists to review the pros and cons of gas drilling and production in the
state, in a manner that does not harm the environment, Benns said.
Neither Hardy, who spoke at the event, nor his daughter, Maggie Hardy
Magerko, president and owner of 84 Lumber and Nemacolin Woodlands Resort,
could be reached for comment.
The Tribune-Review said those participating in the conference paid varying fees,
depending on whether they attended a Tuesday dinner program where Allegheny
Conference on Community Development CEO Dennis Yablonsky spoke, stayed at the
resort hotel overnight or played golf on the resort’s Mystic Rock course on Wednesday.
They were able to join golf pros John Daly, who was sponsored on the golf tour by 84
Lumber, and Justin Leonard, who won the 1997 British Open.
Proceeds from the event will go to five environmental groups, including the Community
Foundation of Fayette and the Toby Creek Watershed Association in Elk County, Benns
said. The event was not publicly announced until after it was over, he said.
Kathryn Klaber, executive director of the Marcellus Shale Coalition, did not
attend the event.
The natural gas companies that are drilling into the Marcellus shale reserves
across Pennsylvania must do a better job both in safety and in protecting the air
and water resources, state Department of Environmental Protection Secretary
John Hanger said he told the group.
If all of the companies operating in the shale reserves, which Hanger estimated is more
than 75, conducted themselves like the top performers, then violations would be reduced
by 80 percent, said Hanger, who the Tribune pointed out did not play golf at the resort.
One natural gas company executive who spoke at the event, Robert C. Skaggs,
CEO of NiSource Inc., the Merrillville, Ind.-based parent of Columbia Gas of
Pennsylvania, said in prepared remarks that the state’s Marcellus shale gas
reserves are literally “transforming our country’s energy calculus.”
Skaggs said NiSource’s transmission and storage business alone plans to invest
about $200 million per year in Marcellus-related projects. “We must operate in a
safe and responsible manner in everything we do,” Skaggs said. He is president of
the American Gas Association, a trade group.
In addition to Hanger, former Gov. Tom Ridge, who serves as a strategic adviser
to the Marcellus Shale Coalition of natural gas companies, spoke to the gathering.
Ridge’s consulting firms signed a $90,000 one-year contract with the coalition to
help with its public awareness campaign. CW

