Cities' fiscal plight ignored in state Capitol

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Just about every city in Pennsylvania is sinking for more or less the same reason: a governmental set-up designed for a 19th century economy.

The only entity that would be able to fix it -- America's Largest Full-Time State Legislature -- has never been interested in dealing with this, mostly because it's never been blamed.

Instead, we, the people of various cities and boroughs, blame whoever happens to be mayor. When the mayor changes, we repeat the process, forever and ever, amen.

"As we deal with this very real crisis at the local level, we wonder -- where is Harrisburg?" Reading Mayor Tom McMahon asked recently. "Where are the leaders of our commonwealth when it comes to dealing with the shortcomings of our outdated municipal government structure?"


Brian O'Neill's book, "The Paris of Appalachia: Pittsburgh in the Twenty-first Century," is available in the PG store.

In fairness, state legislative leaders of the 21st century have been pretty busy. Former House Democratic Whip Mike Veon, for instance, has been talking with his defense lawyers about his potential maximum penalty of 73 years in jail for chronic corruption. Former Republican Speaker John Perzel and former Democratic Speaker Bill DeWeese, each charged separately with corruption, also don't have a lot of free time for public policy.

Other members of the statehouse also have been busy explaining why they haven't been able to adopt a state budget on time for the past seven years. You can't expect them to do everything, even if there are 253 of 'em.

As their elected officials fiddle, many Pennsylvanians can't help but notice that people generally don't work where they live anymore. And with so much of the modern economy tied up in universities and hospitals, which pay neither property nor payroll taxes, cities are disintegrating for lack of a tax base.

Pennsylvanians, by and large, have moved to the places where the current set-up encourages them to live. Sometimes they drive so far each workday, they wind up paying more to foreign oil sheikhs than they would to the Downtown taxman. We have come to accept this as the conventional wisdom.

"We are left with an aging infrastructure, increasing legacy costs and a dwindling tax base," Pittsburgh Councilman William Peduto wrote in a January letter to Pennsylvania mayors. "Pennsylvania's tax structure is fundamentally broken."

The state's current plan is to wait for a municipality to fail, blame it, oversee it, and then repeat the process -- one at a time, forever and ever, amen. That's called Act 47, which carries the ironic name of "Municipalities Financial Recovery Act"

Late last year, Reading became the 19th city or borough to fall under Act 47. Some are small mill towns (Aliquippa, Clairton, Braddock, Rankin, Duquesne) that have been officially distressed for two decades or more. But now Reading, the state's fifth-largest city, has joined Pittsburgh, the second largest, and Scranton, the seventh largest, in the impoverished fold.

Still citizens give Harrisburg a pass. We treat each problem as isolated, even as dozens more Pennsylvania places contemplate the Act 47 inoculation.

I asked Mr. Peduto what made him think the state was any more ready to address this problem now.

"Because we're 10 years further into the problem," he said.

Gabriel Campana, the Republican mayor of Williamsport, says he and his peers "believe it is time for the mayors of Pennsylvania to become united and stand tall." With a hospital and two colleges, his city of 31,000 has more than a third of its property tax-exempt.

A score of mayors came to Harrisburg this month asking for state compensation for the communities that host nonprofits and thus have acres of tax-exempt land.

Doctors, professors and such make pretty good money. They generate great piles of state income and state sales taxes -- but that doesn't go into the host community's coffers. The local tab is left to businesses and residents. That's one reason many decide to move out of town. The Pennsylvania League of Cities and Municipalities advocates a system for reimbursement to these host communities.

"Act 47 is nothing more than life support, but the patient doesn't get better," Mr. Peduto said.

For the state's older communities it's not a matter of if, but when, they will sink, he said.

Harrisburg, the state's 10th-largest city, is the latest. The Economist, the highbrow British magazine, just noticed that Pennsylvania's "picturesque state capital" may skip Act 47 and just go ahead to bankruptcy court, as its city controller suggests. (Its mayor says, "No way.")

None of this is to suggest the cities are without financial sin. They've made plenty. But it's long past time for Pennsylvania to step back and notice that the hosts of its economic engines are running on empty.

Brian O'Neill: or 412-263-1947.


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