Pennsylvania DCED Secretary Declares Altoona 'Financially Distressed' Under Act 47

HARRISBURG, Pa., May 3, 2012 /PRNewswire-USNewswire/ -- Department of Community and Economic Development (DCED) Secretary C. Alan Walker determined today that the City of Altoona is "financially distressed" under the provisions of Pennsylvania's Municipalities Financial Recovery Act, or Act 47.

Walker now has 30 days to appoint a recovery plan coordinator for Altoona. Once named, the coordinator will have 90 days from contract execution to develop and propose a plan to the mayor, city council and DCED.

"Altoona needs more than a short-term or week-by-week fix from its creditors and obligations; it needs a comprehensive recovery plan that will lay the groundwork for long-term financial solvency," Walker said. "The ongoing guidance and support that Act 47 provides will be a vital asset for the city."

The secretary's decision was made after his review of information presented on the record at an April 3 public hearing that revealed Altoona meets four criteria set forth in Act 47: 

• The municipality has maintained a deficit over a three-year period, with a deficit of 1 percent or more in each of the previous fiscal years, outlined in section 201(1) of Act 47.
• The municipality's expenditures have exceeded revenues for a period of three years or more, outlined in section 201(2) of Act 47.
• The municipality has accumulated and has operated for each of two successive years at a deficit equal to 5 percent or more of its revenues, outlined in section 201(7) of Act 47.
• The municipality has experienced a decrease in a quantified level of municipal service from the preceding fiscal year which has resulted from the municipality reaching its legal limit in levying real estate taxes for general purposes, outlined in section 201 (11) of Act 47.

Altoona has operated with a deficit in each of the last four years with deficits ranging from 11 percent to as much as 19 percent of revenues for all governmental funds. These deficits are projected to continue to grow if corrective action is not taken.

Altoona has experienced a measurable decrease in municipal services over the last several years and is faced with debt and contractual responsibilities that limit its ability to significantly reduce expenditures in the short term.  Additionally, the ability to fund a capital program to deal with deteriorating infrastructure cannot be addressed in the city's current financial condition.

"The city has reached the point where their actions alone have not been able to reverse its fiscal decline. This determination will bring objectivity and financial expertise to a city that desperately needs a path to fiscal recovery," said Walker. 

While DCED and the appointed coordinator will provide oversight, elected city officials have ultimate responsibility for the city's policies and day-to-day management of city affairs, Walker stressed.

Act 47 designation triggers procedures, guidelines and powers that help financially distressed municipalities provide vital services, meet debt and other financial obligations, and implement improved accounting, budgeting and taxing practices. State oversight emphasizes long-term fiscal management improvements, service delivery efficiencies, intergovernmental cooperation, and economic and community development priorities.

Including Altoona, DCED has now declared 27 municipalities as distressed since 1987. Six municipalities have successfully emerged from the program.

For more information on the resources available for local governments experiencing financial distress, or additional information on Act 47, visit www.newPA.com or call 1-866-466-3972.

Media contact: Steven Kratz, 717-783-1132

SOURCE Pennsylvania Department of Community & Economic Development