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Capital Watch

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By: Cheryl A. Davenport

 

PSECU, a Pennsylvania-based credit union created by 22 state workers over 80 years ago, was founded to support and secure the financial well-being of state workers when few existed. From these simple beginnings PSECU has grown to include over 400,000 members.  The not-for-profit member-owned institution provides many low or no- fee financial products to its members and 24/7 banking services while upholding the ethical integrity members have come to trust. This commitment to its members is just a part of the overall dedication to the community. PSECU promotes financial literacy, volunteer participation and engages in charitable contributions. Environmental community outreach includes sponsoring the Earth Day Festival and Shredding Event, the Walk 4 Clean Water and support of the Rotary’s Clean Water Projects. These events express the organization’s focus on taking a leadership role in environmental responsibility through clean water, recycling, sustainability and green practices.

As PSECU expanded, the institution resolved that it had outgrown its location at Credit Union Place in Harrisburg. This was an opportunity to magnify their community influence and environmental dedication. Discussions began about building a new facility which would be eco-friendly and sustainable while providing prospects for future growth over the next 50 years. A 47-acre site was chosen close by on Elmerton Avenue in Susquehanna Township. The site, with large open spaces, was ideal as the space provides for biodiversity and promotes local habitat. This site footage exceeds LEED open space requirements by 227 percent. After approximately 5 years of discussion, a $72 million budget and design was developed that would make the new building and surroundings save energy costs while benefitting the community, members and employees. PSECU moved into their new facility in January 2014 with extremely minimal downtime and impact on its member services.

The new PSECU building is operated by a natural gas powered turbine system, also known as cogeneration. The turbines generate heat, which is then used by a heat exchanger to produce heat for the building or an absorption chiller to cool the building. This system also heats the water for the facility. Other options were discussed such as windmill and solar power, but these were determined to have a larger footprint on the environment and the cogeneration system was better suited to meet the buildings current and expanding future needs. The 239,000 square-foot facility and site has the possibility for expansion up to 425,000 square feet.

The goal was to be LEED Gold Certified, which was obtained. Per the U.S. Green Building Council, LEED (Leadership in Energy and Environmental Design) certification points can be earned in many areas of building development, which address concerns related to sustainability. Four levels of LEED certification are awarded based on the number of points earned – Certified, Silver, Gold and Platinum. LEED certified buildings use less energy and water, reduce greenhouse gas emissions and save money. The facility received LEED points by achieving an energy cost savings of 38.1 percent due to cogeneration, and lighting methods. The capture and treatment of 90 percent of storm water runoff, water-conserving showers and toilets, and landscaping design which requires no irrigation all assist in saving water. The cost savings of LEED initiatives help to re-coup initial building investments. The cogeneration system will pay for itself within 5.5 years of initial installation. While producing cost efficient heating and cooling, the system also produces a surplus, which is sold back to the energy grid. Last year alone, $85,000 in excess energy was sold back.

It’s not just the final building product that is important when considering the environment and community. Seventy-five percent of the debris during construction was diverted from landfill into recycled materials, and 20 percent of the building components are made of recycled materials. LEED points were also awarded for the use of low-emitting sealants and adhesives. Building materials were brought in from local sources to reduce the ecological footprint by saving in transportation costs while at the same time supporting local businesses. Per PSECU’s vision, local businesses were sub-contracted to support the project. Also as a part of PSECU’s dedication to the community, a percentage of the building budget was dedicated to the hiring of minority and female workers.

The construction also provides for back-up energy. Supplemental absorption chillers, onsite stored water in case of interrupted water service, as well as a diesel-powered generator, which can power the entire building and its functions, all provide for complete back-up. Alan Brunner, Director of Facilities Operation and Organizational Support Services, a key planner and manager of the project emphasizes “We can’t be down, we have to be online 24/7 for our members.” This fits in to PSECU’s philosophy of ‘brick and mortar-less banking.’ As stated on the PSECU website, “We’re not about having a branch on every corner. We’re about giving members account access where it’s most convenient for them. Their living room. Their backyard. Their cell phone. By not spending money on branches, we can give members competitive rates for loans and savings, as well as a host of low or no-cost services.” Digital banking service is not just about customer convenience and cost savings but also reducing carbon footprint.

