HARRISBURG - When he chaired the state House Democratic Campaign Committee, Rep. Stephen Stetler rejected a plan that would have shifted the job of opposition research from state employees to private firms, a onetime top campaign aide told a state grand jury.

"It was more or less shot down," Dan Wiedemer told grand jurors in July, days after a dozen former House members and their staff were charged with diverting tax dollars to pay for political campaign work. He said Stetler, now the state's revenue secretary, suggested that "we have a perfectly good system in place already."

The testimony took place during an ongoing investigation by Attorney General Tom Corbett into allegations that millions of taxpayer dollars were used for bonuses for state employees who worked on the 2006 and 2004 legislative election campaigns.

A partial transcript, obtained by the Post-Gazette, places Wiedemer's testimony on July 29 - more than two weeks after a statewide grand jury returned a presentment charging 12 current and former House members with multiple counts of fraud.

Stetler has not been charged as a result of that investigation. However, sources close to the probe said investigators were trying to decide whether they had enough to build a case against him and were known to be discussing that question as recently as two weeks ago.

Stetler, a York Democrat, left the House after 2006.

Through a spokeswoman, he released a statement:

"It distresses me that selective, confidential information from the ongoing grand jury investigation is being leaked from anonymous sources. I have confidence that the legal process will eventually reveal the facts."

Wiedemer, now an aide to another House member, told prosecutors that he was concerned that using volunteers from the ranks of state employees would not produce consistent results. The research he was discussing was "opposition research," the gathering of as much data as possible about opposing candidates.

"The way it should have been done and the way, by the time '05, '06 rolled around, we hoped it would be done is that you hire an outside firm. You pay them $2,500, maybe $5,000 a race," he testified. Wiedemer said he had taken the idea to Stetler.

A prosecutor then asked him, "Were you shot down in a way that Stetler said, 'Well, look, we can't afford this and we're not going to be able to do it' or in a way that it was relayed that 'we can't afford this and so we're going to have our folks do this; we're going to have our employees of the taxpayers do this'?"

Wiedemer responded, "Right. It was sort of getting back to what I mentioned earlier: Why in the world would we pay somebody $5,000 per campaign when we have a perfectly good system in place already?"

Several legislative aides assigned to Stetler received large bonuses in 2005 and 2006 and were heavily involved in campaigns, according to campaign-expenditure receipts reviewed by the Post-Gazette. Stetler also helped round up volunteers from other lawmakers' staffs. In a May 2005 memo to fellow Democratic lawmakers, he said: "I urge you to encourage your staff to volunteer their time and talents over the next 11 weeks to the House Democratic Campaign Committee."

Chuck Ardo, a spokesman for Gov. Rendell, issued a brief statement: "Needless to say, we are concerned about all the allegations involved in this particular affair, but we intend to wait for the grand jury to finish its work before reaching any conclusions."