HARRISBURG, April 13, 2016 — At the request of state Sen. Rob Teplitz (D-Dauphin/Perry), the Senate Democratic Policy Committee held a roundtable discussion today on Municipal Financial Challenges and Recovery at the Capitol.

Chaired by Sen. Lisa Boscola (D-Northampton/Lehigh), the committee focused on the financial challenges that municipalities face, and how to overcome them.

“There have been statewide problems, ranging from controversial swaps to other questionable financing arrangements, involving local debt and borrowing efforts that have been more akin to a ‘roll of the dice’ than any sound and thought-out financing strategy,” Boscola said.

“A municipality’s financial condition has a significant and far-reaching impact on its residents, businesses, and surrounding communities, so all Pennsylvanians should be mindful about the decisions that are made at the local level. Harrisburg, for example, is facing and overcoming fiscal challenges. Our city is a model for both problems and solutions,” Teplitz said. “Today’s roundtable was an opportunity for stakeholders to collaborate on what works and how we can move challenged municipalities throughout the commonwealth from distress to success.”

Bethlehem Mayor Bob Donchez touted his city’s revival thanks to many tax incentives and public-private partnerships.

“We need to reform the tax codes. We need assistance in the form of a progressive tax reform package. We can’t just keep taxing middle class citizens and retirees,” Donchez added.

Harrisburg Mayor Eric Papenfuse discussed the progress since the city was declared distressed under the Municipalities Financial Recovery Act, commonly known as Act 47. He said the city’s recovery effort has been a good process, but said that basic additional reforms to Act 47 itself are needed.

“There’s a time clock on Act 47, but in Harrisburg we can’t truly exit without taking with us taxing authority. Our recovery plan calls for an elevated earned income tax and local services tax that we should be able to continue once we exit. We need to keep the taxing authorities in Act 47 as part of a long-term exit strategy. We need the ability to choose our own destiny.”

Fred Reddig, special assistant for Act 47 at the Pennsylvania Department of Community and Economic Development, agreed.

“Giving local governments flexibility is something that should be considered. Thirty municipalities have entered the program since its inception and there are impediments to long-term fiscal sustainability,” Reddig said.

“The Act 47 process is a very good process,” said Dave Unkovic, Harrisburg’s first state-appointed receiver, who is now counsel with McNees, Wallace and Nurick LLC. “As difficult as these issues are, Pennsylvania as one of the best structures.”

Papenfuse, Reddig, and Unkovic also touted the bipartisan municipal debt reform package (Senate Bills 340-344) that Teplitz developed with several Senate colleagues. The legislation improves state oversight of municipal financing deals across the state to prevent fiscal catastrophes like ones that occurred in Harrisburg and other cities.

“It will make a Harrisburg-type situation almost impossible to do,” Unkovic said.

Harrisburg City Council President Wanda Williams said that the tax-exempt status of half of properties in the city is hurting its citizens.

“It’s an awful burden in the City of Harrisburg and its citizens don’t deserve this,” she said.

Brad Jones, president and CEO of Harrisburg Enterprise Inc., praised the use of Keystone Opportunity Zones as a means for redevelopment.

Citing the Cameron Commerce Center at Cameron and Herr streets in Harrisburg as an example of “spectacular redevelopment,” he said the Keystone Opportunity Zone program is something we think has worked well and can continue to work well when managed carefully.”

Senate Democratic Leader Jay Costa (D-Allegheny) and state Sen. John Blake (D-Lackawana) also participated in the roundtable, along with panelists Pennsylvania Municipal Authorities Associate Deputy Director John Brosious, Bethlehem Director of Economic Development Alicia Miller Karner, WebpageFX founder and creator Bill Craig, AFSCME District Council 90 Director Mary Schwanger, and Pennsylvania Economy League Executive Director Gerald Cross.

###