Saving energy and reducing ecological footprint also impacts employees, and PSECU believes that the LEED certified building reflects its culture. Employees were updated and engaged throughout the entire building process, and a workspace planning committee was established to help with the selection of office furniture. Adjustable height desks, using electricity generated on site, were chosen so the employee can stand and change position throughout the day. Work stations were made at a lower height to allow more natural light throughout the working space. Seventy-five percent of the lighting is natural daylight, brought in through efficient design to reduce cost, as well as provide health benefits to employees. Holistic business cultures enhance the total well-being of the employees – physically, financially and emotionally. This practice reduces stress and increases employee productivity. The campus encourages human interaction with the physical environment. Employee walking trails through the open green spaces are provided, as well as a rooftop garden patio area for lunch breaks, which has the added benefit of reducing cooling costs and storm water runoff. Other employee benefits to improve health and well-being include bike racks, on-site gym, the promotion of non-smoking, on-site daycare and involvement in the community through volunteering. Employees are also offered ride-sharing high-occupancy vehicle and fuel efficient vehicle parking, with electric car stations planned.

Each new employee is given a tour and orientation to the building and grounds to understand the scope of the entire initiative. Aside from environmental benefits, health benefits and cost-savings – the character of the building is modern and stunning. It is a professional inviting building, even under heavy security measures to protect their members – not what one might expect from a cost-efficient building.

The building of LEED certified projects and sustainability movements in Central Pennsylvania is growing, with PSECU serving as an inspiration. Phoenix Contact has also installed a cogeneration heating and cooling system; Messiah College has expanded sustainability initiatives to include an organic community garden, composting and recycling. Dickinson College offers on its website that 96 percent of the class of 2015 had taken at least one sustainability course.

As PSECU has evolved, its vision and mission encompasses not only the members but the community and environment in a relationship that is advantageous to all. Providing cost savings through energy efficiency and sustainability and ‘brick and mortar-less banking’ affords innumerable benefits.

 

For more information please visit https://www.youtube.com/watch?v=gfjkL3BU-3E

 

 

 

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By Senator John M. DiSanto

 

The General Assembly recently took action to maintain Pennsylvania citizens’ access to federal buildings and prevent the burden of needing a passport to fly within the U.S.

 

Lawmakers came together in a bipartisan fashion and approved compromise legislation to bring the Commonwealth into compliance with the federal REAL ID Act. Passed in the wake of the 9/11 terrorist attacks, this federal law established increased security standards for state-issued driver’s licenses and identification cards and prohibited federal agencies from accepting licenses and identification cards from states that did not meet these standards.

 

Concerned that that federal government sought to regulate what was previously under the domain of the states – driver’s licenses – the General Assembly overwhelmingly voted in 2012 to prohibit the Commonwealth from participating in REAL ID.

 

In addition to the issue of states’ rights and the Tenth Amendment, concerns about Pennsylvanians’ privacy rights as part of a nationwide driver license database prompted passage of the REAL ID Nonparticipation Act of 2012.

 

The National Conference of State Legislators estimated that REAL ID implementation costs nationwide could be as much as $11 billion. It is estimated the initial start-up costs to fully implement REAL ID in Pennsylvania would be $141 million, with $39 million in additional, annual operational costs. The federal government provided PennDOT with just $5.4 million in grants to assist with REAL ID requirements—yet another unfunded mandate from Washington D.C.

 

In addition, the federal law complicates the process of obtaining and renewing a driver’s license. Pennsylvanians will be required to visit a PennDOT facility upon their first renewal after REAL ID compliance, and to produce a certified, raised-seal birth certificate and proof of social security number and principal residence. Also, REAL ID requires a person to apply in person for the re-issuance of their driver’s license if he or she has a material change in his or her personally identifiable information (not including a change in address).

