During the first week of February, the Pennsylvania state Legislature scrambled to patch together final state guaranteed funding for construction of sports stadiums. By voting to raise the state's debt ceiling by $809 million, a whopping $320 million will be targeted to four new sports stadiums, two in the Philadelphia region, a new Pirates ballpark and Steelers stadium on the North Side of Pittsburgh. $300 million is in the works for an expanded David L. Lawrence Convention Center, Downtown Pittsburgh.
In addition to the arenas, Gov. Tom Ridge will be able to dole out $330 million to dozens of other projects. Among those would be museums, arts centers, parks, and other facilities. Where? Contact your local state representative or state senator.
One likely recipient ironically will be the National Constitution Center in Philadelphia.
During the General Assembly's consideration of an amendment to the Senate's Bill to raise the state debt ceiling, one House member, Representative Sam Rohrer, a Berks county Republican, urged rejection of the legislation on the basis of unconstitutionality. For a mere few minutes, Rep. Rohrer read directly from the Pennsylvania state Constitution, pointing out that the state's credit was prohibited from being pledged or loaned to private companies.
Rohrer challenged a response from the author of the amendment, House Majority leader, Representative John Perzel, a Republican from Philadelphia and co-sponsor House Minority leader, H. William DeWeese, a Greene County Democrat. Neither rose to defend the constitutionality of the amendment. Instead, House Majority Whip, Don Snyder took to the floor to defend the constitutionality of the legislation.
Rep. Snyder stated: "... if one heard comments we made earlier on how the financing of the stadiums will be accomplished in which the state perhaps municipality or counties will be providing money to an Authority which will be the organization that constructs stadiums and then leases those stadiums out. There is nothing in this amendment that provides money directly to any private corporation, to any individual, or to any association other than a state or municipal created authority. The state is providing financing through that."
Under his breath, Rohrer likely sighed, "Uhuh."
Reports indicate the deal for the sports teams will be arranged so that any increase in state tax revenues resulting directly from stadium events will be applied as the full repayment by the teams for the state portion over a 29 year period. The remainder of the funds needed by team administrators would come from team owners and the cities.
TRANSCRIPT PA HOUSE OF REPRESENTATIVES SESSION WED. FEB. 3, 1999
The chair recognizes the representative from Berks County, Mr. Rohrer.
SAM ROHRER: Thank you Mr. Speaker. I rise being a member who is very very disappointed that we are even dealing with this issue on the floor of this house.
There’s a euphoria among some it seems that this issue is before us. But I think I speak for an awful lot who are very chagrined that we are dealing with this issue when all of us know why it is before us and how it got to this place. We stood here not too many months ago when this issue first came up and there were not the votes. Both caucuses independently spoke about why this was bad policy. And there were clearly not the votes. The issue has not changed.
Intervening time has changed perhaps and lots of money has flowed with promises for projects in districts, some of which are legitimate, but the attempt has been to hook together the legitimate with the illegitimate. And to have us stand on this floor today and to put up a vote for an issue that is clearly here before us because we have been blackmailed and extorted. You all know that what I am saying is correct. This would not be here had we all not been told if you do not do this we will leave. That is not the way to conduct public policy.
Public policy and the citizens of this state are ill served when we succumb to this kind of pressure to make public policy. We have heard many comments about this specific amendment today. We have all heard comments about what the amendment was going to be yesterday.
And yet there are significant differences. First we hear it’s going to be a giveaway and nobody likes it. So they come up with another way; we call it a loan. Then we find out it’s not really a loan; it’s a hybrid. But they’re still gonna have to pay us back. According to the definition, that’s a loan.
Well it’s either a loan or it’s not. They’re either paying us back or they’re not. If it’s a giveaway we’ve already said we can’t do that we don’t want to do that. On the other hand they’re saying it’s not a loan. Now where in the world is common sense on this issue? Do we not have the ability to understand English? Words do mean something. And a loan is a loan or a loan is not a loan. Giving it is giving it or it’s a loan.
