Pennsylvania's Revenue Secretary Pat Browne might be escorted to the Senate floor by their Sargent of Arms in the coming weeks. The cause of the summons? A dispute over releasing tax reports for a legislative study.

Early this year, the Legislative Finance and Budget Committee voted to do a performance audit on the Allentown Neighborhood Improvement Zone (NIZ)— a unique tax break program for businesses in the state.

They requested tax reports from the Department of Revenue; but Secretary Pat Browne, who helped create the NIZ when he was a Republican Senator for Allentown, denied the request.
His reason? Citizen privacy protected in section 731 of the fiscal code. 

A subpoena was issued in July, Senate Republicans saying legislative studies fell under an ’official purposes’ exception clause in the code. Secretary Browne did not release the reports.

This lead to Senate Republicans drafting SR334, which compels the Secretary to appear before the Senate to explain in person his reasons for not complying with the legislative requests for data.

SR334 passed Tuesday night on partisan lines, with strong opposition from Senate Democrats.

"There will not be a paddy wagon out on the ramp to send him to jail. But in three legislative days, he will come before the Senate and he will explain why he cannot comply with this subpoena,” said Senator Joe Pittman (R-41), majority leader in the Senate.

Secretary Browne has filed an injunction against the summons and a lawsuit against Senate Republicans. Several Senate Democrats have also sued their Republican cohorts, saying the summons is an over reach and abuse of power.

Digging Deeper

The NIZ is an economic program that gives businesses a tax break, similar to the City Revitalization and Improvement Zone (CRIZ). It was established in 2009, a predecessor to the CRIZ program with some distinct differences. It is the only NIZ in the state.

Allentown officials credit the program with bringing $1 billion in investments to the zone area. Rep. Joshua Siegel (D-22), who represents the Allentown area, says violent crimes have decreased and property values increased since its inception.

A newer lawmaker to the area, Senator Jarrett Coleman (R-16), has questioned if businesses in the NIZ have cost the state more money than originally intended.

Coleman holds Pat Browne’s Senate seat, after beating him in the 2022 Primary election. Since getting in office, Senator Coleman has been the driving force in investigating the NIZ.

The freshman Senator says the NIZ is not generating new business, but rather, already existing businesses in the area moved their operations into the NIZ. He argues this lead to loss of revenue for the state. Rep. Siegel noted in conversation that the consolidation of existing business to the area was expected, and has lead to the community benefits mentioned before.

His office also shared that its estimated 70% of the zone benefits are going to 5 companies. Coleman has questioned if those businesses are making permanent investments in the area, or if they are getting the most benefit and might in turn leave once the NIZ expires (it was set up for a 30 year period).

It is because the majority of the NIZ benefits are going to very few developers, that Browne has raised privacy concerns. He argues that through process of elimination, people would be able to pinpoint which personal tax info goes with which group.

“No business should be put to that level of scrutiny,” said Rep. Siegel. “If we set that precedent, then no business will want to operate in the Commonwealth because they know they can be subject to that level of scrutiny."

Coleman, backed by Senate Republican leadership, says taxpayers deserve transparency on how economic programs, especially ones that impact state revenue, are being utilized.

In 2019, the paper the Morning Call submitted Right-To-Know-Requests (RTKR) for similar tax information as to what the Finance & Budget Committee requested for their performance audit. The RTKR were denied, then approved in court, then their approval was appealed;

In the middle of the appeal, in the 2021 budget, then Senator Pat Browne amended the fiscal code to restrict access to tax reports; like the ones The Morning Call was requesting. The newspaper lost the appeal. 

Siegel says the NIZ is subject to an audit every year. The more thorough performance audit, being requested by the Finance & Budget Committee, would disclose more comprehensive data to fully understand any inappropriate- or exemplary- use of the program.

That performance audit would come at the cost of organization privacy.

Conclusion

With the Senate done for this week, and off next week, the Secretary’s potential escort would happen the last week of October. The courts may interfere before then.

“It may be that we find that the Secretary of Revenue’s explanation is valid and that we should no longer pursue this issue,” said Senator Pittman in remarks on SR 334 this week. "It may be that the Secretary of Revenue comes forward and finally decides to provide us with the information. Or we may find his explanation is insufficient."

"I really find this latest vote a deeply irresponsible use of taxpayer dollars. And frankly, it sets a dangerous precedent,” said Siegel. "We should not be in the business of threatening force and law against Cabinet officials who are literally following the law as it's stated now."