HARRISBURG — Imagine buying a house, but having someone else pay the mortgage. It sounds great, right? Well, what if that someone else was you?
It sounds unbelievable. But CBS 21 has learned some of our elected officials may be using a flawed per diem system as an investment vehicle to buy houses – courtesy of the taxpayer.
“I’m disgusted,” said Susan Newcomb. “We’re struggling, barely making it. And somebody is going to do that? It’s just wrong.”
Those harsh words from Newcomb are directed towards her neighbor, former state Rep. James Wansacz. “It’s just taking advantage of the people,” Newcomb said.
Newcomb’s husband is out of work. The couple have five kids and can barely afford their mortgage. And she just found out her home loan may not be the only one she’s been paying.
From 2000 to 2010, Wansacz represented the 114th House District, which is near Scranton –about 130 miles from Harrisburg.
Through Right-to-Know requests, CBS 21 learned the taxpayer was pretty good to him. In his 10 years, he amassed a $72,702 pension, and still gets $25,457 a year in health benefits.
But what has garnered Newscomb’s ire is how Wansacz apparently used the per diem system.
Per diem is tax-free money our elected leaders get as a reimbursement for expenses, such as hotels and food.
In October 2003, Wansacz bought a house on South Second Street in Harrisburg for $72,000.
Yet he still charged tax payers per diem when he came to the Capitol – even though he stayed in his own home.
During his time in office, he collected $162,904 in per diem to cover his expenses – which would include his mortgage. A few weeks ago, Wansacz put the three-bedroom house on the market for $124,900 – a $52,900 profit.
“It should go back to the people,” Newcomb said when asked what she thought Wansacz should do with the profit he would get by selling the home.
Despite the online listing calling this property a “unique opportunity”, legislators buying homes in Harrisburg and charging per diem is not rare.
A duplex on South Street (once owned by House Majority Leader Todd Eachus), a Green Street row home (owned by Sen. Tim Solobay/ Rep. Paul Costa) and a rancher in Susquehanna Township (owned by Reps. Mike Peifer/Mario Scavello) are more examples.
Under the current system, law makers who live within 50-mile of the capital are not eligible for per diems, but secondary homes are exempt, so this is legal. But some question whether it should be.
“I don’t think anyone imagined that a per diem would wind up being used as an investment vehicle.” Eric Epstein is with Rock the Capital, a government watchdog group. “This is really one of those issues that we haven’t explored before,” said Epstein.
CBS 21 filed Right-to-Know requests that show lawmakers last year collected $1.8 million just in per diems. Epstein says since they don’t have to hand in receipts, that money can then be used for anything, including mortgages.
“I think a lot of people, when they view this segment and they learn that there are legislators that have used their per diems, and they have to offset expenses, but have used some of them to make mortgage payments on a home which they later sell and make a profit, that’s going to raise some eyebrows,” explained Epstein.
Wansacz is now a commissioner in Lackawanna County. But in 2010, before leaving Harrisburg, he defended this practice, telling a local paper, “using per diems to pay mortgages is no different than being reimbursed for hotel rooms or apartments.” (The (Hazleton) Standard-Speaker).
He also said this about his 2,037-square-foot brick home, “It’s not like a great house. It’s a place where I sleep.” (The (Hazleton) Standard-Speaker).
CBS 21 reached out to Wansacz for further comment since he’s now selling the house and stands to make a profit, but he wouldn’t take our calls. So CBS 21 drove to Scranton to attend a County Commissioner’s meeting.
During public comment, CBS 21’s Chris Papst addressed the board. “My question is for Commissioner Wansacz concerning the house you own on South Second Street in Harrisburg. The $53,000 you would make if you sell it for what you’re selling for, should you keep that money or should it go back to the taxpayer who you charged in per diem to stay in that house?”
Papst was then told he had to sit down for his question to be answered.
“We give the opportunity for all the public to address the commissioners and then we’ll respond appropriately afterwards,” Wansacz said as he nervously fumbled over the microphone.
For the rest of the meeting, CBS 21 waited for that response, which never came. But at the very end, Wansacz did say this, which we assume was directed towards us:
“Unfortunately, what we’ve seen here today is politics begin to creep into Lackawanna County. That’s what we are going to see over the next couple of months in personal attacks and a bunch of nonsense and taking facts and distorting them because that’s what sounds good.”
In addition to trying to sell the house for a profit, Wansacz apparently – over the years – has received income from renters. His real estate agent told CBS 21 he has rented the home to many tenants, including other legislators. The online listing for the home says just the first floor rents for $525 a month and the upper apartment for $825 a month.
Read More at: http://local21news.com/news/features/waste-local/stories/per-diem-loophole-allows-lawmakers-abuse-system-100.shtml