Large number of state’s unemployed are educated

Many of Pennsylvania’s 600,000 unemployed people
are educated and facing joblessness for the first time,
according to a report recently released from the state
Department of Labor and Industry.
“This report illustrates with clarity the challenges
faced by citizens who, through no fault of their own,
have lost their jobs and are struggling to make ends
meet,” said Labor and Industry Secretary Sandi Vito.
The department prepared the report, “A Profile
of Pennsylvania’s Unemployed People,” to guide the
state legislature and the public in forming policies on
job creation and assistance for the unemployed, the
department said.
The profile was based on unemployment as of June.
Among the report’s highlights:
• 15 percent of Pennsylvania’s unemployed are
college graduates, and an additional 24 percent
have some college education. In all, 233,000 of the
600,000 total unemployed have more than a high
school education.
• The number without jobs for 26 weeks or
more - considered long-term unemployed - nearly
quadrupled to 232,000 from a maximum of 65,000
between 2004 and 2008.
• Most of the unemployed - 58 percent - are
between 25 and 54 years old, but 17 percent are
over 55 and another 17 percent are between 20
and 24. The rest are between 16 and 19.
• Of the total unemployed, about half had no
claims for unemployment assistance between 2001
and 2007.
• The jobless total included 39,000 managers and
supervisors, 22,000 educators, and 15,000 engi-
neers, scientists, and computer professionals.
Vito said she had not expected to see so many unem-
ployed engineers, especially when there is always talk
about a shortage of scientists. “This is something that
needs to be drilled down on,” she said. “If these folks
are unemployed right now, we have some great talent
sitting on the sideline.”
Also, she said, “we need to expand our efforts for
older workers, especially 55 or older.” CW
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12 OPINION
It’s your money, your choice: Turning on energy
competition in Pennsylvania
More than 10 years ago, Pennsylvania
legislators and utility regulators had a
vision for a competitive energy market in
our state. It would be a market where con-
sumers could pick from a variety of elec-
tricity products to suit their needs, instead
of just one; a market in which investment
would drive innovation and the develop-
ment of energy efficiency technologies
and renewable forms of generation; and a
market in which each and every customer
would see their value.
Today, Pennsylvania has an opportu-
nity to reach this vision, and in doing
so, return significant value to electricity
customers across the state. In fact, First
Energy Corporation (Met-Ed, Penn
Power, Penelec) and Allegheny Power
customers in the state could potentially
receive a rebate estimated to be approxi-
mately $150 to $500 per account. The
fact is, this money belongs to custom-
ers, not to the system that they paid to
create.
To return this hard earned money
to electricity customers, we must push
ahead with the original vision for
Pennsylvania’s energy sector embodied
in the Energy Competition Act.
The Public Utility Commission is
currently considering a proposal from
Direct Energy relating to First Energy
Talk about a brain drain
Pennsylvania has really smart people
warming the unemployment bench.
According to a recent report from the
Department of Labor and Industry, A
Profile of Pennsylvania’s Unemployed Peo-
ple, there are 39,000 managers and su-
pervisors, roughly 22,000 educators and
more than 15,000 engineers, scientists
and computer professionals. The report
also reveals most of the unemployed
Pennsylvanians have extensive work his-
tories with significant education.
This new face of unemployment also
shows these are not people who a per-
petually out of work. The report reveals
of the Pennsylvanians who found them-
selves unemployed in 2009, roughly half
had no previous unemployment claims
from 2001 to 2007. Over the same pe-
riod, 80 percent worked at least five of
seven years.
The report gives cause to pause and
throw all the unemployment stereotypes
out the window.
So with all of these really smart, ed-
ucated and talented people sitting the
bench, why doesn’t the state of Pennsyl-
vania go to this ready, willing and able
workforce when they need contracting
work done?
The state relies on hundreds and hun-
dreds of information technology workers
to keep current systems running, replace
old technologies, and implement new
systems.
However, when a contracting position
opens up, the unemployment bench isn’t
Corporation’s proposed acquisition of
Allegheny Power that would complete
the Commonwealth’s evolution to a
robust competitive energy market. It
calls for three things:
• Allow competitive energy retailers
to better compete to serve custom-
ers. While competitive energy sup-
pliers are now operating in markets
across Pennsylvania, the First Energy
Corporation and Allegheny Power
utility companies plan to continue to
play a dominant role as the default
service provider after the merger.
This type of service should be a “back
stop”, not a “first stop” for customers
in a fully competitive market. As a
result of this ongoing role and other
measures which do not promote cus-
tomer choice, only a small percentage
of consumers are shopping for their
electricity in the First Energy and
