Scranton, City of Scranton

Cities, Chambers Join Forces to Address Financial Woes

A new group is calling on state lawmakers to provide mandate relief for Pennsylvania’s cities and towns.  It’s called the Coalition for Sustainable Communities, and it’s comprised of a variety of business and municipal groups from across the state. 

Chambers of commerce and local government groups had been working independently to strengthen Pennsylvania’s communities, but Greater Reading Chamber of Commerce President Ellen Horan says they realized they had some common goals.  “The areas where we saw our agendas conform were in seeking relief from state mandates on local governments, specifically on the areas of binding arbitration and pension.” 

Pennsylvania League of Cities & Municipalities Executive Director Jack Garner believes the new partnership speaks volumes to the General Assembly and public.  “Over 2,500 municipalities are continuing to function in an outdated, inflexible and uncompetitive set of local laws, which haven’t been changed since – in some cases – 1930,” Garner explains. 

The group’s third priority is reforming Pennsylvania’s Act 47 program for distressed cities, an issue that’s already been the subject of great debate under the capitol dome.

Garner hopes to see three or four bills materialize from the coalition’s efforts.  Horan tells us vibrant communities are key to Pennsylvanians’ quality of life.  “It directly has an impact on businesses ability to attract and retain talent,” she says.

Cash-strapped Cities Take Center Stage

As PA’s list of financially distressed cities continues to grow, some say the system is broken.  “Fiscal distress is inevitable under existing state laws that govern municipalities,” says York Mayor Kim Bracey, while testifying before a joint panel of House and Senate committees.  Bracey was one of a group of mayors that converged on the capitol to urge lawmakers not just to tweak Act 47, but to take the necessary steps to keep cities out of it. 

State Senator Jane Earll (R-Erie) knows that governments of all shapes and sizes are under pressure.  “Really the discussion comes back to, what are the cost drivers forcing municipalities into the distressed status that we see increasing numbers falling into,” says Earll, who chairs the Senate Community, Economic and Recreational Development Committee. 

Many officials told the panel that difficult and unpopular decisions need to be made.  Reading Mayor Tom McMahon tells Radio PA that cities need a menu of local options to support municipal services.  “You can cut, cut, cut, and we can reduce our expenses, but at some point we need to diversify our revenue – not increase it necessarily – but diversify.” 

Mayor McMahon is President of the Pennsylvania League of Cities and Municipalities, which points to its 2010 Core Communities in Crisis Report.  That report lists multiple ideas for supporting municipal services, including a county option 1% local sales tax.  “We have not been able to get that for third class cities,” McMahon says, referring sales tax flexibility in Philadelphia and Pittsburgh. 

Other unpopular revenue options the report suggests to preserve Pennsylvania’s cities, include: a 10% local tax on the retail sales of alcohol, which could be tied to public safety services, and a “sugared drink” tax, which could be tied to local health programs.  Stakeholders are already lining up in opposition.  For instance, the Pennsylvania Beverage Association says the last thing we need in a down economy is higher taxes on our groceries. 

Beyond revenue, state law governing arbitration proved to be another hot topic at Thursday’s hearing.  The state Supreme Court recently told the city of Scranton that it must pay arbitration awards for police and fire unions, despite its Act 47 status.  Scranton Mayor Chris Doherty called the ruling a slap in the face.

Forcing Act 47 on Harrisburg?

    Under the state’s Act 47, cities can be declared financially distressed, setting the stage for debt restructuring and other recovery mechanisms. Under a bill passed by the Senate Tuesday, the process could be taken a step further, giving the state the power to establish a management board and mandate Act 47 for cities like Harrisburg.

Senator Jeffrey Piccola (R-Dauphin)

Piccola Seeks to Mandate Act 47 for Harrisburg

    The state’s capital city is in trouble, and officials are mulling over a possible bankruptcy filing that critics say would be devastating. The Senate bill, sponsored by Jeff Piccola (R-Dauphin) would block such a filing. The bill also includes a provision that would withhold state funding if the city or management board fails to “identify, sell, lease or dispose of its assets.”

    The management board would be comprised of three members, two appointed by the governor and one by county commissioners where the city is located. While the measure would affect any city of the 3rd class, the bill is a direct response to the ongoing problems in Harrisburg, which is groaning under the weight of enormous debt mostly tied to a financially disastrous incinerator project.

    Piccola says Harrisburg officials have “thumbed their nose” at Act 47 for over a year and bankruptcy is simply not an option.

    The bill now goes to the state House of Representatives.