Health - November 1, 2013

Lottery deal gets an extension, consulting fees under fire

The deal to privatize the state’s lottery withUnited Kingdom based firm Camelot got another extension this week.  The Governor’s office announced this week that the bid for the lottery private management agreement would be extended through the end of the year.  The bid was set to expire on October 29.  Governor Corbett said that older Pennsylvanians deserved every effort by his administration to continue to ensure they have access to programs and address the need to “grow reliable revenues” because the “need is outpacing” the state’s ability to continue to pay for those programs.  The Camelot estimates that it can help the lottery generate $3 billion to $4.5 billion in new funding over the proposed 20 year contract; their proposed bid for the contract is $34 billion. 

After the extension announcement, Auditor General Eugene DePasquale made his own announcement regarding payments to the consulting firms involved in negotiating the deal.  To date, $3.4 million in lottery funding has been used to pay those firms; DePasquale has directed his staff to “review and scrutinize…the diversion” of those funds.  He also urged the Governor to “terminate any further discussions with private vendors that are siphoning funds from senior programs.”  State Treasurer Rob McCord also called on Corbett to end his quest for a deal.  McCord previously refused to release the funds for the consulting firms to be paid but ultimately he said he would allow them to be paid.  McCord said that while he considered the consulting contracts to be a waste of money, it was not illegal.   The fees have steadily increased from the initial cap set at $375,000 and will only continue to rise as the bid is extended.  Opponents of the deal continue to point out that the lottery hit record sales numbers last year and the money spent on the consulting contracts could have been better spent on the seniors themselves.

Corbett pushes for transportation deal

Governor Corbett also made headlines this week at a press conference in Pittsburghwhen he pushed for the legislature to compromise on the transportation funding issue.  Corbett discussed the “proposal to relax requirements for union-level prevailing wages on some construction projects.”  Corbett cited public safety and the state economy as reasons to come to an agreement on the terms of a funding bill.  House Republicans want to lift the current limit at which prevailing wage requirements begin, which is $25,000 to $100,000.  Anything less than the $100,000 limit would not require the union-level wages.  The limit has not been adjusted since 1961 and the governor said that the impact would be insignificant on PennDOT contracts that awarded since very few are worth less than $100,000.  Democratic leaders have been against the change and a spokesman for the House Democrats said they feel it’s a big issue that should be considered separately from the overall transportation funding package. House Republicans have their own issue with the actual amount of the spending; they’re uncomfortable with the $2.5 billion funding level and would prefer to work out something slightly less.