In any case it is here before us. We are told for instance as a taxpayer safeguard that if there are cost overruns on this facility which there have been on almost every facility built in other states some of them gigantic that the owners are obligated to pay the overruns. Unfortunately that’s not what the amendment says.
It says that on page 14 agreement that all costs line thirteen through eighteen agreement that all costs of design and construction of a new or renovated facility which are due to delays or which exceed the projected costs as set forth in the financial plan or a contract with the office shall be the responsibility of the contracting municipality, or the contracting authority, or the professional sports organization. Now that is no guarantee that the professional sports organization will pay the overruns. That tells me there’s just as much likelihood that the city of Philadelphia or the authority in Pittsburgh, the taxpayers, will pick up the overrun. There’s an equal chance. There’s no guarantee. We’re not guaranteed of much taxpayer protection at all.
And I’m very saddened that we have those who stand up and believe that we can spin this in any fashion we want and convince the taxpayers of the state that this is something other than what it is. This is a shell game and it’s disrespect of the highest sort to those of us who are here and to the taxpayers who ultimately will pick up the tab.
The other aspect that frankly I don’t like which also the taxpayers and citizens of the state have already expressed their attitude that they don’t like is not just the fact that we are taking taxpayer dollars and giving it to a special interest for their benefit. The primary beneficiary will be the sports teams. Not only that we’re going to call it something other than it is, but that we are subjected to putting up a vote for an item that is combined with legitimate things in our district that we ought to vote for and support, and hook it together to vote for something that clearly has taxpayer opposition and rightly so.
This is bad policy, this is bad process and it’s dangerous. The precedent that is also set policy wise is that if we permit an entity a business such as what we’re talking about today, team owners, to come to us and to tell us and to threaten us with the threat that because of their perhaps poor negotiation and granting to high salaries or whatever and they can’t make the money they can make they need to make it or threaten to go somewhere else.
If they can hold us hostage to obtain tax free dollars and or a free gift, to stay here then what prevents any company anywhere else in this state to do the same thing when they fall on hard times or whatever. What are we going to say? No to them? Perhaps somebody comes and they have ten thousand employees, far more impact than what these guys will give. What are we going to tell them? No? We give it here. Why can’t we give it there.
The slippery slope is one on which we cannot draw a line in the future. This is bad direction. And I think fundamentally as far as I am concerned the reason this is so fraught with problems is that fundamentally the granting of monies be it in the form of a loan or something else that it may be called is fundamentally UNCONSTITUTIONAL.
And I call your attention, I call your attention to ARTICLE VIII SECTION 8 of our PENNSYLVANIA CONSTITUTION.
And I will read it. It says the Commonwealth credit not be pledged. Section 8. The credit of the Commonwealth shall not be pledged or loaned to any individual, company, corporation, or association, nor shall the commonwealth become a joint owner or a stockholder in any company, corporation, or association.
Now, the founding fathers and those who put this in here perhaps didn’t envision a hybrid, but they did envision a loan or the extension of credit. The provision is here strictly for the purpose that the commonwealth is not held hostage. That the commonwealth conduct its business in the interest of the general public. If we do policy that benefits all business, equally across this state then we have conducted good policy.
But if we conduct business and policy such that it favors particular interests we have violated this section, and whether you choose to set up an authority who one would say meets the parameters clearly the obligation that the owners payback money constitutes a loan, and therefore VIOLATES THIS SECTION.
Mr. Speaker? Madam Speaker. I move that this house consider the issue of constitutionality on this amendment and I move that this amendment as written is not constitutional and in violation of the letter of Section 8 if not the spirit and the clear intent of what this says.
MADAM SPEAKER: The gentleman raises the point of order that Amendment 0401 is unconstitutional. The Speaker under rule 4 is required to submit questions affecting the constitutionality of an amendment to the house for a decision which the chair now does and recognizes the gentleman, Mr. Snyder.
