Pa. Auditor Gen. says state’s waiver system for businesses closed during shutdown riddled with inconsistencies

Written by on October 9, 2020

Pa. Auditor Gen. says state’s waiver system for businesses closed during shutdown riddled with inconsistencies

By An-Li Herring, WESA

October 8, 2020

Auditor General Eugene DePasquale. Photo | Sarah Kovash / WESA

Pennsylvania’s chief fiscal watchdog on Tuesday criticized a state program under which businesses could seek permission to operate during Gov. Tom Wolf’s pandemic shutdown, saying waivers were granted inconsistently and with little transparency and comparing the process to a “Keystone Kops routine.” 

The office of Auditor General Eugene DePasquale has been investigating the business shutdown waiver program amid complaints it was managed unfairly. The audit, which is ongoing, has uncovered significant problems that created an uneven playing field for businesses across Pennsylvania, DePasquale said. 

“The waiver program appeared to be a subjective process built on shifting sands of changing guidance, which led to significant confusion among business owners,” DePasquale said at a virtual news conference. 

In March, Wolf closed businesses deemed “non-life-sustaining” to help slow the spread of the coronavirus, but established a waiver program run by the Department of Community and Economic Development (DCED) under which tens of thousands of businesses applied to remain open during the pandemic. 

DePasquale, a fellow Democrat who is running for Congress this year, said program guidelines changed repeatedly; the decision to grant or deny a waiver often depended on which staffer was making the decision; and, for about 500 businesses, the department changed its waiver decisions without ever giving a reason why. 

“Businesses were asked to hit a moving target. And when they did get a waiver approved, sometimes the answer changed,” the auditor general said. Some businesses, he added, were originally denied permission to reopen “even though they clearly stated that they were manufacturing or selling hand sanitizers, masks, or other PPE.” 

In a statement, DCED spokesperson Casey Smith noted such cases make up a small fraction of the more than 42,000 waiver applications it received and that the agency corrected the mistakes following a quality assurance review. Given rapidly changing circumstances following the arrival of the coronavirus, Smith added, “This [waiver application review] process was not static and guidance was refined to ensure that businesses with life-sustaining services remained open.” In addition, Smith said a few businesses initially misrepresented themselves. 

But DePasquale highlighted instances where similar types of businesses received different decisions depending on how they worded their waiver application. For example, he said, two garden supply centers in Cumberland County were approved to reopen while similar businesses in nearby towns had their requests denied. In response, Smith said that DCED “worked to address any inconsistencies.”

Auditors combed through nearly 600 pages of emails, texts and other communications sent by legislators and lobbyists to the department to advocate for businesses applying for waivers, DePasquale said. He said auditors are seeking similar communications between legislators and lobbyists and the governor’s office. 

But Smith said, “DCED did not make waiver decisions based upon pre-determinations or pressure from the governor’s office or other outside influences.” Rather, the department consulted guidance from federal agencies, including the Department of Homeland Security, according to Smith. DCED then compared that information to industry codes to determine whether a firm “was operating in a life-sustaining industry or if they were providing a life-sustaining service,” Smith said.

However, DCED officials suggested to state auditors that some of the department’s decisions to grant or deny a business waiver were later changed by the governor’s office, according to DePasquale. He said his auditors are seeking to confirm that. 

“If they were, we would want to know the rationale for why,” DePasquale said. 

Wolf has said he has no intention of ordering a statewide business shutdown again, but DePasquale said that improvements will have to be made to the waiver program if it’s needed once more. 

“We can’t have this Keystone Kops routine again,” he said.

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