Act 47 doesn't assure city's financial health, report says

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Act 47, the state law that offers a lifeline to Pennsylvania's financially distressed cities, is merely "triage" for a gravely ill Pittsburgh.

That's the conclusion of one of a trio of reports released yesterday, assessing the health of Pennsylvania, its biggest cities and its outlying rural areas.

The Brookings Institution, the Pennsylvania Economy League and Penn State University collectively issued the reports, each with the goal of taking Pennsylvania's temperature halfway through Gov. Ed Rendell's tenure.

And Pennsylvania, it seems, is running a nasty fever.

The conclusions aren't terribly shocking -- Western Pennsylvania continues to lag behind in terms of population growth, job growth and minority influx. Pittsburgh continues to hollow out as deaths exceed births, even as new housing permits consume land in the distant, underdeveloped suburbs. (Brookings discourages sprawl and promotes investment in cities and older, inner-ring suburbs.)

The state government, the studies say, "bears the responsibility to create structures that allow municipalities to become and remain strong, vibrant entities."

The economy league, research arm of the Allegheny Conference on Community Development, specifically noted that "Act 47 [is] not effective. State and local taxes are expended with limited real, long-term hope for success ... tools for fiscal recovery [are] promptly taken away when a municipality exits Act 47."

That's echoed by Mark Muro, of Brookings. "Act 47 is not particularly helpful at this point. It arrives too late in the process. Very few municipalities that enter Act 47 leave it," he said.

Of the 22 cities and communities that have entered Act 47 "distressed status," only five have exited, and none of those is in particularly good shape.

None of that can be pleasing to Pittsburgh, which succumbed to Act 47 protection in December 2003. Act 47 puts constraints on labor contracts and means that the city must submit to a long-term recovery plan, guided by consultants. It also opened up the possibility of commuter taxes for the city, but that possibility was put off when the Legislature agreed to allow Pittsburgh to collect a $52-a-year occupation tax.

However, it reflects what critics of Pittsburgh's Act 47 status -- including labor leaders and suburban legislators -- said more than three years ago: Pittsburgh's problems are too big to be addressed by Act 47's middling provisions.

The report stopped short of advocating the consolidation of Pennsylvania's many municipalities but added that many already lack the resources to "provide the necessary range of municipal services effectively or efficiently."

And the state law that tells municipalities what taxes they may and may not collect, Act 511, is going on 50 years old, said Stephen H. Stetler, director of the economy league's midstate division. That law, along with Act 47, "doesn't offer ways out" for cities, he said. "It just offers the ability to pay your bills."

There were few prescriptions in the report, though, and Mr. Stetler acknowledged that it's much easier to point out what's wrong than to identify solutions. New tax law, for example, wouldn't wipe out Pittsburgh's decades of debt, health care and pension obligations. "A lot of the problems are legacy," he said, "from all these years, operating under all these laws."

The Penn State researchers focused on rural communities, arguing that the midstate is underserved by an "uncoordinated mixture of subsidies, tax breaks, incentives and other policies that have been only marginally effective" at helping rural counties take advantage of their natural resources and open agricultural spaces.

"Some regions are prospering," thanks to retail and service-oriented jobs, "while others struggle to provide jobs and basic services." Educational attainment in rural counties still lags behind urban and suburban counties.

Bill Toland can be reached at or 412-263-2625.


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