MR. SNYDER (Majority Whip): Mr. Speaker, Madam Speaker, I’m sorry, the gentleman raises the question of constitutionality under the provision that says the Commonwealth shall not pledge or loan to any individual, company, corporation, or association, nor shall the Commonwealth become a joint owner, or stockholder in any company, corporation, or association. Mrs. Speaker, I, one reads this amendment, We are not taking ownership of any particular organization. We are making an investment in an authority.
Each one of us has municipalities and counties that have authorities for providing if one heard comments we made earlier on how the financing of the stadiums will be accomplished in which the state perhaps municipality or counties will be providing money to an authority which will be the organization that constructs stadiums and then leases those stadiums out. There is nothing in this amendment that provides money directly to any private corporation, to any individual, or to any association other than a state or municipal created authority. The state is providing financing through that. funding for hospitals, for colleges, within their own communities. We provide authorities for many many purposes.
In fact there’s over almost 3000 different authorities in this commonwealth. To say that what we are doing today is unconstitutional is in essence saying that the financing we have utilized to provide for public works projects, for infrastructure in our communities is unconstitutional. I ask you therefore to vote that it is constitutional.
MADAM SPEAKER: Those voting aye will declare.
ROHRER: Madam Speaker, can I comment again.
SPEAKER; For what reason does the gentleman rise?
ROHRER: I’m still up can I comment on this motion? Is that it.
SPEAKER; Each member is permitted to speak only once but you may proceed.
ROHRER: I think that there is a distinction that has got to be made here. We are all aware that authorities are established in order to flow through state monies. But there from a policy perspective is very strong reason to look at the way a lot of those have been set up. In fact, an authority becomes a third party. You’ve got to look at where the money is going. To whom is the money ultimately flowing and for whose benefit. We obviously all know today that if it were not for the sports teams and their benefit as derived from these monies we would not be sitting here today discussing this issue. Regardless of whether an authority is set up to legally circumvent this section of the constitution or not, the primary beneficiary still remains a private entity, and therefore, members of the House, I say that this in fact does apply and this restriction does apply and therefore, unconstitutionality should stand.
MADAM SPEAKER: Those voting aye will declare the amendment to be constitutional. Those voting no will vote to declare the amendment to be unconstitutional. Members will proceed to vote. PAUSE. Have all the members voted? The clerk will record the vote. The ayes are 169. The nays are 30. The majority having voted in the affirmative, the constitutionality of the amendment is sustained.
END TRANSCRIPT
Oath of Office
Senators, Representatives and all judicial, State and county
officers shall, before entering on the duties of their respective
offices, take and subscribe the following oath or affirmation
before a person authorized to administer oaths. "I do solemnly
swear (or affirm) that I will support, obey and defend the
Constitution of the United States and the Constitution of this
Commonwealth and that I will discharge the duties of my office
with fidelity."
Article VIII TAXATION AND FINANCE
Section 1.
Uniformity of Taxation
All taxes shall be uniform, upon the same class of subjects,
within the territorial limits of the authority levying the tax, and
shall be levied and collected under general laws.
Section 8.
Commonwealth Credit Not to Be Pledged
The credit of the Commonwealth shall not be pledged or loaned
to any individual, company, corporation or association nor shall
the Commonwealth become a joint owner or stockholder in any
company, corporation or association.
Article IX LOCAL GOVERNMENT
Section 9.
Appropriation for Public Purposes
The General Assembly shall not authorize any municipality or
incorporated district to become a stockholder in any company,
association or corporation, or to obtain or appropriate money
for, or to loan its credit to, any corporation, association,
institution or individual. The General Assembly may provide
standards by which municipalities or school districts may give
financial assistance or lease property to public service,
industrial or commercial enterprises if it shall find that such
assistance or leasing is necessary to the health, safety or
welfare of the Commonwealth or any municipality or school
district. Existing authority of any municipality or incorporated
district to obtain or appropriate money for, or to loan its credit
to, any corporation, association, institution or individual, is
preserved.
