Browne faces scrutiny of NIZ as he awaits confirmation

HARRISBURG — As former state Sen. Pat Browne awaits confirmation in his new job as Pennsylvania’s top tax collector, the tax benefits of one of his biggest public achievements are under scrutiny by the man who ended his long legislative career last year.

Browne, now acting Secretary of Revenue, is among 19 high-level nominees in Gov. Josh Shapiro’s two-monthold administration who still need approval from the Republican-controlled Senate. During a 28-year career as a lawmaker from Allentown, he ascended to chairman of the powerful Senate Appropriations Committee and drew widespread praise for Neighborhood Improvement Zone legislation designed to boost his hometown.

But Sen. Jarrett Coleman, R-Lehigh, introduced a bill last week to reverse a change made to state law in 2021 — a change crafted by Browne — that effectively stymied a push to make tax records for the so-called NIZ public. The Neighborhood Improvement Zone law authored by Browne allows many categories of taxes generated by new development in a 130-acre chunk of Allentown to be used by property owners to pay off debt from their building projects.

A few other cities were targeted for assistance through a now-dormant state program that uses a NIZ-like tax-incentive structure. Coleman’s proposal has statewide ramifications because in January he became chairman of the Senate Intergovernmental Operations Committee. The panel is charged with reviewing proposals to restructure and streamline state government, and at least one bill filed in the Legislature would reboot the dormant program.

“In June of 2021, the fiscal code was changed to stop the public from learning how tax dollars are moving through the NIZ,” Coleman said. “Accessing this information is vital to understanding whether the NIZ functions as advertised and sold to the public.”

Coleman, of Upper Macungie, was an airline pilot and political novice when he defeated Browne in last year’s Republican primary. He has questioned whether the NIZ has been nearly as successful as its proponents say.

The Department of Revenue collects state taxes and processes millions of tax returns. Browne has been serving as acting revenue secretary since Shapiro was sworn in on Jan. 17, one of the Democratic governor’s cabinet picks that crossed party lines.

Coleman’s bill drew support from attorneys who specialize in government transparency. Melissa Melewsky, a lawyer with the Pennsylvania NewsMedia Association, said the trade group generally supports legislation that increases public access and accountability.

“We believe this bill is that kind of legislation and would require more transparency related to these specialized investment zones,” Melewsky said.

Attorney Joshua Bonn represented The Morning Call during a two-year fight by the newspaper to gain access to specific tax totals generated in the NIZ. The Legislature should pass Coleman’s bill, Bonn said. The newspaper’s legal battle ended unsuccessfully on Dec. 30, 2021, with a Commonwealth Court decision — the second of two in the case — that cited the Browne-authored law change as evidence that tax totals in the NIZ shouldn’t be made public.

Referring to the 2021 legislative tweak, Bonn said, “That law, in my opinion, was specifically targeted at our Right-to-Know request.”

In response to written questions, Browne cited earlier statements made to The Morning Call. In those comments, he cited the first of the two Commonwealth Court decisions in the case. That February 2021 ruling upheld an Office of Open Records decision granting access to tax totals when there were three or more taxpayers — because totals with fewer taxpayers would risk a violation of confidentiality.

That ruling, Browne said, revealed a legal loophole in confidentiality protections for tax information held by the state.

The loophole, according to Browne, opened the door for news organizations to obtain information that could jeopardize taxpayer confidentiality and might even have allowed public access to every corporate tax return filed in Pennsylvania. Browne said it was important to face “the possibility that every single tax report would possibly be available for the Department of Revenue to make public.”

So, he said, the law had to be changed. It was changed with just a handful of words placed deep in a 114-page bill that was part of the state budget approved by lawmakers in the summer of 2021.

The case was reargued at the request of the Department of Revenue, and the court reversed its previous ruling. The opinion on the second decision, like the first, was written by thenJudge Drew Crompton, who had previously been general counsel to the Senate Republican caucus that included Browne.

In his final, Dec. 30, 2021 opinion, the judge wrote that “this court need look no further” than the recent changes in the state law “to conclude that the information sought is exempt from disclosure.”

As he deals with scrutiny of his past legislation, Browne is entering a busy stretch in his role as acting revenue secretary. Negotiations between the new administration and the Legislature over Shapiro’s proposed 2023-24 budget are about to start. And Browne — who as a lawmaker was generally viewed as the Legislature’s foremost budget authority — could play a major behindthe-scenes role.