Gov. Wolf’s coronavirus business waiver program was inconsistent, unfair, auditor says

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HARRISBURG — The Wolf administration’s coronavirus business waiver program was inconsistent and confusing, creating an unfair playing field for companies across Pennsylvania, according to the preliminary results of a state audit.

“The waiver program appears to be a subjective process built on shifting sands of changing guidance, which led to significant confusion among business owners,” state Auditor General Eugene DePasquale told reporters Tuesday.

DePasquale, whose office launched the audit over the summer, said some business owners who applied were able to get a pass to reopen by using the right “buzzwords” in their applications — ones that immediately gained them a stamp of approval.

Some businesses also had the benefit of support from legislators and lobbyists, who called or emailed the Wolf administration on their behalf, though DePasquale noted that his auditors had not yet unearthed any evidence of undue influence.

Yet other business owners were forced to deal with the whiplash of having their waiver applications initially denied, only to be later told by the administration that they could reopen — without any explanation as to the change of heart.

DePasquale cited an example of a food truck company that was twice turned down for a waiver, then later told it could reopen. The company was never told why.

Another business, a construction company in Allegheny County, submitted 10 separate applications for separate but similar construction projects. They were rejected for some sites, approved for others, and told for yet others that they didn’t require a waiver.

“That, to us, is a major problem,” DePasquale said, who characterized the waiver program this way: “This was not a level playing field.”

In all, 171 businesses granted a waiver after first being denied, he said. Another 141 applicants were denied a waiver, but then later told they never needed one and could resume operations. In 73 cases, businesses were issued a waiver but then saw it revoked, and were told to shut down. Another 48 were told they didn’t need a waiver to operate, but then were subsequently ordered to shut down.

“The most frustrating part, so far … is that there wasn’t an explanation given as to why a yes went to no, and vice versa,” DePasquale said. “We believe strongly that there should be reasons given as to why answers changed because a) the businesses are owed that and, b) if we are going to be in this situation again, we can’t have this Keystone Kops routine again.”

In a statement, Casey Smith — a spokesperson for the Department of Community and Economic Development, which administered the program — said the overarching goal was to give qualified businesses the opportunity to remain open.

Waiver decisions, Smith said, were not based “upon pre-determinations or pressure from the governor’s office or other outside influences,” but on a well thought-out set of standards to determine which businesses provided “life-sustaining” services. She acknowledged that there were changes to the criteria used in making those determinations, but noted “only a fraction of the requests required correction through the quality assurance process.”

David Taylor, president and CEO of the Pennsylvania Manufacturers’ Association, was critical of DePasquale’s decision to release only preliminary findings, calling it a stall tactic to “protect himself and his political patrons” before the election.

DePasquale, a Democrat from York County, is in the midst of a hotly contested congressional race.

“The flimsy overview issued today does not begin to address the deeply disturbing practices of the Wolf Administration that have destroyed untold Pennsylvania jobs and businesses while others somehow got the ‘Golden Ticket’ of a waiver from Governor Wolf’s front office,” said Taylor, who believes DePasquale should recuse himself from the audit since he has received political support and campaign donations from Wolf.

DePasquale said his audit is continuing, and is now focusing on the Wolf administration’s criteria for who qualified for a waiver, which he noted changed more than once during the shutdown. He said his office has also asked for numerous documents and emails from Gov. Tom Wolf’s office as his audit continues.

The Democratic governor’s business waiver program has been one of the most-oft criticized aspects of his handling of the pandemic, and the subject of an ongoing investigation by Spotlight PA, “Decided in Secret.” Republican lawmakers and many in the business community complained that it was cobbled together in a sloppy and haphazard way. The program, they said, was also cloaked in secrecy, with little transparency about who was deciding which businesses could reopen — or why.

The business waiver program was launched in March, as the governor and his administration were taking steps to stem the spread of the virus and to prevent Pennsylvania hospitals from becoming overwhelmed by coronavirus patients.

Initially, Wolf urged all “non-essential” businesses to close. But within days, the governor had issued a sweeping order ordering that only “life-sustaining” sectors of the economy could continue operating, forcing thousands of businesses to shut their doors.

The first few hours of the shutdown order were chaotic. Several business sectors that had been ordered to close complained and said they were needed to provide essential products and services, leading Wolf to revise his definition of life-sustaining.

The governor also created the waiver program to allow other businesses to apply to the Department of Community and Economic Development to make a case for why their services were essential.

The complaints continued. Some businesses were able to reopen even though they did not seem to provide any life-sustaining product, leaving employees in the position of having to decide between forgoing a paycheck or potentially risking their health.

In some cases, direct business competitors received conflicting guidance, with one being allowed to reopen while another had to stay closed.

As the months went by, the waiver program became the target of litigation and court disputes, including by Republicans who hold the majority in the state Senate, who were trying to force Wolf to comply with a legislative subpoena for thousands of records related to the waiver process.

As that dispute unfolded, DePasquale announced that his office would conduct an audit of the waiver program, and that his team would review everything from the criteria state officials used to evaluate waiver applications, to any emails or letters from legislators or lobbyists seeking to influence the process.

He said his office had received more than 100 complaints from businesses, many small or mid-size, that believed the waiver process was unfair. At the time, he said that was the largest number of complaints he had ever received at the start of an audit.

Last month, a federal judge ruled that key components of the governor’s mitigation strategy are unconstitutional, including Wolf’s business shutdown order. The governor is appealing that ruling.

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