What goes into an Act 47 recovery plan?

    Seeking a better understanding of Pennsylvania’s issues and proposed solutions? Sometimes, complicated jargon and concepts can get in the way. That’s why we started Explainers, a series that tries to lay out key facts, clarify concepts and demystify jargon. Today’s topic: Pennsylvania’s distressed communities law (Act 47).

    One in a series explaining key terms and concepts of Pennsylvania government.

     The plan usually offers financial projections and recommendations to restore and maintain financial stability.

    It defines “recovery” specific to the municipality; in other words, the standards that, when met, allow it to petition to Pennsylvania Department of Community and Economic Development to exit Act 47.

    Here are some typical recovery plan steps:

    Sales of non-essential municipal assets

    Debt restructuring

    New or higher fines and fees to generate revenue

    Savings through layoffs, departmental reorganizations or technology solutions

    DCED has to OK the plan. So does the municipality’s governing body and top official.

    If local leaders don’t like the state’s plan, they can propose their own, but the state has to approve it.

    If a stalemate exists, the state might withhold grants and other aid, so long as that doesn’t risk a fiscal emergency4 and pension default.

    The state also might institute a receivership.

     

    Footnote

    4.  Fiscal emergency: insolvency or an inability to provide vital services exists or appears likely within six months. Governor must declare.

    Did this article answer all your questions about Pennsylvania’s distressed communities law? If not, you can reach Emily Previti via email at emily_previti@witf.org or through social media @emily_previti. Have a topic on which you’d like us to do an Explainer?  Let us know in the comment section below, or on Twitter @PaCrossroads.

     

     

     

     

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