 

While these and other concerns were valid, not meeting the federal requirements comes at a cost to citizens. By June 6 of this year, Pennsylvanians would no longer have been able to gain access to secure federal buildings using their driver’s license. And, by January 2018, Pennsylvanians would need a passport to fly on commercial airlines within the U.S. A recent study determined Pennsylvanians would need to spend nearly $1 billion on passports if the state did not comply with REAL ID.

 

The General Assembly needed to prevent these unacceptable burdens from being placed on our citizens. That meant complying with the federal law while maintaining options for residents.

 

Pennsylvania had already taken 33 of the required 38 steps to enhance ID security as required by the REAL ID Act, such as using digital photos, issuance and expiration dates and a unique identification number on driver’s licenses.  Remaining mandates to be met include having a specific federally approved symbol that is designed to make tampering and forgery more difficult, and requiring a certified birth certificate to issue a driver’s license.

 

Meeting the last remaining federal requirements, while protecting Pennsylvania citizens and taxpayers, was the goal of a lengthy legislative process that featured compromise in the Senate and House of Representatives as well as input from PennDOT. The result was Senate Bill 133.

 

The legislation brings Pennsylvania into compliance with REAL ID, with safeguards for citizens.

 

Senate Bill 133 allows Pennsylvania residents to choose between getting a REAL ID-compliant identification card or a non-compliant card. Holders of standard-issued driver licenses will not be asked to subsidize or cover the cost to issue REAL IDs. Instead, the cost of compliance will be borne by those opting for the federally approved ID. PennDOT will also be required to report annually to the General Assembly regarding the cost to the state of REAL ID compliance.

 

Pennsylvania’s approach to REAL ID prohibits state government from compelling any individual to apply for a REAL ID, and it does not allow Pennsylvania to exclusively mandate a REAL ID for any reason. These are important protections to preserve individual choice for our citizens.

 

Without this legislation, Pennsylvania would have soon become one of only five states to remain noncompliant with REAL ID and without an extension.

 

Now that Governor Wolf has signed Senate Bill 133 into law, PennDOT will begin what is expected to be an 18 to 24 month process to fully implement REAL ID. Given Pennsylvania’s new law to enact REAL ID, it is expected the Department of Homeland Security will provide further extensions that will allow Pennsylvanians, with their Pennsylvania driver’s license or photo ID card, to continue flying commercially and visiting federal facilities in the interim.

 

Our Commonwealth should never blindly comply with every regulation handed down by the federal government, especially those that encroach on what is rightfully a state matter, such as driver licensing. By slowing down the process and creating alternatives, Pennsylvania is implementing REAL ID on its terms, not Washington’s.

 

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Senator John DiSanto represents most of Dauphin and all of Perry County. He was first elected in 2016.

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By Robb Hanrahan

It’s budget time in Pennsylvania and the usual questions are popping up. How late will it be? Or, will it be on time? Every year, the state legislature wrestles with how the Commonwealth will spend its money. Cuts are often considered “draconian” to those who like a program and “necessary” to those who don’t.

So every year around this time on my show “Face the State” the idea of zero base budgeting is tossed about. It’s the total opposite of how we currently decide how much and where the money will be spent in Pennsylvania.

The way we do it now

Currently we use incremental budgeting which always begins with the budget from last year. It’s not a bad way to budget and is used in many businesses and governments. The idea is to approach the coming budget year with the current budget’s numbers. If a department or agency needs more money for programs or services, it requests an increase. The increase must be justified. But here’s where many lawmakers have a problem with this practice. If a department doesn’t use all of the money in the previous budget year, they lose it.

It’s this “use it or lose it” philosophy that has many thinking the only way to go is up. More spending, which requires more revenue, which these days often means more taxes. Money isn’t pouring into the Commonwealth at this point. So to keep the budget balanced without an increase, departments and agencies often have to cut spending. That’s hardly a popular thing to do for one running a multi-million-dollar government agency.

So why not start at zero?

To remove the “use it or lose it” mentality, a process known as zero-base budgeting is floating out there. It’s far from new. A guy named Peter Pyhrr wrote an article about Texas Instruments use of it in 1970. Interest grew in its success. Then, Governor Jimmy Carter implemented ZBB into the state of Georgia’s budget. Carter brought it to Washington where it lasted all of four years until President Reagan killed it in 1980.

