June’s Issue of Transactions features Sen. Don White, Senate Banking Chairman. Below is a transcription of the interview.
Can you give me an outline of the top two or three action items during your tenure as the Senate Banking Committee Chairman?
This is my fifth year as Chairman and we have considered a number of issues over that time. Fortunately, from the banking side, Pennsylvania was not impacted by the national banking crisis as much as our neighbors. I think that has a lot to do with the conservative nature of our banking and financial institutions. Do we have some problems? Yes. But I think the reforms we have implemented in regards as to mortgages have had a positive impact and we are moving forward.
On the insurance side, I was very actively involved, as everyone knows, in the opposition to the proposed merger of Highmark and IBC a few years ago. Fortunately, we were successful in those efforts. That proposal from moment one, never made any sense. We all know that competition is key to affordability and accessibility in Pennsylvania’s health insurance marketplace. Having one or two major 800-pound gorillas dominating in any business in a region is not healthy for consumers.
What have we done since then? We have continued our efforts to stimulate the markets and foster a competitive environment as much as we can and I think the marketplace has responded pretty well.
In the area of insurance reform, you can’t look at the overall health of the industry without taking into consideration some of the outside influences and one of those is the lack of tort reform in our state and the impact that has had on business in this Commonwealth. I think we have an opportunity this year to finally try to balance the scales and make this a more competitive environment for business and industry.
We educate the world in this state, but only five percent of our medical school graduates stick around in Pennsylvania. A lot of that has to do with the fact that we don’t exactly have the most healthy tort reform environment for them. I think we need to do something about ‘joint and several.’ We need to discuss caps on awards, something that has been successful in a lot of other states.
We need to encourage docs to stay here in Pennsylvania and that’s not going to be done unless we find a way to enhance the current environment. Right now, we’re about 10,000 docs short from what we need. We’re an aging state. As some people know, I have a vested interest in this in issue since I have a doctor in my family who is in her third year of residency. She is a general surgeon and obviously I would like her to practice in Pennsylvania. But, with this current environment, I think she would be foolish to set up shop here in Pennsylvania and that’s sad. We’ve got to change that.
There’s certainly a sense to our members that having a small business owner as chairman is pretty important. How will that background shape your approach to community banks?
I think my years in the private sector clearly prepared me for the job and the mission that I feel I am on down here. I paid taxes. I paid salaries. I had people who were relying upon me to provide an income and I took that responsibility very seriously.
When I look at our community banks, they are our small business backbone. Community banks in my region were pretty much unscathed by the mortgage crisis. They have always had a fundamental way of doing business that’s very conservative and they have never overreached. I think that it is because of those principles that they have been successful.
They have a great impact in my communities. They are very active. They are very visible and they employ a lot of people with good family-sustaining jobs and provide a great service.
Six months in, we’ve gone from Ed Rendell and divided government to total control for Republicans. From your perch in the Senate, what’s changed?
One major change is now we can discuss issues of great importance that really never saw the light of day under Governor Rendell. We are now having discussions on issues such as tort reform, school choice and balanced budgets and not sitting back playing defense all of the time.
We are getting an actual opportunity to play offense and move forward on an agenda that will benefit working families and senior citizens. And, we are getting the opportunity for the first time in a long time to create a positive business environment that we need in Pennsylvania to get us back among the leaders in the national economy.
The governor made big commitments early on – no taxes, a balanced budget, school choice, legal reform, privatization of the state liquor stores. How many of these big-ticket items need to pass for Governor Corbett to declare a first round win?
Right now we need to see some improvements in communications between the Administration and the Senate and House. I think that will improve with time.
I think the Governor will score a big win with the budget. After eight years of late budgets under Governor Rendell, Governor Corbett will bring home a budget that is a win not only for him, but for the Commonwealth. It will be a win because there will be no new taxes. It will be balanced and it will be on-time.
I think the other issues are still open for debate.
School choice has run into a couple of speed bumps. Some overzealous advocates of school choice certainly hurt their cause by going out of their way to irritate some legislators who were initially supporters. I have always felt that parents ultimately have a responsibility for the education of their children. If that is the case, then they deserve to have their choice in where their children attend school.
On the issue of privatization of state liquor stores, I don’t think we’ve done our due diligence as far as crunching the numbers and I think that has caused a problem. The numbers don’t seem to add up. I mean it makes perfect sense to get us out of the liquor business. The state shouldn’t be in the liquor business, but the fact remains that the state liquor system that we currently have in place generates close to a half-billion dollars every year for the state budget. Obviously we need to have a return for our investment and to privatize just for the sake of privatization is not necessarily in our best interest. It must be fiscally warranted.
Nothing, as I have found out in state government, comes easy and these are going to be works in progress. We could bring some to a conclusion during the Governor’s first term.
Of that grouping, school choice seems to be one of the most contentious. Given that the Senate is out front on this, what flavor of school choice do you support?
We have done some good things in this state, the EITC program is working. Maybe that’s what we are going to end up with, an expansion of the EITC instead of full vouchers. However, anything in that direction where it gives parents, especially those who are of limited resources, the option of sending their children to the school of their choice I think is very positive.
What’s your prediction? Can school choice pass this session? Will the final bill be substantial enough for families to see a real difference in way kids are educated in Pennsylvania?
I don’t see school choice passing this session. Senate Bill 1 has been kicked around and turned upside down and it has some basic fundamental problems. I like the premise, but I am not real sure about the bill as it is. I don’t have a lot of underachieving, underperforming schools in my district, so do I benefit?
Not necessarily, but we tried so many different ways to prop up the education system in places like Philadelphia County and some of our larger cities, including Pittsburgh. The basic formula we have used, especially under the Rendell years, was to throw more money at public education and that has proven not to work.
