COMMON CAUSE/PA CALLS ON STATE ATTORNEY GENERAL KELLY TO INVESTIGATE ALEC COMPLIANCE WITH STATE TAX AND LOBBYING LAWS

PENNSYLVANIA-On the heels of filing a whistleblower complaint with the IRS charging abuse of federal tax laws, Common Cause/PA today asked Attorney General Linda Kelly to look into the tax status of the American Legislative Exchange Council (ALEC) in Pennsylvania.

ALEC is registered in Pennsylvania with the Bureau of Charitable Organizations, and at the federal level, where it enjoys tax-exempt status under section 501 (c)(3) of the Internal Revenue Code. A letter delivered to Attorney General Kelly today charges that ALEC is primarily a lobbying organization and may therefore be in violation of its tax exempt status. Common Cause/PA is calling on the Attorney General to review ALEC’s 990 form and investigate their activities to ensure that they are in compliance with state tax and lobbying laws.

“ALEC is a corporate lobby front group masquerading as a public charity on the taxpayers’ dime. Pennsylvanians shouldn’t have to subsidize ALEC’s agenda to limit voting rights, undermine our public schools, spread Stand Your Ground gun laws, and weaken laws protecting our environment. Tax fraud is illegal, which is why Common Cause/PA is calling on the Attorney General to review ALEC’s registration as a charity and whether its lobbying activities in Pennsylvania are being properly disclosed,” said Common Cause/PA Executive Director, Barry Kauffman.

ALEC was also the beneficiary of a $50,000 Pennsylvania tax-payer subsidy to its 2007 convention in Philadelphia. The funds appear to have been used for food at a reception at the Philadelphia Marriott, including $3,600 for crab cakes, $3,000 for cheesecake lollipops, $4,000 for cheesesstakes, and much more. Questions have been raised as to whether Pennsylvania lawmakers “double-dipped”; taking ALEC scholarships and submitting for reimbursement from the state.

Common Cause/PA’s letter comes just days after the national organization of Common Cause filed a whistleblower complaint with the IRS on the grounds that ALEC is flouting federal tax laws by posing as a tax-exempt charity while spending millions of dollars to lobby for hundreds of bills each year in state legislatures across the country. The complaint was filed on Common Cause’s behalf, pro bono, by the prominent whistleblower law firm Phillips & Cohen LLP, under the Tax Whistleblower Act of 2006.

ALEC is an organization of nearly 2,000 state legislators, including a number of members of the Pennsylvania legislature, and more than 140 corporations including the following based in Pennsylvania – Crown Cork & Seal; Endo Pharmaceuticals; SAP America, Inc.; and TEVA Pharmaceuticals. Representatives Kate Harper, Sandra Major, Mark Mustio, Harry Readshaw, and Senator John Pippy have indicated that they have dropped their ALEC memberships.

Corporate membership in ALEC ranges from $7,000 to $25,000 which is currently tax deductable under ALEC’s 501 (c) (3) status. ALEC also spends thousands on junkets and conferences to bring corporations and lawmakers together to propose and draft legislation. ALEC model legislation introduced in Pennsylvania includes the onerous and expensive photo Voter ID law, and the dangerous Stand Your Ground law.

The IRS classifies ALEC as a 501 (C)(3) organization, which means that it is tax exempt and that donations to it are tax deductible. The law limits lobbying by groups with that designation, specifying that “no substantial part” of their activity can be devoted to influencing legislation. ALEC has declared under oath in several tax returns that it does no lobbying. Evidence in the Common Cause filing shreds that claim; it includes several thousand pages of ALEC records, detailing extensive efforts to influence a wide range of state legislation.

Read the full complaint here: www.CommonCause.org/IRSWhistleblower

In recent weeks, ALEC has faced scrutiny for its role in the spreading “Stand Your Ground” laws like the one that for weeks shielded the killer of Florida teenager Trayvon Martin from prosecution. Since then, at least a dozen major companies, including McDonald’s, Wendy’s Kraft Foods, Mars Inc., and Coca-Cola, have abandoned ALEC.

Good Government Groups Decry Regressive PA House Rule Changes

Common Cause, Democracy Rising PA, Taxpayers and Ratepayers United, Keystone Progress tell House leadership “No Way!” on proposed rule changes.

Good government groups held a news conference decrying the proposed House rule changes which would restrict the ability of elected Representatives to do their jobs effectively. Under these new rules, the majority party would be able to control legislation in the Rules Committee. The Rules Committee would be allowed to restrict amendments from the minority party and would be able to table amendments without cause, effectively prohibiting amendments from ever being voted on.