It’s a simple idea that gets complicated quickly. Zero based budgeting starts at zero. Sounds good, right?  Each department gathers every expense that it will incur during the next year. Every expense. Then they simply budget for that amount. There’s no “bagging” of last year’s budget and asking for more. The simple genius behind it is that there’s no incentive to spend all of the current year’s budget, and it requires proof of every expense needed. Here’s where it gets complicated. That’s a lot of detail. Detail that requires managers, department heads, even mid-level employees to be recording current expenditures and predicting next year’s. Governments that have used it often had to hire and train more people in order to get it up and running. In other words, it needs more work and is often not very popular with employees.

The reason many government agencies abandoned zero-base budgeting was because it requires time and understanding of its complexity. Units in every department have to justify spending, not only to meet minimal expectations but also to include predictions for providing higher levels of service. The analysis has to be handed up through several levels before finalization. In Pennsylvania, that would have to be done every year. Whew. That would include counting every pencil, paper clip and folder, not just major expenses.

Advantage: detail

ZBB is a great way to have a working knowledge of where every cent is being spent. It provides an efficient allocation of money and can improve cost effective spending on services. It also takes away the “entitlement” philosophy of spending the entire current budget.  ZBB can also weed out stale and outdated programs and departments.

Disadvantage: complexity

With Pennsylvania on a yearly budget cycle, implementing zero-base budgeting would require enormous preparation time and increase the cost of preparing the spending plan. Our state government is huge and complex in and of itself. ZBB requires a microscopic examination of everything that needs money. In my opinion it would probably need a year-round department of its own just to gather the information needed to produce a yearly zero-base budget.

So why all the talk about ZBB?

Because we’re looking at a possible $6-billion-dollar budget deficit by the end of next year if we don’t close the current $700 million deficit this year. Lawmakers are looking for money in every corner and ZBB appears to be an answer to wasteful government spending. In a recent appearance on CBS 21’s “Face the State,” House Appropriations Chair Stan Saylor talked about performance base budgeting. It’s a sort of hybrid off-shoot of ZBB which requires accountability and measurable objectives. PBB presents its own list of challenges but may be a possible road to explore as we face the state budget challenge every year.

According to the National Conference of State Legislatures, almost half the states use performance information but differ in when and where the information is used in the budget process. Basically all information is important in the budget process and performance information can provide background on the purposes of state-funded programs and the results they achieve.

Robb Hanrahan is host of CBS 21’s “Face the State.” The show can be seen every Sunday morning at 8:30 a.m.

 

 

 

 

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By Tony May

 

Give Pennsylvania state government some credit.  It has put the Commonwealth on the cutting edge in recent years of some important trends that have slowed the slow slide into Rust Belt decay.

The state authorized casino gaming which has created thousands of new jobs and generated billions in state revenue.  It aided and abetted the birth and growth of the “tight gas” industry making Pennsylvania one of the largest producers of natural gas in the nation.  It countered the national anti-tax trend and authorized an overhaul of the state’s funding strategy for transportation funding.  In a time when Congress has failed in its responsibilities to write a new national transportation policy and fund it, Pennsylvania has turned the corner on replacing and upgrading obsolete bridges and restoring and expanding highways.  And it about to join the growing number of states legalizing cannabis to heal the sick, create jobs and add needed state tax revenues.

Yet Pennsylvania still lags behind other states in population growth, average and median family income, economic development and other vital signs of a thriving economy. So what one, single thing can the General Assembly and the Governor do to get ahead of the curve and increase the rate of economic growth and restore actual population growth to keep Pennsylvania competitive among the states?

The answer is: be more like California – the good aspects of California.  The “Golden State” is unafraid to see itself as an outlier, a trend-setter and innovator.  Pennsylvania is more inclined to avoid sticking out like a sore thumb.  It doesn’t mean that we need threaten to secede from the union, ala California Gov. Jerry Brown.  It means that we need to work harder to chart our own future independent of the largesse of the federal government – something that looks like it might go the way of the dodo bird anyway.

