Township makes 12: home rule, debt payoff key to municipality’s exit from Act 47

Plymouth Township has some lingering unknown costs, however, that could be problematic for its narrow budget margins.

Plymouth Township is one of 30 municipalities to try to fix its finances through Pennsylvania’s Act 47 program for distressed municipalities since 1987, and the twelfth to succeed.

The 2,000-person township, in Luzerne County, is financially stable enough that it can operate without state oversight, according to officials and consultants.

Plymouth Township entered the program in 2004.

That was six months after it disbanded its police force, in an attempt to cut costs.

It is unclear how much money the local government saved by doing away with the police department. The township’s Act 47 recovery plans don’t say, nor do related news stories.

Consultant Alan Baranski of the NEPA Alliance also didn’t know the figure, but recalled the cost to maintain local law enforcement “was a back-breaker” for the township.

Whatever the amount saved, it wasn’t enough

The township had accumulated a debt of at least $830,000, a potentially crippling amount for a local government with a $1 million annual operating budget. Particularly given the limits on deriving revenue from a mostly-exempt taxbase.

The debt was rooted in costs to recover from January 1996 flooding that caused $1 billion in damages statewide.

It’s unclear what other factors might have exacerbated the situation during the next eight years because, according to Baranski, the township’s “record-keeping was rather poor” and it’s likely “audits weren’t reflecting reality” during time debt snowballed.

“There were elected auditors, but I couldn’t tell you what they were doing,” Baranski said.

In 2011, the township adopted a home rule charter that addressed that very point

The new charter says no more elected auditors, for which, by the way, there weren’t qualifications such as being a certified public accountant. Now, the township must hire an independent CPA to do annual audits in accordance with the law, under its charter.

The charter spells out some good governance basics one might take for granted elsewhere, including: •    Requiring public hearings in advance of budget adoption•    Barring elected officials from holding paid positions as township employees•    Putting policies and procedures (like budget policy and personnel and ethics code), in writing.

And the charter lets the township keep its earned income tax rate higher than otherwise allowed by state law. Other distressed municipalities — including Altoona and Nanticoke — also adopted home rule charters to keep enough revenue coming in.

Speaking of Nanticoke

Nanticoke, which is adjacent to Plymouth Township, also went through Act 47, but on a faster timeline, entering in 2009 and exiting in 2015.  Still, the municipalities’ participation in the program overlapped for several years.

Did the communities contemplate sharing services, given the common need to save money and improve operating efficiencies?

Seemingly not, according to Baranski.

There were “political” differences and concerns about giving up control, he said. But it was also a matter of timing, Baranski said.

“The best time for collaboration is when municipalities are healthy and looking to do cost-saving ventures,” he said.

Potential pitfalls

Plymouth wasn’t supposed to get out of Act 47 without resolving a sewer project mandated more than 16 years ago by the state Department of Environmental Protection.  More than 275 properties in the township have septic systems discharging into the Susquehanna River. DEP wants the township to connect them to sewer lines, which would more than double the current customer base of the township’s system.

The township’s consistently said it can’t afford to do the project. Cost estimates have ranged between $3 million and $9 million.

One media outlet reported six months ago the figure’s now lower, but didn’t state the exact number.

Former Township Supervisor Joe Yudichak says an amended plan calls for doing the project in pieces of less than $1 million, using matching grants to help cover costs.

“They’ll manage, somehow,” Yudichak said.

Reached on her cell phone, longtime Supervisor Gale Conrad said she didn’t know.

DEP couldn’t provide project details because it has been seeking them from the township for several months, according to spokeswoman Colleen Connolly.

Whatever the cost, it’s unclear how the township will afford it.

Baranski says the township’s been running a “stable” surplus for years and provided a 2015 budget showing a surplus of just under $80,000. But there wasn’t any money allocated for this sewer issue.

And it is unclear whether projected budgets — required as part of the state’s assessment to exit Act 47 — take into account repaying potential borrowing to finance the sewer project.

Baranski and local officials couldn’t provide the documents.

The state Department of Community and Economic Development also couldn’t provide the township’s multi-year budget, which is supposed to be part of the department’s assessment of whether a municipality is no longer distressed.

Often, these documents are found on a municipality’s website, but Plymouth Township doesn’t have one and hasn’t since a prior site “was hacked” in recent years, according to Treasurer/Secretary Grzymski, who declined to provide the information via email.