Pennsylvania Revenue Secretary Browne asks court to block state Senate jail threat over tax data
Pennsylvania Revenue Secretary Pat Browne asked a court to urgently intervene Wednesday after the state Senate threatened him with jail if he refused to divulge data on a tax-funded Allentown redevelopment program in Browne’s former Senate district.
The filing came as the Senate escalated tensions between Gov. Josh Shapiro’s administration and lawmakers seeking information about Allentown’s Neighborhood Improvement Zone that Browne says is confidential. The push over the last year and a half has been led by first-term state Sen. Jarrett Coleman (R-Lehigh) who ousted Browne from his long-time Senate seat in a 2022 primary challenge.
“The Shapiro Administration’s move to block the Senate from obtaining information related to the Allentown Neighborhood Improvement Zone is not only premature but legal overkill and raises the question, ‘What is Gov. Shapiro and his Secretary of Revenue hiding?’” Senate President Pro Tempore Kim Ward (R-Westmoreland) said in a statement.
Coleman’s chief of staff Leo Knepper did not respond to questions from the Capital-Star about what the committee believed it could learn from the tax information it sought from Browne or its reasons for directing a review of the program.
Ward noted that the Neighborhood Improvement Zone (NIZ), a one-of-a-kind special tax district Browne is credited with creating as Allentown’s state senator, has diverted more than $700 million from state coffers. That money could be used to support other programs such as child and elder care and state pension adjustments, Ward said.
The Revenue Department filed a lawsuit Monday to block enforcement of a July subpoena issued by the Senate Intergovernmental Operations Committee seeking more detailed information about the NIZ. The Senate responded Tuesday by adopting a resolution instructing its sergeant-at-arms to bring Browne to the upper chamber to be declared in contempt and jailed in the Dauphin County Prison unless he provides the data.
Browne’s request in Commonwealth Court for an emergency injunction says the General Assembly’s contempt procedures appear to have been untested since 1974 and may never have been used by the Senate.
Republican Senators, who adopted the resolution along party lines, “have now chosen to use this contempt mechanism, for the first time in 50 years, not to compel testimony from a recalcitrant or obstreperous witness, but instead to punish a member of the Governor’s cabinet for his steadfast compliance with law,” Browne’s filing says.
History of the NIZ
So, what is Allentown’s NIZ, what information does the Senate want, and who’s behind the push to investigate the program that supporters say reversed the city’s fortunes over the last decade?
The NIZ is 128 noncontiguous acres in Allentown’s central business district and along its once-industrial Lehigh River waterfront. Property owners in the zone can use state tax revenue generated from businesses in their buildings to pay the interest on money borrowed for capital improvements.
Browne, who represented Lehigh County in the state House and Senate for 22 years, drafted the legislation to create the NIZ, which was enacted as part of the state’s Fiscal Code in 2009.
The zone has spurred more than $1 billion in new investment including a 10,000-seat arena that is home to a minor league affiliate of the Philadelphia Flyers, hotels, several new office towers and more than 1,000 new apartments. Civic leaders say the resulting increase in workers, residents and foot traffic in Center City Allentown has created opportunities in the majority-Latino city.
“It has worked. It has paid back its investment,” said Alan Jennings, a community organizer who served as a founding board member of the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA), which has oversight of which projects receive funding.
Jennings, now retired from the board and his role as director of Community Action Committee of the Lehigh Valley, said he worked to keep the city’s residents, about a fifth of whom fall below the poverty line, in the board’s consideration.
“You can’t have a functioning community without a functioning marketplace, but you can’t have a functioning marketplace if everyone is poor,” Jennings said.
Critics have noted that roughly two-thirds of the investment by ANIZDA has gone to projects by City Center Development Corp. Browne has close political and personal ties with City Center’s president and co-founder, J.B. Reilly, who grew up across the street from Browne.
The biggest donor to Browne’s unsuccessful 2022 primary election campaign was the political action committee for the lobbying firm Pugliese Associates, which lists City Center among its clients, according to Department of State records.
Pugliese donated $252,500 to Browne’s campaign, according to campaign finance reports. Reilly and his business partner Joe Topper, were Pugliese’s largest donors, each contributing $100,000 to the committee, campaign finance records show.
Even as a lame duck in 2022, Browne helped City Center acquire the former site of the Allentown State Hospital, nearly 200 open acres on the border of Allentown and Bethlehem.
Browne suffered a stunning defeat by Coleman, an airline pilot who had only recently been elected as a school board member before running for the state Senate. Coleman’s campaign benefitted from six-figure donations from Republican mega-donor Jeff Yass and Lehigh Valley millionaire Bill Bachenberg, who was among former President Donald Trump’s slate of “fake electors” in his attempt to overturn the 2020 presidential election.
As chairperson of the Senate Intergovernmental Operations Committee, Coleman introduced a Senate resolution that was adopted unanimously in December directing the Legislative Budget and Finance Committee to conduct a performance audit of the NIZ and ANIZDA programs administered by the Department of Revenue.
That led to the Intergovernmental Operations Committee issuing its subpoena July 10. Browne responded to the subpoena with 34 pages of data but said the Revenue Department was prohibited from disclosing information about specific taxpayers.
The law prohibiting that disclosure was language inserted by Browne into the fiscal code in 2021, as an Allentown newspaper pursued a right-to-know request for information about revenue in a category labeled “other taxes.”
A Commonwealth Court judge sided with The Morning Call, saying taxes paid by three or more taxpayers in that category, which includes liquor and malt beverages, gross receipts and cigarette taxes, should be disclosed. The addition of the confidentiality language ended the case.
Central to the NIZ’s early development efforts, including the arena, was the location of a tobacco wholesaler in the zone. City Center Wholesale is a subsidiary of City Center Development, whose co-owner Topper owned a chain of 180 convenience stores. The company structured its sales in such a way that the cigarette tax collected by the wholesaler could be captured by the NIZ, according to a 2012 Morning Call article.
Calling for support of his resolution threatening Browne with contempt, Coleman said Tuesday that the data that he was requesting was necessary for the legislature to evaluate the program that it established.
“To be perfectly clear, the Senate is not requesting individual tax returns,” Coleman said on the Senate floor, noting that the “other taxes” category in the Revenue Department’s reports that he sought an explanation accounts for more than $557 million since the NIZ’s inception. “That’s over $557 million that we cannot be certain where it’s coming from.”
Capital-Star reporter Ian Karbal contributed to this report.