Altoona Gets Distressed Status

Mary Wilson & Essential Public Radio Staff May 3, 2012

Altoona is joining Pittsburgh and nearly 20 other cities in Act 47 status. The city of 46,000 received permission Thursday to enter the program for “distressed municipalities.” The move comes as some in Harrisburg are wondering if the program itself might be inadequate to help Pennsylvania cities struggling to deal with badly eroded tax bases.

Today’s decision by the Department of Community and Economic Development (DCED) means Altoona will have access to state-supported financial guidance, as well as the possibility of financial aid from the state and the ability to rewrite union contracts and assess new taxes.

“The city has reached the point where their actions alone have not been able to reverse its fiscal decline,” said department Secretary Alan Walker. “This determination will bring objectivity and financial expertise to a city that desperately needs a path to fiscal recovery.”

Altoona is the 11th mid-sized city in the state to receive protection under Act 47. That means roughly 20% of Pennsylvania’s mid-sized cities are financially distressed.

“They’ve been running a deficit for several years now, and are really having trouble having their revenues meet their expenditures,” said Steven Kratz, with the DCED. “The most recent recession certainly hit them hard as far as tax revenue coming into the city, and also with businesses leaving, but really, they’re not all that uncommon from many municipalities across the state, and across the country for that matter.”

Six municipalities have successfully left the program, but they were all boroughs.

Fred Reddig, executive director of the department's Center for Local Government Services, suggested lawmakers consider a way to require payments by nonprofit institutions that are exempt from property taxes, but tend to congregate in cities already struggling with the loss of tax-paying residents to the suburbs. Lawmakers from Pittsburgh have been calling for such a revenue option for years.