Helping struggling cities through early intervention
A new nationwide study of state interventions to help fiscally distressed cities provide some support for an approach that Pennsylvania is already taking with those teetering on the edge of Act 47 designations.
The study released last week by Pew Charitable Trusts discusses what role if any state governments should take to help municipalities with chronic fiscal problems. Pennsylvania is one of seven states profiled by the study and the travails of Act 47 cities like Scranton and Harrisburg are mentioned.
"States should be proactive in detecting and tackling local government financial challenges through oversight of local finances and offering technical advice," the study recommends.
Pennsylvania established an early intervention program in 2004 to help municipalities grappling with fiscal problems that haven't reached the crisis stage yet. The EIP program gets less attention than the Act 47 program itself, which tries to bring fiscal recovery to municipalities meeting specific distress criteria, such as missing payroll or payments to creditors.
"The EIP is a pre-emptive step for counties and municipalities who realize their financial situation is deteriorating and want to take steps to avoid Act 47," said Fred Reddig, the Act 47 expert for the state Department of Community and Economic Development at a joint House-Senate committee hearing in 2011.
DCED will provide these communities matching grants up to $100,000 to help them analyze their fiscal situation, develop multi-year financial plans and set long-term financial objectives.
In 2012, Exeter Borough in Luzerne County received a $30,000 EIP grant and Luzerne County received a $22,840 EIP grant to help with home rule transition, according to DCED.
The new state budget provides $1.7 million - level funding - for the early intervention program.
Many of the proposals to overhaul Act 47 call for expanding the level of early intervention assistance to municipalities on the brink.
A map prepared by the Pennsylvania Economy League of Southwestern Pennsylvania shows the widespread geographic distribution of municipalities with some form of financial distress. PEL considers Act 47 municipalities, municipalities participating in EIP, municipalities with troubled employee pension plans and municipalities that meet a PEL municipal stress index.
About 40 percent of the state's residents live in a municipality facing some form of distress, PEL says.
The Pew study comes as an Act 47 Municipal Fiscal Distress Task Force is considering recommendations for a overhaul of Act 47, the state law governing 21 distressed municipalities. The task force, including Sen. John Blake, D-22, Archbald, and other lawmakers, works under the umbrella of the Local Government Commission and hopes to have recommendations ready by year's end.
(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. Email: email@example.com.)