Kate Huangpu of Spotlight PA and Stephen Caruso of Spotlight PA
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HARRISBURG — The Shapiro administration insists the governor did not violate his own gift ban when he and top staff went to Arizona for the Super Bowl on the dime of a nonprofit that has received millions of dollars in state money.
Under a policy instituted in January, Democratic Gov. Josh Shapiro and executive branch employees are not allowed to accept tickets to recreational events such as football games.
The ban states these employees cannot accept such a gift from any “person or entity” that “has financial relations with the Commonwealth.”
Team Pennsylvania — a public-private partnership that works to improve the state’s “competitiveness and economic prosperity” — paid for Shapiro and his staff’s flights, lodging, and tickets to the game.
The nonprofit received about $1.7 million from the Wolf administration in the 2021-22 fiscal year, according to its most recent federal tax form, mostly to attract new businesses to the state. In January, the Shapiro administration awarded it a new contract worth $100,000 to conduct a study on how to incorporate hydrogen technology into Pennsylvania’s energy system.
In total, the state has given the group over $17.2 million in contracts since 2007, according to a database maintained by the Office of the State Treasurer.
Shapiro’s spokesperson Manuel Bonder told Spotlight PA that the tickets did not violate the gift ban because the organization has a “decades-long history of collaborating with the state,” and is “completely incomparable to a private actor.” He did not address questions about the financial relationship that the organization has with the state.
Abby Smith, Team Pennsylvania’s president and CEO, said her organization isn’t covered by the gift ban because it does not recommend policy. She argued that the contracts her organization has with the state are not what the gift ban was intended to cover.
“[There’s a] difference in terms of having a grant which requires a contractual agreement, that is different than an outgoing financial relationship,” Smith said. “We are interested in being a neutral broker, not ever pushing policy or an agenda.”
As one of his first acts as governor, Shapiro signed an executive order outlining the kinds of gifts he and his staff cannot accept and from whom. The order does not lay out the consequences of violating the policy, nor does it say who is supposed to monitor staffers and officials for potential violations.
Bonder did not answer a question about whether the trip expenses will be disclosed on Shapiro’s annual statement of financial interests. Under the State Ethics Act, public officials are required to report gifts worth over $250 at the risk of criminal and civil penalties.
Claire Finkelstein, a professor of government ethics at the University of Pennsylvania Carey School of Law, said that the gift ban casts a wide net as to who is under its purview, including “anyone who does business with the state or has any hope of doing business.
“If the Pennsylvania government is paying them to do studies, I think that counts as a financial relationship,” said Finkelstein. “Whatever the practices are at that organization, that doesn’t change the fact that it is truly a gift to the governor and that none of the exceptions to the gift ban appear to apply to it.”
Finkelstein added that she does not see the governor attending the Super Bowl as a problem, but raised questions about how the trip should have been paid for. If Shapiro was attending in a public capacity, she said, the trip should have been paid for with public funds. (Smith said her group sent Shapiro to the Super Bowl because as “CEO” of the state he would raise Pennsylvania’s profile by being seen there.)
This isn’t the first time Team Pennsylvania has funded a governor’s expensive trip. The group has arranged and paid for similar outings since 1997, when former Republican Gov. Tom Ridge established the group with top business executives amid Ridge’s own efforts to broadly review and repeal state regulations.
In 2012, Team Pennsylvania paid for Republican Gov. Tom Corbett and a small entourage to visit Lyon and Paris in France, then Stuttgart and Düsseldorf in Germany to meet with business executives.
Smith said in an email that the group has also funded governors’ trips to “major golf tournaments” to meet with executives.
Team Pennsylvania had $9.9 million in “financial resources,” according to its 2021-22 annual report. In recent years, it’s spent money on a mix of economic studies, public relations, and travel, including a trip by the group’s agricultural policy expert to the Netherlands.
Federal tax law does not require Team Pennsylvania, a 501(c)3 nonprofit, to reveal its donors, and Smith did not reply to specific questions about who contributes to the organization. Its most recent annual report lists many “investors” from companies that also have top executives on Team Pennsylvania’s board.
Currently co-chairing the organization with Shapiro is a lobbyist for Harrisburg law firm McNees Wallace & Nurick, which provides legal services to the governor’s office, state agencies, and commissions.
Executives from Shell, Consol Energy, First Energy, St. Luke’s University Health Network, Carnegie Mellon University, and the International Brotherhood of Electrical Workers are also on the board.
According to Smith, any member of the public can be nominated to the board, but the bylaws of the organization specify that nominees should be in leadership roles of relevant organizations — those that the board members believe have an impact on the issues it focuses on.
The annual report said the nonprofit backs goals such as decarbonization of the state’s energy production and strengthening the manufacturing industry. These goals sometimes directly benefit board members’ companies.
In September 2022, the group sponsored a study that advocated for Pennsylvania to bolster its hydrogen production and CO2 management industries to help meet carbon reduction goals.
Soon after, the legislature passed and former Democratic Gov. Tom Wolf signed a $2 billion tax credit package, half of which was earmarked for any company that built an industrial facility producing hydrogen fuel in Pennsylvania. In the lead-up to its passage, lobbyists supporting the deal frequently pointed to Team Pennsylvania’s report.
Team Pennsylvania then applied on behalf of the state government for federal incentives to attract such a facility in November. Shell, which has an executive on Team Pennsylvania’s board, is one of two companies that would build and operate the hub if the federal government accepts Pennsylvania’s bid.
“Team Pennsylvania’s ability to accelerate economic growth through public-private partnership will be leveraged to support an application for a hydrogen hub that will keep Pennsylvania economically competitive for generations to come,” Smith, Team Pennsylvania’s top executive, said in a news release at the time.
Smith downplayed the role of the organization in setting policy during interviews with Spotlight PA. She argued the group provides a forum for private interests to meet with public sector actors to debate policy, and said that business and government working together will benefit the state’s economy.
But environmental advocates, who criticized the tax credit package, highlighted the connection between Team Pennsylvania, its backers, and its policy prescriptions.
“It’s not a surprise that the report from Team PA concluded that dirty hydrogen was a viable pathway given the fossil fuel interests involved in its drafting,” Patrick McDonnell, Wolf’s former environment secretary and current chief executive of conservation group PennFuture, said in a statement.
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Featured image caption: Pennsylvania Gov. Josh Shapiro went to the 2023 Super Bowl in Arizona. David Maialetti / Philadelphia Inquirer
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