Pa. house speaker blasts City Council on PGW, warns of repercussions to Philly schools

One of Pennsylvania’s most powerful state lawmakers says the actions of Philadelphia City Council may put additional funding in jeopardy for the cash-strapped city school district.

Speaker of the House Mike Turzai (R-Allegheny) criticized City Council’s decision to not hold a hearing on Mayor Michael Nutter’s plan to sell the city-owned Philadelphia Gas Works.

Nutter’s proposed deal with UIL Holdings Corp. of Connecticut would have privatized the utility for $1.86 billion. A portion of those proceeds would have been used to reduce the city’s unfunded pension liability.

“Not holding a hearing on the Philadelphia Gas Works for such an important proposal, where billions really could have been used towards debt reduction, infrastructure — such important opportunities — it gives everybody real pause,” said Turzai. “This is a real concern for us.”

When, for instance, the Philadelphia School District makes a funding request of the state this year, Turzai says Council’s handling of PGW will spur skepticism among house Republicans — even though there is no formal link between the city-owned gas utility and the schools.

“Everybody is, I think, going to ask, first and foremost, ‘Why didn’t you take a look at this Philadelphia Gas Works proposal? You didn’t have a hearing. You didn’t even hear out so many of your city civic leaders,'” Turzai said. “It will be something that I know that a lot of people are going to want to know about.”

The Philadelphia School District, which currently faces an $80 million budget deficit to status quo budget for next year, declined to comment on Turzai’s view — as did City Council President Darrell Clarke.

In December, Clarke said in a statement that Nutter’s plan “would have resulted in significant job loss among Philadelphians by allowing UIL to lay off employees and to shift jobs away from experienced PGW workers.”

Nutter, who has described council’s inaction as “big mistake” and “a massive failure in leadership” said that Turzai was “more than entitled to his view and opinion.”

“I said at the time, I thought it was a bad decision and that it could potentially negatively affect us here in Harrisburg,” said Nutter in an interview before Gov. Tom Wolf’s inauguration. “No matter how people voted, there should have been a hearing and a vote, one way or another, up or down.”

Donna Cooper, executive director of Public Citizens for Children and Youth and former policy director for Gov. Ed Rendell, called Turzai’s sentiment “political blackmail.”

“There are communities across this state that locally might be making decisions that he finds personally reprehensible.” said Cooper. “Is he going to hold up school funding for communities across the state because he doesn’t like the decisions made by the local governments?”

Just didn’t work out

Nutter’s plan to sell PGW, the nation’s largest municipally-owned gas utility, had the approval of Craig White, the utility’s president and CEO. According to the terms of the deal, rates would have been frozen and employees would have been protected from layoffs for the first three years of the agreement.

The Nutter administration says UIL would have agreed to fast-track the replacement of the city’s aging gas pipelines had Council allowed the sale process to move forward.

In a competitive bidding process, UIL submitted the highest offer.

Curtis Jones, City Council’s majority leader who also sits on the Philadelphia Gas Commission, said he and his colleagues weren’t convinced that Nutter’s pitch was best for taxpayers and ratepayers in the long run.

“Even if adults didn’t agree, the children should not be punished,” said Jones.

The Pennsylvania constitution requires the legislature to provide children with a “thorough and efficient” education.

Jones says council would have responded better had Nutter included them earlier in the bidding process.

“We should have probably had better discussions on the front end and not waited until the last part of the sale process to have those hearings,” he said. “It just didn’t work out.”

Turzai says his caucus has had a “positive dialogue” with City Council in the past and hopes to continue that good will moving forward. He specifically referenced Councilman Ed Neilson, a Democrat who moved from the state house to city hall in August 2014, as a very good friend to House leadership.

Neilson, who described Nutter’s plan to sell the asset as a “one time grab,” said that council would continue “to look at every option” for the future of the utility, “not just the one that was presented.”

“Hopefully we can explain in our meetings with the [House] leadership why we took the steps we took with PGW,” he said, “and show them how we will be actively seeking to — not so much sell PGW — but take steps to make certain that our pensions are funded and our city is moving forward.”

If Turzai has concerns about Council’s handling of the process, PCCY’s Cooper says he should air them with the state-run Public Utility Commission.

“That’s the appropriate venue for him to take his concerns,” she said. “And that has absolutely nothing to do with school funding.”