Week in review: PA credit rating takes a hit; arcade owner battles big tax


By PA Independent Staff

The fallout over Pennsylvania’s patchwork budget started earlier this week, with Moody’s dropping the state’s credit rating and citing the stop-gap spending plan as part of the reason.

Elsewhere, a small business owner is battling a borough over an antiquated amusement tax, Uber and Lyft get a re-do in Allegheny County, and Obamacare is back in the news after a court ruling jeopardized the health-care law’s subsidies in Pennsylvania.

Here’s a look back at this week’s coverage:

Arcade helps give PA borough extra life, but hefty tax could mean game over

Brandon Spencer took a chance on Hanover’s downtown last year, when he relocated his arcade business to a former bank building near the town square.

Some have called him a “catalyst” for downtown revitalization, considering other businesses there have noticed increased traffic since TimeLine Arcade opened and a couple of breweries are now looking to bring their business there, too.

The borough wants to cash in on the arcade’s success, too. Officials want Spencer to a pay a hefty amusement tax and have been exploring rewriting a local law to bring him into the fold.

The disagreement largely centers on two words in Hanover’s amusement tax ordinance, specifically that the borough can charge $50 for every “coin-operated” amusement device. Spencer’s 130-plus machines — from pinball machines to classic arcade games — don’t accept quarters or tokens. Instead, TimeLine Arcade patrons pay flat rates for each half-hour of play.

“The law’s the law, but for them to take this law and change it all of a sudden just because of me, it’s pretty scary,” Spencer said, adding the amusement tax would cost him close to $6,000 and make him consider relocating.

Budget blues: Moody’s downgrades Pennsylvania’s bond rating

Pennsylvania lawmakers can’t say they weren’t warned.

Just weeks after Pennsylvania lawmakers passed a patchwork budget and skipped town without addressing pension reform, Moody’s downgraded Pennsylvania’s general obligation bond rating. The move comes after the three major rating agencies issued warnings to the state in advance of the budget season.

LOOKING BACK: Pennsylvania’s patchwork budget already might come back to haunt lawmakers. Moody’s downgraded the state’s credit rating, citing the stop-gap budget as part of the reason.

Among the reasons Moody’s cited? The state’s “growing structural imbalance, exacerbated by the fiscal 2015 enacted budget that depends on non-recurring resources.”

Moody’s also indicated that “large and growing pension liabilities coupled with modest economic growth will limit Pennsylvania’s ability to regain structural balance in the near term.”

Court ruling clears way for charter schools to expand

A Commonwealth Court ruling Tuesday could pave the way for charter schools outside Philadelphia to expand their operations and take on more students.

In a 2-1 ruling, the court overturned an earlier decision from the state’s Charter Appeal Board that blocked the Lehigh Valley Dual Language Charter School from expanding its operations beyond a single school building.

The LVDLCS argued it was unable to find a single building large enough to accommodate its growing enrollment, and tried to change its charter to allow a second location but was denied by the school board of the Bethlehem School District, where it operates. State law allows charter schools in Philadelphia to operate at multiple locations, but it limits all other charter schools to a single location.

In the majority opinion, Judge Renee Cohn Jubelirer said the court would not rely on “permissive special provisions” that allow charter schools in only one school district to expand.

Uber, Lyft granted temporary authority to operate in Allegheny County

Score this a win for a free-market solution.

The Pennsylvania Public Utility Commission granted the tech-savvy ridesharing services Uber and Lyft emergency temporary authority to operate in Allegheny County. Both have ferried customers about the Pittsburgh area for months, even after they were slapped with a cease-and-desist order because they were not licensed with the PUC.

The decision is a win for Pittsburgh residents who turned to Lyft and Uber after frustrations with unreliable traditional taxi services. It’s also victory for the drivers who count on the companies for income.

But while PUC Chairman Robert Powelson said he supports innovation, he also chided Lyft and Uber for their “past sins” of operating outside regulatory protocol.

“Today, you’re getting the chance to take the mid-term exam over,” Powelson said Thursday.

Obamacare subsidies in question after court ruling

The federal health-care law seems destined for more litigation after dueling court decisions were handed down this week.

First, the U.S. Court of Appeals for the Washington, D.C., Circuit on Tuesday dealt a potentially devastating blow to Obamacare when it ruled that only those who enrolled via state-run exchanges qualified for federal subsidies.

But then, not long after the D.C. court’s decision, an appeals court in Virginia released a contradictory decision later that found the subsidies were allowable.

Thousands of people in Pennsylvania would be affected if the subsidies aren’t allowed here.

Pennsylvania happens to be one of the states that did not set up its own exchange, meaning the 318,019 residents who signed up for Obamacare had to use the federal exchange. More than 80 percent of the qualified for the subsidies that could be imperiled.