Philadelphia with 16 percent of the state’s students received 32 percent of the additional funding over the last eight years. What have we seen from that additional funding? We have not seen any improvements in graduation rates, SAT scores, or truancy. They are still at the same levels they were when Governor Rendell took office. That shows you that throwing money at a problem is not necessarily going to be helpful when it comes to education. I think that those areas have some basic problems outside the classrooms.
When you look at the environments that these kids live in, I think it is important that they do have some alternatives. I think going the voucher route for kids from underperforming schools is a good option to try. We have tried everything else, so let’s not kid ourselves. I don’t know if this is the solution, but I think this will force people to get involved in their children’s education.
So let’s try it and see if it works. It’s not like it can’t be refined as we go forward.
Let’s shift to the budget. When you’re pumping gas in Indiana, what are the biggest criticisms constituents have about state government?
No matter where I am in the district, people seem to have a very apathetic attitude their government. It’s a shame to have developed that way, but I think politicians helped create that. It seems that every week there’s a new scandal and a new issue involving elected officials. As a result, people have become discouraged. I think they believe government is too involved in their lives on a daily basis.
In my area, property taxes are just through the roof. I have an aging population. They paid taxes through their earning years and are now supposedly in their golden years, yet in a lot of cases they are being pushed out of their homes prematurely. So, I think taxes are a big issue.
Jobs are always a huge issue back home. We’ve been pretty fortunate in the 41st District. We never had the highs and the lows. The impact of the recession was felt, but it wasn’t as serious as it was in other regions of the Commonwealth and the country. Our unemployment is below state average and we have an economy that is much more diversified than it was 20 years ago. When I came back home from the service in 1975, the unemployment rate in Indiana County was the lowest in Pennsylvania. By 1985, it was the highest in the state.
That was because we were not a diversified economy. We were strictly a coal region. When coal took a dip and mines closed, layoff occurred and we suffered. We suffered greatly. We still very much in the energy business, be it coal mining, electrical generation or shallow well drilling or Marcellus Shale drilling and all of the interrelated businesses that service that industry. But, we also have some light manufacturing development.
One of our region’s key assets is our quality of life. Our school districts, the low crime levels in our neighborhoods, and our main streets are great assets that we continue to promote. This is a great place for people don’t like the hustle and bustle of the cities. I think it’s a great place to raise a family, get an education and do business. I will never leave it.
Is it realistic for Governor Corbett to go a full term while keeping his ‘No Tax Pledge?’ If he keeps it, what’s the alternative?
I hope so. I’ve seen too much money thrown around in this Commonwealth during my 11 years in office. Too many times, I have just shaken my head. I must say that I am proud of the Senate Republican Caucus for standing up to Governor Rendell. We thwarted almost every tax and initiative he proposed. We made it quite clear that state government must live within its means just like our families that we represent. We must have a responsible budget and adhere to that budget. Governor Corbett’s ‘no tax’ pledge is a pretty courageous stand and I’m going to do all I can from my small role in state government to ensure that he fulfills that pledge.
We must live within our means and that’s not always easy. We’re pulled in so many different directions by so many different groups and constituencies. However, fiscal sanity has to take priority. We must restrain spending and that includes everybody from those in the various state departments and agencies to Legislature as well.
You’ve been a pretty open critic of the current state welfare system. There are plenty of critics who view this as an attack on the poor. What’s your response?
I think we have an obligation to take care of those in the most desperate of need. That is an obligation of any state, but at the same time the system is rife with fraud waste and abuse. Auditor General Wagner, in a short investigation, found $300 million of outright fraud and misuse of state dollars.
We have turned it into an entitlement program. We have created second-, third-generation social welfare people and families. Taxpayers should expect a better return on their dollar. It’s nice to be benevolent, but at the same time we owe the general public and taxpayers an accounting for what we do on a daily basis with the poor and the indigent.
I received an e-mail just today from a teacher out in Karns City about the condition of welfare in her area. ‘When I ask the senior kids what they are going to do after they graduate the response time after time is that they are on welfare and that they are going to stay on welfare.’
We need to have a check and balance system and we need to verify that these people are in need and do deserve our support and that really hasn’t been done.
If this year was challenging, what does next year look like?
I am hoping that based on the state revenue numbers we’ve seen, our economy seem to be recovering. I hope this just isn’t a little blip on the radar. I think we have a great future ahead if we continue to streamline state government and continue the Governor’s pro-business initiatives. I am encouraged that we have seen the worst and we are coming out of it. However, we need to continue to be forthright and sincere in our efforts and we can’t get lackadaisical. We need to continue to be the strident watchdog of the tax dollar. That that’s an obligation I take very seriously. People back home are working two to three jobs just to tread water. They are struggling for every dime and the last thing they want to hear about is waste on our part.
Finally, now that you’ve passed a decade of service in the Senate, what is the biggest misconception you had as an outsider about the institution where you now serve?
I have to admit, I was one of the skeptics. I was a taxpayer who looked upon government with a certain level of disdain and really felt that it was my responsibility to take care of myself, my family and my employees. My interaction with government and my local government officials was basically non-existent. Government was a real wake up call to me and things changed in my life.
The loss of my son and the fact that my daughter was intent on going to medical school and wasn’t interested in coming back to Pennsylvania were wake up calls to me that there is a need to give back. I don’t think I necessarily did a good job of that during my working years. I didn’t run for school board. I didn’t get involved with the chamber of commerce.
“My actions revolved around my job, my employees, and my family. I’d be the first guy to write a check, but I would be the last guy to give a minute of my time. So, when I made the decision to run for office it was with a deep understanding of wanting to finally give back and be a true public servant. Since then, I have done all I can to serve honorably and make the people back home proud.