Allegheny Power service territories.
• Allow competing suppliers to bid
for the opportunity to serve custom-
ers’ energy needs. This process could
potentially generate between $300
million to $1 billion dollars in funds,
which should be returned to these
approximately 2 million electricity
customers in Pennsylvania.
By Deena C. Malley
even looked at first. Instead the request
goes out to vendors to fill these spots,
who have no contractual requirement to
look at or consider the unemployed.
For those not familiar with how peo-
ple are contracted for these assignments,
here is how it works. Say the state needs
a computer programmer and is willing
to pay $70 an hour. The request will be
sent out and the vendor will take a cut
of the hourly rate and they will push the
request down to sub-vendors who may
even push it further to their sub-vendors.
Each vendor that gets involved takes
their piece of what is left of the $70 an
hour rate.
By the time the actual computer pro-
grammer is hired to do the actual work,
he will make far less than the $70 an hour
and will be lucky if he even makes half.
This process by nature forces workers
wages lower than what they need to be
and drives costs higher for the state.
How does this make good business
sense?
Let’s say this average computer pro-
grammer probably became unemployed
because his job was outsourced, a new
technology came along dating his skills,
or his company made cutbacks due to the
recession. Maybe it is a combination of
all three.
For every week, this computer pro-
grammer sits on the unemployment
bench it costs the state on average about
$300. That is $1,200 a month and $15,600
a year. He can feed his family but is mak-
OCTOBER 2010 CAPITAL WATCH
By Chris Weston
• Create a separate billing company
that would be responsible for per-
forming the functions that the utility
does today, while also sending bills
to electricity customers on behalf of
their competitive supplier of choice.
At present, competitive electricity
suppliers in the State are able to sell
their products, but in most cases they
are simply a line on the bill from the
local utility. The creation of a billing
company would foster the develop-
ment of innovative products and
services to help customers manage
their overall energy bill, while poten-
tially translating into new jobs, or the Chris Weston
retention of existing jobs, that would
otherwise be lost to another state as a It’s time for electricity customers in
result of the proposed acquisition. our state to have choice; it’s time for
These actions would potentially pre- private sector investment in generation
serve all of the important consumer and energy efficiency technologies as
protections in place, as well as programs seen in other states; and, most impor-
that benefit low-income customers. tantly, it’s time for the money that could
Due to the supportive efforts of legisla- be generated through Direct Energy’s
proposal to be returned to the people of
tors and utility regulators, Pennsylvania
is on track to becoming one of North Pennsylvania.
It’s your money; your choice. Say yes
America’s most competitive energy mar-
kets, recognized by energy sector experts to the completion of Pennsylvania’s
vision for energy competition. CW
for the commitment of its government
officials to the creation of a robust com- Chris Weston is President and CEO of
Direct Energy, based in Pittsburgh.
petitive market.
ing far less than the salary he once made
and each week his skills are stagnating.
Meanwhile the $3 billion unemployment
compensation debt ticks up.
On the other hand, the state fills hun-
dreds of information technology jobs
with contractors every year. The unem-
ployed computer programmer doesn’t
even have a crack at these positions un-
less he is lucky enough to have connect-
ed with one of the hundreds of vendors
who fill these positions. The state ends
up paying a much higher rate for a skill
set for which they are already paying
through unemployment compensation.
So why not cut out all the middlemen?
Go directly to the bench. Pennsylvania
saves money for unemployment. Avoids
paying a higher cost for contractors. Best Deena C. Malley
of all, the unemployed worker makes a
higher wage, restores his skills and starts this wall between the unemployed and
putting his life back in order. their own jobs.
There is already precedence for this. Be like Mike Tomlin, coach of the
Many Department of Public Welfare Pittsburgh Steelers. When he needed a
contracts include partnership agree- quarterback to replace Big Ben, he didn’t
ments where vendors are encouraged to go to a high priced talent agent who
fill positions with anyone who is receiv- would bring him a high priced replace-
ing county assistance. ment. He went to his bench.
In these extraordinary economic To read the Department of Labor and
times, Pennsylvania has to think differ- Industry’s report, A Profile of Pennsylva-
ently. We cannot afford to do things the nia’s Unemployed People, go to www.pa-
way they have always been. This situa- workforce.state.pa.us CW
tion does not even make good common
business sense. So whatever the issues Deena C. Malley is a technology and
are, whether they be legal, privacy or business consultant with more than 20 years
whatever, the legislature needs to make experience. Her website can be found at
the changes necessary to break down www.deenamalley.com.
OCTOBER 2010 CAPITAL WATCH
OPINION 13

