Many towns enter Pa.’s distressed cities program, but few find it all that helpful

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     The city of Harrisburg, Pa., is seen along the banks of the Susquehanna River. Experts estimate 40 percent of Pennsylvanians live in a distressed community. (AP Photo/Carolyn Kaster)

    The city of Harrisburg, Pa., is seen along the banks of the Susquehanna River. Experts estimate 40 percent of Pennsylvanians live in a distressed community. (AP Photo/Carolyn Kaster)

    Pennsylvania’s program for helping distressed cities solve their fiscal woes has not been a roaring success. Still, more and more cities are entering it – and they’re waiting for gubernatorial candidates to offer new ideas to help.

    The city of Shamokin in Central Pennsylvania’s Northumberland County has had trouble paying its bills. So, the community of about 7,500 is looking for a way to fix that problem.

    But it’s hard for a down-on-its-luck town to cure its own ills.  So Shamokin looked to the state’s Act 47 program for distressed cities for help.

    At a recent Shamokin City Council meeting, resident Robert Gilligbauer summed up the dilemma:

    “People are out of money. They can’t afford any more tax increases. This town’s gonna die. “

    Within an hour of Gilligbauer’s grim statement, the Shamokin City Council voted unanimously to seek state assistance through Act 47. The law sets up a state-guided recovery process for distressed municipalities in Pennsylvania.

    Pensions a culprit

    How do cities get into so much trouble that they actually invite state oversight?

    It takes decades of population loss and tax base erosion; on top of ever-rising payroll, pension and debt obligations. It happens often enough that more than two dozen municipalities currently are engaged in the Act 47 process, or its precursor, the Early Intervention Program.

    And experts say many more would qualify, but aren’t seeking intervention – enough that an estimated 40 percent of Pennsylvanians live in a distressed community.

    So this election season it’s striking that the Democratic candidates for governor have largely ignored this problem. And Pennsylvania political analysts have noticed.

    They say jobs, economic development, and Medicaid expansion have dominated the dialogue because those are the issues that resonate more with voters than the plight of municipal governments.

    Democratic candidate Rob McCord readily admits that:

    “Part of a campaign is just finding the cut-through issues that people, when they hear it, they automatically understand what you’re talking about.”

    Pushing shared services

    But when these issues do come up, McCord and Democratic candidate Katie McGinty both mention the state should encourage municipalities to share local services.

    McGinty, a former state environmental protection secretary, is the only candidate whose platform includes detailed reforms targeting local governance and distressed towns.

    One of her proposals is to consolidate the state’s smallest police forces and local pensions.

    “They are hugely costly relative to population they’re serving,” she said.

    But the candidates’ proposals don’t go far enough for Rick Schuettler. He runs the Pennsylvania Municipal League.

    “That is not gonna solve Reading, or Allentown’s, or Altoona’s pension problem,” he said. “The administrative savings that’ll be reaped will be gone in five years.”

    Credit ratings agencies have actually threatened to downgrade Pennsylvania’s bond status, if pension reform doesn’t happen soon. .

    For Steven Goldfield, from the Public Resources Advisory Group, these credit agency warnings are extra pressure to enact pension reforms that are long overdue. Goldfield is one of the lead consultants for the debt resolution and recovery plan in another one of the state’s fiscal basket cases, Harrisburg.

    “If someone retires at age 55 and gets $60,000 a year and they live until they’re 80, that’s just an enormous amount of money that needs to be set aside,” he said.

    But for Goldfied, what perhaps matters most to running local government is cooperation.

    That can be hard to come by.  From Harrisburg to Scranton – city officials bicker and sometimes refuse to cooperate with demands made under Act 47.

    One thing they seem to agree on is this. ACT 47 isn’t working for their cities, but they have hardly any other recourse. And they’re not happy that the people running for governor seem short on ideas to help.

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