Harrisburg Bankruptcy Sparks Act 47 Review

Mark Nootbaar October 24, 2011

Last week, Pennsylvania Governor Tom Corbett signed legislation aimed at better equipping the state as it deals with distressed municipalities that are having problems implementing a fiscal recovery plan.  The change has prompted lawmakers to look for ways to fix the law designed to help all of Pennsylvania’s financially troubled cities. 

Local government experts say more cities across the commonwealth will find themselves in fiscal dire straits and the state’s Act 47 program needs to change if it’s going to help.

“There is no real force behind the idea of getting a financial rescue plan actually implemented,” said Representative Chris Ross (R-Chester County). “We have the ability to craft them, but how do we get them implemented, particularly when they’re politically difficult decisions?”

The new law allows state intervention in certain cities, including Harrisburg, that have entered Act 47 but haven’t implemented recovery plans.  However, it does not impact municipalities already working through a plan, or those that will come under Act 47 protections in the future. Ross thinks changes need to be made to address problems facing Act 47 communities, such as having too many tax-exempt properties and declining populations. 

“Small municipalities that perhaps have had a rapidly declining population and simply don’t have critical mass any longer, and how to address that when the neighboring municipalities typically are not interested in taking on their burdens, debts, and problems,” said Ross, describing the kinds of municipalities that the act may not provide much help for.

Senator Jane Earll, (R-Erie County) agrees that the writing’s on the wall that more cities will face fiscal crisis if they don’t get more heavy-handed treatment from the state.  “So I’m wondering, on this list of your ten action items — where’s the easy ones?  And where’s the shot of political testosterone that it’s going to take to accomplish any of these?”

Suggested solutions include giving cities a way to collect some kind of tax from currently tax-exempted properties and shifting away from certain taxes that rely heavily on the assets of shrinking populations.