A showdown between Pennsylvania Treasury Secretary Pat Browne and the state senator who forced Browne from his former Senate seat two years ago appears likely to be scheduled when the Legislature returns to session next week.
The Commonwealth Court on Tuesday rejected requests by Browne and Senate Democrats to block a subpoena calling Browne to testify on the Senate floor about Allentown’s one-of-a-kind economic development zone that he created as a lawmaker representing the district.
Sen. Jarrett Coleman (R-Lehigh) defeated Browne in the 2022 primary contest and has since pushed for a legislative audit of Allentown’s Neighborhood Improvement Zones (NIZs), where developers can apply state tax revenues to pay for capital improvements to their properties .
Coleman told the Capital-Star on Wednesday that the purpose of the audit by the Joint Legislative Committee on Budget and Finance would enable the Senate to determine whether NIZ is providing a net economic benefit to the Lehigh Valley region or is “poaching” businesses from surrounding communities for Allentown.
“When the subsidies disappear and private developers can no longer use them to pay off their debt… will Allentown be able to ride off into the sunset of a prosperous future… or will Allentown become a void,” Coleman said. He added that assessing the program’s impact is vital when it diverts hundreds of millions of dollars in state tax revenue to the state that could be used for other programs.
“We want to make sure the Allentown Neighborhood Improvement Zone was a tool to drive economic growth and not just subsidize private property development,” Coleman said.
The Department of Revenue filed a lawsuit on Oct. 7 to block compliance with a July subpoena issued by the Senate Intergovernmental Operations Committee seeking more detailed information on NIZ. In response, the Senate on October 8 passed a resolution ordering its sergeant-at-arms to bring Browne to the upper house, where he would be found in contempt and committed to the Dauphin County Jail unless he provided the data.
In compact ordination published behind schedule on Tuesday, the Commonwealth Court rejected attempts to block a subpoena that said the case was not ready for intervention because “there was no confrontation.”
Senate Minority Leader Jay Costa (D-Allegheny) said in a statement Wednesday that he is disappointed in the court’s decision, which he considers erroneous, and vowed to “renew our efforts to defeat this subpoena on the merits” if the Senate seeks to hold Browne in contempt ’em. A spokesman for Browne said the Treasury Department had nothing to add beyond the court filings.
Created by a series of pieces of legislation beginning in 2009, the NIZ allows developers to apply most of the state tax revenue generated by businesses operating on their properties to cover interest on loans. According to authorities overseeing the apply of tax dollars, the program has raised more than $1 billion for modern development and redevelopment projects in the 128-acre area centered on the city’s central business district and the Lehigh River waterfront.
But Coleman said he and other Lehigh Valley residents have questions about the program’s effects and want to know details about taxes reported by businesses in the zone to the Department of Revenue. In particular, Coleman said he wants to learn more about sales taxes on alcohol, malt beverages and tobacco products in the zone.
“The big question is: Is Allentown built on disease and addiction?” Coleman said.
The state cigarette tax was an early factor in the development of the state of New Zealand, including the 10,000-seat arena that houses the Lehigh Valley Phantoms, a minor league hockey team for the Philadelphia Flyers. City Center Development, beneficiary of approximately one third of all state revenues invested in the zone, bought a tobacco wholesaler and arranged the sale of the company to allow NIZ to capture the cigarette tax revenues it generated.
Dean Browning, a Lehigh Valley business executive who ran unsuccessfully as a Republican for Congress and the state Senate, said there are concerns throughout the Lehigh Valley that NIZ has created winners and losers. As Allentown attracts businesses to move to the zone, surrounding municipalities lose tax revenue and support for ancillary businesses.
Roughly two-thirds of the development in the zone went to one company, City Center Development Corp., according to the Allentown Neighborhood Improvement Zone Development Authority. City Center owners JB Reilly and Joe Topper contributed to Browne’s unsuccessful 2022 re-election campaign through a lobbying firm.
“In my opinion, if you’re going to give this benefit to one person or group of people, you want to make sure that there’s a net benefit to the region or not,” Browning said.
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