The Gaping Black Hole of Central PA

Vindication today for the South Middleton Township supervisors, as a court-ordered audit confirms the abusive incompetence of Captax.

If you haven't been following The Sentinel's coverage of the dispute, here's a brief summary of its genesis:

The township fired Captax as its tax collection agency two years ago after a dispute over the bureau sending criminal complaints to teenagers and fining them for not filing tax returns.

Captax then said it overpaid the township by a total of $264,000. The bureau claimed $91,000 of that money by withholding it from its last quarterly payment to the township.

South Middleton officials subsequently demanded a full accounting.

So, it turns out the Capital Tax Collection Bureau owes close to $9 million to the municipalities for whom it collects taxes. "Collects" being the operative verb. Distribution of taxes collected is a separate matter:

The undistributed funds piled up in part because Captax violated a state law governing the distribution of earned income taxes collected from workers who later move or die. In those cases, the municipality where the worker claimed residency cannot claim the tax receipts. According to Act 511, those tax receipts belong to the municipality where the worker was employed when the taxes were paid.

According to the audit, Captax failed to redirect the taxes collected from workers who move away or die. The agency just kept the money.

The audit chided Captax for several other questionable practices — such as its low bonding and commingling tax collections with its regular funds.

“The taxes collected by Captax... are not its funds, but the funds of the taxing jurisdictions served,” the audit summary reads. “It is a general practice that fiduciary activities are kept separate from normal activities.”

The Captax board met in January and voted to increase its bonding for employees from $2 million to $40 million.

Captax was planning to withhold an additional $91,000 from South Middleton. It turns out that South Middleton taxpayers are owed $710,000.

This story hasn't received the kind of publicity it might in the future, and it isn't the typical horsing-around that little bureaucratic offices have with each other - this is major fraud being perpetrated on most of the municipalities of Cumberland County. The supervisors of South Middleton have taken a lot of heat over the past several years over development in the township, but standing up to Captax in court like this takes real courage and conviction, and every municipality in Cumberland County owes them a debt of gratitude.

Every politician targets "waste, fraud, and abuse" in government, but most are too lazy or corrupt to fix it, because it turns out "fraud" and "abuse" are not actually line items in their budgets. South Middleton took a stand for every abused borough and township out there. This is good government at its best - do take a moment to appreciate it.

Rendell Looks to Kind of Reform Legislature

Governor Rendell hasn't exactly been a model of ethics in politics, but he deserves some note for his halfhearted attempt at ethics reform. Appointing judges is an obvious step, as currently judges campaign on nothing in particular except name recognition, a game which is won mostly by raising money. Rewarding the state's best fundraisers with judgeships is a bit of a moral hazard.

Downsizing the state legislature is another good idea, although a massive thwack to its operating budget would have been even better. Still, reducing headcount of an ineffective organization is usually a smart move, and keeping the budgets constant might appeal to the senior members, as they get to split the pie between a smaller group of people.

The other two planks to this plan aren't terribly exciting. Campaign finance reform is really a red herring that has not even slightly hampered the ability of wealthy individuals and special interest groups to buy access to policymakers in Washington, so one suspects it is unlikely to do so in Harrisburg. The term limit idea is always interesting, but self-defeating, since the most influential people in the state legislature would essentially be voting themselves out of an office they just won a few months ago. Term limits exist: every two years, every member has to win an election.

The real hypocrisy in these "ethics reform" efforts is the fact that nobody wants to pursue the obvious crime of the election-themed public service announcements that incumbents in competitive districts mysteriously seem to produce. Well, poor Greg Vitali (D-Delaware) is still fighting the good fight, but he is without supporters on this battle. After all, how many legislators would willingly give up the ability to have our taxes help protect their re-election campaigns? One, apparently.

Teachers' strike

On Sunday, the West Shore Education Association took a symbolic step toward sending Cedar Cliff and Red Land careening toward the first major teachers' strike in Cumberland County in over twelve years.

Ideas for improving school performance range from increasing government spending to instituting school vouchers, but it's hard to see how any of these proposals would make employment negotiations work in favor of the students. Rep. Will Gabig has even floated a proposal to outlaw teachers' strikes, which is probably unfair and possibly illegal, as refusing to work is really the only leverage a union labor force has. It also targets a symptom rather than the underlying problem - the unionization of public educators has made it impossible to link performance with compensation, which is the lynchpin of efficient labor markets. Steve Jobs, true to form, has done a great job of cutting through the rhetoric and identifying the problem:

I believe that what's wrong with our schools in this nation is that they have become unionized in the worst possible way.

What kind of person could you get to run a small business if you told them that when they came in they couldn't get rid of people that they thought weren't any good? Not really great ones because if you're really smart you go, ‘I can't win.'

This unionization and lifetime employment of K-12 teachers is off-the-charts crazy.

Quite simply, some teachers are much more effective than others, but forcing them to negotiate their salaries en masse sacrifices the rights of the best ones in favor of the rights of the worst.

Of course, nobody pays attention to self-made billionaires when it comes to matters of education - one needs several degrees and decades of bureaucratic credentials to be taken seriously in that arena. Fortunately, Cedar Cliff and Red Land are among the best school districts in the area, and these students will be fine no matter how this particular contract negotiation plays out. Still, it's worth taking note of this story and wondering who exactly could benefit from the struggle.

