Auditor General Eugene DePasquale said an ongoing audit of the Wolf administration’s business waiver process is finding inconsistencies and “puzzling decisions” in the way businesses were treated and the program was carried out.
Wolf on March 19 ordered to close the physical locations of all non-life-sustaining businesses in Pennsylvania to stem the spread of Covid-19 as part of his efforts that also included a stay-home order that lasted statewide for weeks in the spring. Some businesses and types of businesses were exempt, but others were forced to apply for waivers through a process that business owners and GOP legislators said was unclear, muddy and capricious. DePasquale announced an audit April 30.
“So far we’ve found that more than 500 businesses received answers from DCED that later changed,” Pasquale said in a statement Tuesday afternoon. “The waiver program appeared to be a subjective process built on shifting sands of changing guidance, which led to significant confusion among business owners.”
There were 42,380 waiver exemption requests that were sent to the Pennsylvania Department of Community and Economic Development between March 20 and April 3. DCED granted 6,060 requests and another 11,635 were told they didn’t need an exemption. There were 12,826 business waiver requests that were rejected and 11,619 others, from businesses like construction and auto dealers, that were allowed to reopen later with additional guidance from the Wolf administration.
While the audit isn’t complete, DePasquale said that investigators found 523 businesses so far that had their exemption status changed by DCED.
“Some waiver applications were approved only to be later rescinded, while others were initially rejected and later approved,” DePasquale said in the update. “For the majority of the changes, DCED provided no explanation about the reason for the change except to say that there had been some type of further review performed.”
The auditor general said there wasn’t a way based on what they were given by DCED to determine why the changes were made.
There were 171 waiver applications that were initially denied and then later approved, including eight companies that were making PPE or hand sanitizer, two items that were in short supply during the early stages of the pandemic. Another 151 were initially rejected and then told they didn’t have to seek a waiver. One company, in York County, made five separate waiver applications and received two yes, two no and one waiver not required response.
Seventy-three others initially got approval that was later taken away, and 48 other applications were denied after initially being told that a waiver was not required.
“Most concerning about these changes is that DCED provided no reason for the change or redacted the reason before providing us with the information,” DePasquale said.
DePasquale said the waiver process, which DCED said depended on guidelines established by the governor’s office, had a major flaw in its subjectivity.
“Initial review indicates a lack of consistency because decisions to grant or deny a waiver to keep a business open were being made by multiple individuals based on constantly changing guidelines and reliance on justification statements provided by businesses without being able to verify all of the information being submitted on behalf of businesses across the state,” DePasquale said.
It apparently mattered a lot what was written on the application.
“Some owners of small businesses may not have had the knowledge to use the right ‘buzzwords’ in their justification for remaining open, or realized they could ask a legislator for help to navigate the process,” DePasquale said.
He said DCED cooperated on some things but not on others, which need to be cleared up before the audit can be complete. That includes asking the governor’s office to provide emails between it and legislators and lobbyists about specific businesses.
A Wolf spokeswoman said DCED would send a statement to the Business Times in response to questions, which they did. DCED’s statement said Pennsylvania was one of only a few states that had an exemption process and that the National Governors Association asked the commonwealth for guidance about one.
“DCED did not make waiver decisions based upon pre-determinations or pressure from the governor’s office or other outside influences. When reviewing applications, DCED consulted existing guidance, including those from CISA (Cybersecurity and Infrastructure Security Agency) and the Department of Homeland Security, while cross-referencing industry codes to determine if a business was operating in a life-sustaining industry or if they were providing a life-sustaining service,” DCED said in its statement to the Business Times.
DCED said the process and guidance was refined.
“Reviewers were tasked with making decisions based on information that was submitted by businesses, and a quality review process was put into place to ensure consistency and that details provided by the business in their application accurately depicted day-to-day operations,” DCED said.
DCED said it trusted businesses to provide accurate information and most did.
“And, while there were some inconsistencies noted, we worked to address any inconsistencies, and overall the process was consistent given that our commonwealth was responding to a global pandemic from a novel virus and prioritizing public health and safety,” DCED said.