Amendments are the main way in which rank and file members of both parties can present alternatives to legislation proposed by the majority party leadership. And they are also the main way in which the minority party can force the majority party to go on record on issues that they prefer to avoid.

The rule changes also cut back minority representation on each House Committee. The proposed changes will create committees of 15 Republicans and only 9 Democrats. With a more equitable balance, minority amendments can pass with a few supporters from the majority party. This unfair formula effectively means that proposals from the minority representatives have little chance of passage.

Pennsylvanians want real reform in Harrisburg, but these moves bring us back to the old days of back door deals. If these rule changes pass, it will erode our rights to fair and equal representation. This move is regressive and counter to the reform Pennsylvanians have been promised and expect.

Natural Gas Donations Predict Marcellus Tax Votes

An analysis of the House of Representatives vote on SB 1155 by MarcellusMoney.org

Harrisburg – MarcellusMoney.org, a project of Common Cause PA and Conservation Voters of Pennsylvania, tracks the more than $3 million that the natural gas industry has spent on campaign contributions and $5 million spent on lobbying efforts in the Commonwealth.

Yesterday, by a vote of 104 to 94, the Pennsylvania House of Representatives voted in favor of SB 1155, a bill to establish a tax on drilling companies that extract gas from Pennsylvania’s Marcellus Shale. Though a victory for environmental protection, yesterday’s vote reveals just how insidious natural gas money has become.

The 104 who voted for the bill have taken an average of $824 from the natural gas industry, while the 94 legislators who voted against the bill took an average of $2,900 from the gas industry, or 3.5 times as much as those in favor of a severance tax. The vote split largely along party lines, with Democrats generally in favor, Republicans generally against. The vote count and accompanying data can be downloaded here: http://bit.ly/an3N18

The ten Democrats who voted against the bill, Representatives Barbin, Casorio, Deweese, Harhai, Kotik, Markosek, Pallone, Petrarca, Sainato, and White, accepted a total of $64,700 from the gas industry, an average of $6,470 each. Of these Democrats, only Rep. Barbin took no contributions from the natural gas industry.

The twelve Republicans who voted in favor of the bill, Representatives Beyer, DiGirolamo, Harper, Hennessey, Killion, Micozzie, Milne, Murt, O’Brien, O’Neill, Quinn, and Ross, accepted a total of only $1,500, an average of $125 each. Only three of these representatives (DiGirolamo, O'Brien, and O'Neill) received any contributions from the natural gas industry.

“Some gas drillers may not want to pay their fair share, but a Marcellus Shale drilling tax is good for the Commonwealth, good for local communities, and good for the environment,” said Josh McNeil of Conservation Voters of Pennsylvania. “When legislators take thousands of dollars from the gas industry and vote to let that industry take our resources for free, we have to wonder whose interests they’re really serving.”

"This correlation between the natural gas industry's campaign contributions to our elected officials and the way in which they vote on a bill that directly affects that industry's profits speaks volumes about the current state of our elections and campaigns," said Alex Kaplan of Common Cause Pennsylvania. "In Pennsylvania, out of state gas companies are allowed to give unlimited campaign contributions to elected officials charged with protecting our environment and crafting policy to benefit our state. In Pennsylvania, wealthy special interests have the ability to speak louder than everyday citizens."

SB 1150 would tax gas drillers 39 cents per thousand cubic feet of gas extracted, competitive with similar taxes in other gas producing states. The tax is expected to raise $120 million next year, $326 million the next. These funds will be used to plug gaps in Pennsylvania’s state budget, to help local communities deal with impacts of increased drilling, and to fund the regulatory and environmental clean-up efforts required to protect Pennsylvania’s health and safety.

The passage of a tax on drilling was part of a June deal between Governor Ed Rendell and legislative leaders to pass a gas tax by October 1. The funds from a tax are needed to fill $70 million of an estimated $280 million budget deficit.

Now that the bill has passed the House, it is up to the Senate to approve the amended bill.

Natural gas companies have contributed $359,827 to members of the House of Representatives, an average of $1755.25 per member. Current State Senators have accepted more than $407,440, an average of $8148.80 per Senator.

To find contributions to individual candidates, visit www.MarcellusMoney.org.

NOTE: Because data from the most recent campaign filing has not yet been released by the Pennsylvania Department of State, the numbers above reflect donations made before June 7, 2010. Early indications are that the gas industry has donated heavily to PA candidates in the last three months. MarcellusMoney.org will make public the data of the following reporting cycle (early June through early September) as soon as it is available.