Taxes Optional

The real question is, if a tax is levied in the forest, and Captax can't collect, does it make a sound? (Answer: only in bankruptcy court!)

The idea that Captax doesn't audit its results is absurd. Full audits should be required on an annual basis, and one suspects that in the end, every municipality in Cumberland County will owe a debt of gratitude to the South Middleton supervisors for demanding better performance of Captax.

Council hopefuls share concerns

Across the river, Steve Reed is conducting a campaign to whip Harrisburg's City Council into shape. Mayor Reed has had a bit of a contentious relationship with City Council, and is to some degree putting his political credibility on the line to turn the political balance even more heavily in his favor. This should be another fun race to watch, both during and after the election.

Curiouser and Curiouser

Matt Best at Courage of Conviction decided he liked our M.C. Escher posting at first, but then quickly changed his mind when he was informed that he was wrong about who wrote it.

To be fair, Matt wasn't the only person to judge the post based on the authorship. Somebody posting under the name "Mark McKinnon" also weighed in with the assumption that the post was by this Christian Muniz, and used his preconceived notions about Christian to criticize the relevance of the post.

(N.B. Mark seemed also to judge the post based on the fact that Matt linked to it, saying it was "filled with harsh criticism." That doesn't quite ring true - the post in question wasn't critical of anybody, and those prior weren't particularly harsh, either. The intent of exploring the commissioners' race is simply to raise underdeveloped questions for discussion. Eichelberger and Gunnison both appear to be strong candidates with good bases of support, and this blog simply finds the race to be interesting. We'd certainly appreciate clarification on the finer points if we're getting things wrong.)

Even in the blogosphere, we all judge opinions based on the agendas they're perceived to advance, rather than on their own merits. Still, it's odd to see an innocuous posting embraced and then rejected so quickly. Matt is a fan of upsetting the apple carts, but if he really can't be bothered to evaluate substance, he should make sure to do his own fact-checking before posting.

Sentinel Photography

The Carlisle Sentinel's note about the Cumberland County Republicans' Lincoln dinner contains a stunning photograph by Jason Malmont of the Carlisle Sentinel, and the caption really brings home the irony of the scene:

Cumberland County commissioner candidate Karen Gunnison, right, talks to Mechanicsburg mayor Jack C. Ritter, left, and former county commissioner Nancy Besch of Camp Hill.

Really? Can you spot a conversation happening anywhere among these three people? It's like an M.C. Escher drawing - none of the three is really making eye contact with anyone else. None of the three is even speaking. This is real art here - Mr. Malmont's snapshot beautifully captures the awkwardness and boredom that dominate these kinds of functions.

Gunnison's Odd Pick

Matt Best posted an interesting tidbit on the commissioners' race over at his Courage of Conviction blog:

Ray Zaborney is Karen Gunnison’s campaign manager. Let’s see, hire the guy that almost lost Shuster’s seat, then goes on to do a great job with Swann’s campaign. Smart move there by the establishment candidate.

Not knowing Mr. Zaborney personally, it's hard to comment on his qualifications. After all, Swann was a Hail Mary pass from the beginning, and Shuster did his best to embarrass himself in the face of an intense, well-funded challenge. That said, both campaigns were among the most mediocre Republican efforts in recent memory, particularly in south-central PA.

Eichelberger, in contrast, is building his team primarily through his personal local contacts in Mechanicsburg and across Cumberland County.

One might suggest that the core of the Gunnison campaign consists simply of a vindictive personal swipe of GOP leaders at Eichelberger. Whether or not this is the case, putting a veteran party soldier at the helm makes the party connection appear stronger, and increases pressure on the Republican rank and file to deliver victory for Gunnison on May 15.

Commissioners Gear Up

The 2007 commissioners' race promises to be an interesting test of the strength of the Cumberland County Republican Party. By endorsing challenger Karen Gunnison over incumbent Gary Eichelberger, the party assures us of a primary season no less interesting than the five-way 2003 contest that resulted in the election of Eichelberger and fellow incumbent Bruce Barclay.

The Carlisle Sentinel weighs in with an unsurprisingly shallow analysis:

Given that there's not much daylight between Barclay and Eichelberger on the issues, we have to wonder if the one thing they did disagree about recently might have hurt Eichelberger. During budget deliberations, when an attempt to hold the line on taxes failed, Eichelberger abruptly suggested selling off Claremont Nursing and Rehabilitation Center.

That suggestion, coming as it did late in the budget process, upset quite a few people in the community, if the reaction we received here was any indication.

While we don’t blame Eichelberger for questioning whether the county needs to own a nursing home, Claremont isn’t just any local business. It’s a community institution that employs a fair number of local residents and, more to the point, cares for quite a few of them. Many residents have an emotional attachment to Claremont and its employees.

Political parties can be fickle, and the origins of the preference for Gunnison over Eichelberger could be as simple as a series of personality disputes, but the Republican establishment wouldn't turn its back on an incumbent over an admittedly significant property divestment. In any event, the claws are out, and the personalities and emotions in this race will make it one to watch over the next few months.