A good place to start would be to evaluate Pennsylvania’s unused capacity and find ways to increase utilization on existing resources.  One of the reasons Pennsylvania faces bitter annual state budget fights is because the decay of our existing economic engine is throwing off less and less cash.  The first factor to address here is population stagnation.

Outside of a few key, mostly suburban counties, Pennsylvania’s population is not growing.  While an increasing population would add to demand for services, it is likely that new residents would generate more in economic demand than they would consume in state and local services.  This would be true even of immigrants from war torn countries.

Another sector that is under-utilized is higher education, particularly our state-owned universities.  Attracting out-pf-state students (perhaps even international students) would help our state-owned schools operate more efficiently.  Because they are operating, for the most part, under capacity, increasing the number of higher-revenue non-resident students would not be denying access to qualified in-state students.  The bottom line would be an economic boost in 14 Pennsylvania non-urban communities.

Third on the list would be a state approach to increase demand for home ownership aimed primarily at third class cities and boroughs.  Pennsylvania’s towns and cities are being hollowed out.  The state should investigate strategies to attract new residents to small  towns where thousands of dwellings stand vacant and decaying.

The best part is that most Pennsylvanians would relish the challenge.  Every Pennsylvania community has local pride; it would be easy to transfer that enthusiasm to support for a state growth effort.

 

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With a Friday court deadline providing a catalyst, lawmakers in the House and Senate are moving to tackle long-debated gambling issues including the reinstatement of a local share assessment on casino slot machine revenue.

Bipartisan votes by the House Gaming Oversight Committee approved two separate bills May 21 to reinstate the local share.

The bills – House Bill 1342 and House Bill 1301– would require that Category 1 and Category 2 casinos pay an annual fee of $10 million to host municipalities and a payment of 2 percent to the host county.

But they differ in how the local share revenue for some casinos would be distributed.

The Senate Community, Economic and Recreational Development Committee has scheduled an off-the-floor meeting Tuesday on House Bill 271, a House-approved airport tablet gambling bill seen as a vehicle for gambling expansion legislation.

Sen. Mario Scavello, R-Monroe, the committee chairman, said he is preparing to amend the bill with provisions to expand legalized gambling and reinstate the local share. The amendment is expected to address the legalization of internet gambling and fantasy sports betting.

Drew Crompton, chief of staff for Senate President Pro Tempore Joseph Scarnati, R-Jefferson, said the Senate plans to send a gambling bill to the House this week.

With the June 30 budget deadline to pass a fiscal 2017-18 state budget just weeks away, lawmakers are under pressure to fill a revenue hole in the current state budget. The budget is based on the assumption that new gambling will generate $100 million for state coffers.

The state Supreme Court has given lawmakers until Friday to pass a new local share assessment that meets constitutional muster.

The court declared the assessment unconstitutional last fall on grounds that it wasn’t levied uniformly on casinos. The court said a provision in the 2004 gambling law requiring casinos to pay a 2-percent tax or 10 million, whichever is higher, to host municipalities created a variable

The May 26 deadline is the second set by the court since last fall’s court order.

“I think it was important for [committee] members to have a vote on the local share before the court deadline,” said Gaming Oversight Chairman Scott Petri, R-Bucks. “I don’t think the court is going to give us another deadline.”

Committee members voted the interests of their own districts on several amendments to change the existing distribution of local share money, said Petri.

The committee rejected amendments to give part of Hollywood Casino’s local share assessment that goes to Dauphin County to Lebanon County and to give a portion of each casino’s local share assessment to a state-run volunteer fire company grant program.

 

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    Capital Watch is now available on line in a digital format.

    What does this mean to you?  You will continue to receive the same quality news and opinions about what is happening in Pennsylvania state government that you have come to expect from us, in both traditional print format and in a beautiful easy to read digital edition.  Now you can keep up with the latest political news on your laptop, tablet or smartphone.

    Click here to subscribe!

    Once subscribed each month Capital Watch will be delivered directly to your inbox automatically.  All you need to do is click the link to view or download the issue. Past issues beginning with the June 2014 issue can also be accessed online. You can check out our July issue online now.

    Happy reading!

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