Friday, August 28, 2015

$3.4 million and counting

$3.4 million and counting

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Pennsylvania State Treasurer Rob McCord is criticizing Gov. Corbett for spending $3.4 million on legal fees and consultants as part of his (so far unsuccessful) quest to privatize the management of the state lottery.

And that number is bound to rise, as Corbett is showing no signs that he's planning on backing off the move to bring in British firm Camelot Global Services to run the lottery, which helps fund programs for senior citizens.

According to McCord, of the $3.4 million the administration has paid in an effort to seal the deal with Camelot, the lion's share - $2.36 million -- has gone to consultant DLA Piper. Another privatization consultant, Greenhill and Co. LLC, previously received $1 million, and the law firm of Blank Rome has received more than $116,000 defending the governor’s plan against litigation.

"I call on Gov. Corbett to put this failed and costly experiment to an end," McCord said in a statement. "... Do not divert more money from our seniors."

The administration must decide by tomorrow whether to once again extend Camelot's bid to run the lottery.

Corbett spokesman Jay Pagni on Monday would not say how the administration was leaning. But he said the value of contracting with a company like Camelot is that it will ensure a predictable and stable stream of revenue into the lottery in the years to come.

Corbett has said repeatedly that he wants to hire a company to manage the lottery because of concerns that the state-run system, while profitable now, would not be able to keep up with what he expects to be a rapid growth of the state's senior population.

"That is the reason we have been looking at doing this," said Pagni. "Unfortunately Mr. McCord hasn’t brought a solution to the table -- only criticism. He is putting politics before programs for older Pennsylvanians."

But his efforts to privatize have been thwarted by state Attorney General Kathleen Kane, who ruled in February that the lottery deal violated the state constitution.

Among other things, Kane said lawyers on her staff had determined that the contract with Camelot, which runs Britain's national lottery, usurped the authority of the legislature to regulate and manage the Pennsylvania Lottery. Kane's office reviews all state contracts.

Under the proposed contract, Camelot would make annual guaranteed payments, and if lottery profits fell short of those amounts, the firm would reimburse the state for the shortfall - up to 5 percent of profits - from cash required to be held as collateral.

Camelot would guarantee a profit of $34 billion over the life of the 20-year contract.

The state-run system offers no similar guarantees, the administration argues. The Department of Revenue, which oversees the lottery, estimates it would generate roughly $30 billion over the same 20 years.

 

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Commonwealth Confidential gives you regularly updated coverage of the state legislature, the governor and the workings of the state bureaucracy. It is written by Angela Couloumbis in the Inquirer's Harrisburg bureau, based in the statehouse, and by the newspaper's far-flung campaign reporters.



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