State financing authority operations shrouded in secrecy
By Brad Bumsted and Melissa Daniels
Published: Saturday, Feb. 22, 2014, 10:40 p.m.
HARRISBURG — The Commonwealth Financing Authority spends billions of taxpayer dollars “behind the shadows,” one critic said, with secrecy that includes covering members' communications with black ink to avoid public disclosure.
The little-known agency, established a decade ago to enable the Pennsylvania Legislature to sign off on multimillion-dollar development projects, demonstrated its shadowy reputation by refusing 90 percent of a Tribune-Review request for its members' emails.
Lawmakers last fall chose the authority to distribute tens of millions of dollars in grants from a $2.4 billion transportation revenue law that Gov. Tom Corbett signed to fix state highways and bridges.
The Trib requested emails — between board members, and to lawmakers or Corbett administration officials — to examine potential political deal-making.
The authority works in the shadows, said Eric Epstein, founder of the government reform group Rock the Capital, and its refusal to disclose emails is a “snapshot of how the game is played in Harrisburg.”
The agency sent 167 pages of largely blacked-out emails. Attorneys for the Department of Community and Economic Development redacted content almost in its entirety. Readable text is mostly benign one- or two-line exchanges referring to attached files or scheduling matters, and the names of correspondents.
The state's lawyers redacted “internal pre-decision correspondence.” They blacked out information pursuant to attorney-client privilege, or “sensitive financial analysis” related to projects. They deleted even publicly available information, such as state-issued email addresses and staff phone numbers.
Melissa Melewsky, media law counsel for the Pennsylvania Newspaper Association, said the lawyers' actions are typical of government responses to requests for emails.
An agency can't provide blanket reasons for denial without specifying the emails covered under each exemption, Melewsky said.
“A denial that isn't clear doesn't comply with the spirit of the law and may not comply with the letter of the law,” she said.
Lawmakers established the Commonwealth Financing Authority in 2004 during former Democratic Gov. Ed Rendell's administration. Its scope has expanded to house multiple grant and loan programs.
It has allocated $2.3 billion since its inception, and this year will receive $40 million for transportation projects.
“We are talking about doling out billions of dollars in contracts to attorneys, bankers, consultants, corporations, developers, engineers and on and on — by unelected appointees,” Epstein said.
The board is composed of seven political appointees of legislative leaders and the governor. Project approvals require the consent of four legislative appointees and one gubernatorial appointee, setting the stage for political deals.
DCED spokesman Steve Kratz said conversations between staff, board members and the governor's office sometimes involve how much money to spend on projects.
“There's an interest on that level for what gets proposed from the CFA, to make sure that we're investing in projects within our means,” he said.
Department and administration officials might discuss program guidelines, Kratz said, especially for programs the legislature established without specifying criteria for project approval.
The authority lists approved projects on its website. But individual applications, including those the board rejected, are not available to the public.
Kratz said the office receives thousands of applications each year that would be burdensome to post online, given the potential need to redact information. Applications may include tax identification, Social Security and bank account numbers that would be private.
Looming bond debt
Jake Haulk, president of the Allegheny Institute for Public Policy in Castle Shannon, considers the authority “a very secretive bunch.”
Haulk recently researched the authority's audits dating to 2006 and found that it pays nearly $148 million a year on outstanding bond debt of about $1.8 billion.
“They are digging a hole over there,” he said. “They're borrowing and giving money away. You just can't do that forever. At some point, somebody is going to ask the question, ‘How much money is DCED having to pay just to cover their bonds over there?' ”
Though the authority's annual audits go to chief clerks of the House and Senate, audit results are not posted on its website.
Haulk said lawmakers may have to contend with the authority's growing spending.
“The legislature, having created this thing, has a strong fiduciary responsibility to make sure they understand what this place is doing,” he said. “This should be far more open and public about how much they owe, how they're spending.”
Email exchanges provided to the Trib show administration officials and authority board members do communicate, though about what they won't say.
The authority produced three letters from lawmakers pushing projects.
The legislature is considering changes to strengthen the state's Right to Know Law, House Republican spokesman Stephen Miskin said. It is likely that board members asked for information before making a decision, he said, noting that the information law exempts “pre-decision” matters.
“It's so you can ask questions, including the ‘stupid' question, to learn about a project without constant fear of being written up,” Miskin said.
But Senate Majority Leader Dominic Pileggi, R-Delaware County, author of the 5-year-old law, said the exception for pre-decision deliberations “was not meant to swallow the rest of the Open Records Law so that every document created and every communication made before a decision is exempt from disclosure.”
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