For debates, Sestak should show up or shut up

By Peter L. DeCoursey, Capitolwire

U.S. Rep. Joe Sestak, D-Delaware, had
the best of all possible worlds on Sept.
27. He got the chance to snipe at what
his rival said, as former Congressman
Pat Toomey got grilled by a respected
journalist.
But while Toomey was answer-
ing questions before the Pennsylvania
Chamber of Business & Industry’s annu-
al convention in Hershey, Sestak was in
Pittsburgh raising funds with Sen. John
Kerry, and his wife, Teresa Heinz Kerry.
Now I know that U.S. Sen. Bob Casey,
D-Scranton, refused to do this same
debate four years ago. But both candi-
dates for governor and most Democratic
candidates for Senate have been attend-
ing this debate for decades.
Sestak should have too. Yes, Sestak is
mad that the U.S. Chamber of Commerce
put out an ad that Sestak believes is inac-
curate. He was even madder after that
ad, first pulled by some stations when
Sestak protested its inaccuracy, was later
aired again, by stations who dismissed
Sestak’s wails.
But this was no corporate-shill event.
Ted Koppel of Nightline fame was the
moderator, and it was a chance for Sestak to
contrast his views with those of Toomey.
The only reason to duck was if Sestak
feared a fair ideas fight with Toomey.
Instead, Sestak chose to instead
cavort with the gazillionaires. Maybe
Kerry sweetened by putting Gruyere on
Sestak’s cheesesteak?
People who want to run for the U.S.
Senate or governor or any major office
should do debates sponsored by any
respectable organization, rather than
ducking them.
And if someone would rather raise
funds than do a statewide debate that
they got four months notice of, well, that
tells you something.
Especially in a race where Sestak is
trailing.
Then, having not attended, supporters
of his from MoveOn.org came to protest
and his campaign rattled out an insta-
response to whatever Toomey said. So he
got to rebut him while nibbling foie gras
with Teresa and Jawn.
Which is all fine, but sort of just re-
emphasizes the point that their candi-
Rep. Joe Sestak
date ducked a public forum designed to
inform voters, on statewide TV.
Sestak, and other candidates for high their fancy farm another night. want to clash with the other candidate
office, should debate. And if they have Good candidates welcome debates and by e-mail, tell you something by that
four months notice, the Heinz’s can open don’t look for excuses. Folks who only choice. CW

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14 editorial OCTOBER 2010 CAPITAL WATCH

Stay Informed, editorial

If you hated the

Subscribe Today! Rendell years, you’ll
Capital Watch
loathe what comes next
Tom Corbett, the Republican
provides me candidate for Governor, says that,
with what I need if elected, he won’t raise taxes even
if you pull out all of his fingernails
to know about the with a rusty pair of pliers.  Dan
Onorato, the Democratic candidate,
inner workings of says he won’t raise taxes even if
you pull out all of Tom Corbett’s
state government fingernails AND toenails.
Do they know something that we
without having don’t know?
Last time we looked, Ed Rendell,
to be there. the “still Governor until the middle of
January,” signed a $27 billion budget for the current fiscal year that’s already running
well into the red – mainly because of a shortfall of expected federal funding and a
likely dead-on-arrival plan to tax the extraction of natural gas from the Marcellus
Shale in Pennsylvania.  On top of that, the election-bound General Assembly kicked
the can down the road on a wide range of fiscal issues like financially-strapped state
employee and teacher pension systems, an illegal – if not immoral – plan to fund
state highways that was rejected by the federal government, the prospect of no more
federal stimulus dollars and a growing debt to the federal government for borrowing
needed to pay unemployment claims for a half million Pennsylvanians.
We keep trying to figure it out: how is the state going to pay all of these bills?  One
of these men will soon be the new Governor and know one who is going to the polls
on November 2 really has a clue on how the lucky winner is going to address these
financial challenges individually or as a group.
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The Challenge
 
Program area Shortfall–low estimate Shortfall–high estimate

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Subscribe online at www.capital-watch.com using offer CW901
Expiration of federal
stimulus dollars
$1.3 billion $1.3 billion

State pensions “cliff” $800 million $3 billion

Name Unemployment comp debt $4 billion $4 billion-plus

Unrealized Medicaid $225 million $225 million

Address monies

Apt. (or Office) Lost Marcellus ------- $270 million

tax collections
City/State/Zip
Replacing Act 44 for $1.3 billion $4 billion
transportation
Telephone (Home)
TOTALS $7,625 billion $12.795 billion
(Office)

Email Now these numbers pose some pretty interesting challenges.  Even if you strip
out the transportation numbers on the grounds that the solution in this area lies
outside of the so-called General Fund budget – you still have budget buster problems
Payment Enclosed Please Bill Me Later
ranging from $6.3 billion on the low side to $8.8 billion on the high side.  That means
that Tom Corbett or Dan Onorato will have to do some budget slashing never before
achieved by any Pennsylvania governor and maybe not by any state CEO anywhere. 
We’re talking about cutting anywhere from one fourth to one third of project state
spending over the next couple of years – if either candidate has a hope of keeping a
C/O Benchmark Group Media “no tax” pledge.
Attn: David Fitzkee Whatever happens in 2011 through 2015, it won’t be pretty. CW
3400 N 6th St
Harrisburg, PA 17110
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