Oct 14, 2014 4 min read

HARRISBURG – A look at key claims being made in TV ads that are being aired in Pennsylvania’s campaign for governor ahead of the Nov. 4 election.

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Theme: Gov. Tom Corbett’s campaign attacks Tom Wolf’s plan to raise the income tax.

Title: “Say what?”

Length: 45 seconds.

Airing: TV stations in every Pennsylvania market starting Sept. 30.

Key claim: “Wolf’s promising to raise middle class taxes and he seems like the type of guy that’s going to keep that promise.”

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Theme: Corbett’s campaign attacks an indirect investment by a state pension fund into Wolf’s family company.

Title: “Learning Curve”

Length: 30 seconds.

Airing: TV stations in every Pennsylvania market starting Oct. 7.

Key claim: “How did Wolf get so rich? Off the backs of middle-class taxpayers. Shortly after Wolf made huge political contributions to state politicians, millions from the state pension fund were funneled into Wolf’s company. After Wolf pocketed the money, he laid off his workers.”

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Analysis: “Say What?” refers to Wolf’s plan to restructure and raise Pennsylvania’s 3.07 percent state income tax. The change would serve two purposes. One, it would shift a bigger burden to higher earners. Two, it would raise the state’s share of public school spending to his stated goal of 50 percent from its current level, below 35 percent, and cut school property taxes by a dollar-for-dollar amount.

Wolf has not, however, promised explicitly to raise middle class taxes, although that might depend on one’s own definition of middle class.

Wolf has not been explicit about how such a shift would work, or who would see higher taxes and who would see tax cuts. In general, he said his plan would exclude more lower-income households from the income tax and deliver a tax break to the middle class, a category he said includes households with taxable incomes of roughly $70,000 to $90,000 – double that for a married couple. Those who earn more would see increases, he said.

He has said this proposal would be a centerpiece of the first budget plan he delivers to the Legislature in March.

“Learning Curve” refers to the Pennsylvania’s State Employees’ Retirement System’s indirect investment in Wolf’s company. The system has a $50 million stake – committed in 2005 – in the $1 billion Weston Presidio V, or about 5 percent of the entire equity fund.

Weston Presidio invested $41 million in the Wolf Organization starting in 2006 when Wolf and two cousins sold a two-thirds stake for about $20 million apiece. Weston Presidio took over a 47 percent stake in the leveraged buyout. The value of the Weston Presidio investment was placed at just under $23 million in a 2013 year-end report to its investors.

In the meantime, Wolf and his cousins each kept an 11 percent stake and handed over control of the Wolf Organization to a professional management team that owned 20 percent. In news reports from the time, company executives said they – and not Tom Wolf – made the ensuing layoffs due to the effects of the recession. Wolf returned to day-to-day control in 2009 – upping his stake in the company to 28 percent – in order, he said, to help the company avoid bankruptcy. On May 31, Wolf became the non-executive chairman, an unpaid position with no day-to-day control, the campaign said.

For years, Wolf was a generous donor to the political campaigns of Democrats. No one has established a connection between Wolf’s campaign donations and SERS’ indirect investment in the Wolf Organization. However, the ad suggests there is a connection.

Asked to back that up, the Corbett campaign responded former Rep. Mike Veon, who received campaign contributions from Wolf and later went to prison for corruption, sat on the board of SERS in 2006. The Corbett campaign also said Ed Rendell, who was governor in 2006 and received campaign donations from Wolf, acknowledged he lobbied SERS to invest in the business of a donor. That reference is to a Chicago Tribune report from earlier this year in which Rendell said he once recommended SERS board members “take a look” at the investment management firm of a campaign donor – Bruce Rauner, now the Republican nominee for governor in Illinois.