Mayors and Local Officials, Representing the PA League of Cities and Municipalities, Rallied for Legislative Support of New Revenue Options to Address Dire Municipal Fiscal Crisis

HARRISBURG, Pa., March 8 /PRNewswire-USNewswire/ -- A bipartisan group of mayors and local officials from across the Commonwealth, representing the Pennsylvania League of Cities and Municipalities (PLCM), rallied in the Capitol earlier today, to call for support of new revenue options for local government.  The economic downturn and soaring personnel costs combined with an outdated local tax structure have generated an unprecedented fiscal crisis at the local level.  This crisis is most prevalent in our older, urban communities, but it is also evident in suburban and rural communities statewide.  All levels of local government are faced with increasing property taxes and user fees, cutting services and decreasing their workforce to make ends meet.  These drastic measures are necessary because there are no tools at the local level to help avert or even soften these last resort efforts.

"I am pleased to have alongside me today, a bipartisan group of officials all working toward the same goals," Reading Mayor Tom McMahon, PLCM 2nd Vice President said.   "At the same time, I am troubled by the fact that my city was recently declared distressed under Act 47 and sadly, many more municipalities are headed toward that same unwelcome distinction.  Some are much closer than others, but the inevitability of the situation is disheartening for local elected leaders who want to foster and lead healthy, vibrant, safe communities."

Communities are having to make tough administrative decisions that are necessary to trim their budgets.  Local governments are working with fewer personnel and looking for ways to continue to provide the level of services their residents expect, without raising taxes unless absolutely necessary.

Most striking is that this fiscal crisis is not just affecting the urban core.  There are many communities in the suburban ring also experiencing financial hardship.  Many are, for the first time, having to lay off employees, dip into reserves and cut back on services in order to keep their budgets balanced. This is not the result of mismanagement and overspending, it is the result of our archaic, inelastic local government system.  In fact, the Pennsylvania Economy League has deemed municipal fiscal distress inevitable under our existing laws.

There are several factors that are leading to the systemic failure of our local government structure – the inability to restructure local taxes; uncontrolled costs of providing municipal services; skyrocketing healthcare costs; a high proportion of tax-exempt entities; and a loss of population and tax base.  All of these factors work to pull communities into a downward spiral, which is only accelerated by the nation's current economic downturn.

"As we deal with this very real crisis at the local level, we wonder – where is Harrisburg,"  said Mayor McMahon, on behalf of the PLCM.  "Where are the leaders of our Commonwealth when it comes to dealing with the shortcomings of our outdated municipal government structure?  Will they acknowledge a problem?  Will they act to give us useful tools that will enable us to move forward, or will they wait until entire regions of the Commonwealth are in jeopardy?"

Pennsylvania mayors, councilmembers and managers from both large and small communities representing PLCM, called upon the Legislature and the Administration to acknowledge this crisis and act this budget season, to provide new revenue options for local government.  

"We are not asking for a handout," stated Mayor McMahon. "We will take responsibility for implementation of these new tools, and will gladly explain to our residents why they are necessary.  There is never a good time to raise taxes, and of course there are numerous other reforms that need to take place at the local level; however, new revenue is tantamount to thwarting distress.  All of the officials with me today understand the economic plight of Pennsylvania residents, and they also understand the political nature of passing a tax vote.  We would not be here today if the need was not urgent – even dire in some cases."  

Several viable options, adopted and presented by PLCM, would provide local governments with help addressing the pressing need for new revenue sources:

The County and Municipal Property Tax Relief Act – House Bill 1858 awaits the conclusion of Second Consideration in the House.  In its current form it allows for a 1% county option sales tax.  One half of the revenue would be used to alleviate property taxes at the school district level.  One quarter would go to the county and the final quarter would be shared among the municipalities in the county. PLCM supports requiring the municipal share to be used to meet annual pension obligations and provide core services. This bill represents a movement toward a regional tax base – a concept strongly supported by PLCM.

A Local Share of a Sales Tax Expansion – Any revenue from an expansion of the sales tax base should include a significant local government share.  This revenue should be distributed to municipalities based on a formula that is weighted with specific fiscal distress criteria that will drive the new revenue into communities that need it most.

A Local Option Liquor Sales Tax – All municipalities should be allowed the option of levying a drink tax of 10% of the purchase price.  This taxing option is currently available in Philadelphia and Allegheny Counties. This tax would be used to pay for the public safety services associated with alcohol consumption.  

Reimbursement for Tax-exempt Property – In municipalities with a high percentage of tax-exempt property, owners of taxable property are paying for both their own municipal services as well as the services provided to tax-exempts.  A system must be developed that makes fair and adequate reimbursement to municipalities.   At the same time, the lack of reliable data on the value of tax-exempt property needs to be addressed so that a statewide distribution formula is feasible.

The Commonwealth cannot afford to ignore this crisis any longer.  The Pennsylvania League of Cities and Municipalities needs the Legislature and Administration to act.  All four options presented today provide avenues to begin addressing the severe fiscal issues facing local government – issues caused by the outdated system under which we operate.  It is imperative that state and local government work together as partners to solve this crisis.  Real action is needed this spring.  A positive step forward is imperative for the future of our municipalities, the regions they support and the Commonwealth.

The Pennsylvania League of Cities and Municipalities is a nonprofit, nonpartisan organization established in 1900 as an advocate for Pennsylvania's 3rd class cities. Today, PLCM represents Pennsylvania's cities, townships, town, boroughs, and home rule municipalities that all share the League's municipal policy interests.  The Board of Directors oversees the administration of a wide array of municipal services including legislative advocacy, publications, education/training, consulting-based programs, and group insurance trusts.

SOURCE Pennsylvania League of Cities and Municipalities