York faces another budget shortage under pressure for more state oversight

Pennsylvania’s early intervention program for the distressed municipalities hasn’t worked in York, where the budget deficit has grown since the city entered the program a decade ago. 

“We’re bankrupt. This is a bankrupt business.”

That’s York Councilman Michael Helfrich’s assessment of the city’s long-suffering finances, shared during a two-hour public safety budget hearing.York’s been operating for years at a deficit, which has grown to as much as $5 million since entering the state’s Early Intervention Program a decade ago and making changes intended to foster fiscal stability.

Past projections put the city’s cumulative deficit over $30 million by 2017, and $50 million in later years.

Some civic and business leaders say it’s time for York to trying fixing its finances through Pennsylvania’s Act 47 program, a more intensive form of intervention than what the city has now.

The issue did not come up during the hearing.

After the hearing Mayor Kim Bracey said the city’s not there yet. Bracey says York hasn’t exercised all its options outside the Act 47 program – which doesn’t work so well, anyway, she says.

Even the Act 47 advocates acknowledge the state program’s lackluster success rate – seven of 29 municipalities have fixed their finances through the Act  since 1987 – and that the blame rests in large part with the Commonwealth’s municipal pension, binding arbitration and other laws affecting local governments.

“While it is a tool the state has and throws out to communities, it hasn’t been an answer. We need a restructuring of our government. Until those kind of structural conversations are taking place, Act 47 is just a title in my mind,” Bracey says.

Pressure meets resistance

The city cannot, for example, do anything about its pension obligations, which are increasing a combined $6 million next year for police and fire deparments alone, according to budget documents presented during the hearing.

Ballooning pension costs were one reason cited by the York County Community Foundation in its recent York Dispatch op-ed, which advocated Act 47 for the city.

Another: reassuring creditors. Basically, state oversight might help the city overcome financial insitutions’ hesitancy to lend to  cities facing ballooning pension obligations, a stagnant or declining tax base, and high rates of poverty and crime (although this has been trending steadily downard and is now at its lowest point since 1989, according to Police Chief Wes Kahley).

Bracey says she’s not surprised about the foundation’s public stance, given the facts.

“Their data … came from our website,” she says with a laugh. “I appreciate community stakeholders saying, OK, we’re going to look at this and try help the city, too. That’s how I’m taking that tool. And it’s another report about the city’s fiscal status.”

What’s next

Bracey and her predecessor John Brenner say Act 47 wouldn’t be much different from early intervention.

Act 47 cities get financial consulting, which York has, and can levy higher taxes, which York leaders say already are excessive for people living and doing business in the city.

Police Chief Kahley acknowledged one benefit, though.

“If a city’s in Act 47 and the plan is together, when you go to … binding arbitration, the arbiter can’t give benefits in excess of what the plan calls for,” Kahley says.

That’s critical because York’s police and firefighters unions are negotiating contracts.

Union leaders weren’t available Thursday to respond.

Bracey says she thinks they can work out an affordable deal without Act 47.

Helfrich says he wants savings estimates for different public safety downsizing scenarios, too.The city’s also considering a commuter tax.

And Bracey says consultants for York – as in Reading and Altoona – are analyzing whether privatizing its trash hauling, or wastewater or sewer collection and treatment systems might work there as it has in other places like Harrisburg and Allentown.

And if it would make enough of a difference.