Mayors, Officials Representing PLCM,
Call for Needed Measures to Prevent Act 47
Harrisburg, PA – Mayors and local government officials from across the Commonwealth, representing the Pennsylvania League of Cities and Municipalities (PLCM), as well as local business chamber executives, rallied in the Capitol Rotunda earlier today, to make an urgent call to the General Assembly for measures to prevent municipalities from entering Act 47 – the Municipalities Financial Recovery Act – by providing the necessary tools for municipal self-reliance. Local officials also called for immediate legislative correction to the October 19 PA Supreme Court decision regarding Act 111 arbitration awards under Act 47.
The press conference was held following a joint committee hearing of the House and Senate to discuss amending Act 47, where several League members testified, urging reform of the antiquated laws under which local government currently operates.
One of the primary reasons a governing body enters Act 47 is for the ability to hold the line on personnel costs. For 25 years, state and municipal officials have relied upon the premise that both arbitration settlements and arbitration awards in Act 47 communities must comply with the corresponding Act 47 plan. In deciding City of Scranton v. Firefighters Local Union No. 60, the Court found ambiguity in Act 47, in terms of its application to arbitration awards, determining that arbitration awards could exceed the Act 47 Plan limitations. This decision has effectively overturned 25 years of precedent and, in PLCM’s opinion, made Act 47 useless. The decision will cost Scranton’s taxpayers dearly in the form of both a tax increase and public safety layoffs. Other Act 47 communities and their taxpayers are now at risk during future collective bargaining sessions. Additionally, fiscally distressed municipalities may find no benefit to Act 47 and head straight for bankruptcy. It is imperative that the General Assembly act quickly to correct this ambiguity.
Senator Earll and Representative Ross have both introduced legislation to clarify the intent of Act 47. PLCM supports Senate Bill 1321 and House Bill 1988, and urges the General Assembly to pass one of these bills prior to their December recess and send it to the Governor for enactment.
In addition to the immediate need to address the Supreme Court’s decision, there are broader issues that require action by the General Assembly. Our Commonwealth should not only be working to improve Act 47, it should be focusing on building fiscally healthy communities, thereby preventing the need to use Act 47, except in rare cases.
“The reality is that Act 47 is looming for many of our small cities. Perhaps not this year, or next, but down the line, when every last ditch effort to prevent fiscal distress has been made, many will turn to the Commonwealth and Act 47 for assistance,” stated Reading Mayor Thomas McMahon, PLCM President. “Act 47, however, does not have to be their destiny.”
As the joint committee concludes its Act 47 hearings, we hope the committee members will recognize the need for reform of the archaic laws under which local government officials are attempting to operate, and begin to pursue a comprehensive overhaul aimed at providing local government with tools for self-reliance. There are difficult decisions to be made and no easy fixes, but inaction is no longer acceptable.
“It is PLCM’s position that no amount of amendments and improvements to Act 47 will make a difference to our communities, if we don’t address the underlying causes of municipal distress. We simply cannot continue to allow our communities to fail,” said Mayor McMahon. “New tools and reform measures are essential and can only be provided by our General Assembly.”
Our 2010 Core Communities in Crisis Report (www.plcm.org) sets out what we believe to be the reasons for the fiscal crisis facing the Commonwealth’s older, full-service municipalities. It also provides the legislative and policy actions necessary for fiscal relief.
The Report addresses the impacts of hosting a high percentage of tax-exempt property; the inability to pay for current and future personnel costs, which can be half of a municipal budget; the impediments to regional thinking and shared municipal services; and an over-reliance on the inelastic real property tax. These are weighty issues, and change will not occur overnight, but change must occur.
PLCM has partnered with a number of local chamber executives who are also concerned with the future viability of their communities. Fiscally distressed communities do not attract new business and investment. Together, this partnership has concentrated its efforts on addressing personnel costs by developing language to amend the Act 111 collective bargaining laws covering police and fire, as well as reform of the municipal pension laws.
We need a bold group of bi-partisan sponsors to introduce our Act 111 amendments. This is in no way a call to eliminate our public safety personnel’s right to collectively bargain. It is, however, a call to equalize the inequities in the law and bring personnel costs in line with the revenue available to pay for them.
Over the last few years there have been studies, hearings, and reports all pointing to the need to reform the systemic failures in today’s local government structure. The policies and laws of the 1950’s and 60’s do not sustain today’s local governments, and no one should expect that they would.
“Pennsylvania’s local governments need new 21st Century tools aimed at building self-reliance and preventing fiscal distress. Only the General Assembly can provide these tools,” said McMahon. “The choice is clear – more Act 47 petitions, or a new path toward building sustainable core communities. PLCM chooses the new path and stands ready to support this effort.”
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The press conference was held following a joint committee hearing of the House and Senate to discuss amending Act 47, where several League members testified, urging reform of the antiquated laws under which local government currently operates.
One of the primary reasons a governing body enters Act 47 is for the ability to hold the line on personnel costs. For 25 years, state and municipal officials have relied upon the premise that both arbitration settlements and arbitration awards in Act 47 communities must comply with the corresponding Act 47 plan. In deciding City of Scranton v. Firefighters Local Union No. 60, the Court found ambiguity in Act 47, in terms of its application to arbitration awards, determining that arbitration awards could exceed the Act 47 Plan limitations. This decision has effectively overturned 25 years of precedent and, in PLCM’s opinion, made Act 47 useless. The decision will cost Scranton’s taxpayers dearly in the form of both a tax increase and public safety layoffs. Other Act 47 communities and their taxpayers are now at risk during future collective bargaining sessions. Additionally, fiscally distressed municipalities may find no benefit to Act 47 and head straight for bankruptcy. It is imperative that the General Assembly act quickly to correct this ambiguity.
Senator Earll and Representative Ross have both introduced legislation to clarify the intent of Act 47. PLCM supports Senate Bill 1321 and House Bill 1988, and urges the General Assembly to pass one of these bills prior to their December recess and send it to the Governor for enactment.
In addition to the immediate need to address the Supreme Court’s decision, there are broader issues that require action by the General Assembly. Our Commonwealth should not only be working to improve Act 47, it should be focusing on building fiscally healthy communities, thereby preventing the need to use Act 47, except in rare cases.
“The reality is that Act 47 is looming for many of our small cities. Perhaps not this year, or next, but down the line, when every last ditch effort to prevent fiscal distress has been made, many will turn to the Commonwealth and Act 47 for assistance,” stated Reading Mayor Thomas McMahon, PLCM President. “Act 47, however, does not have to be their destiny.”
As the joint committee concludes its Act 47 hearings, we hope the committee members will recognize the need for reform of the archaic laws under which local government officials are attempting to operate, and begin to pursue a comprehensive overhaul aimed at providing local government with tools for self-reliance. There are difficult decisions to be made and no easy fixes, but inaction is no longer acceptable.
“It is PLCM’s position that no amount of amendments and improvements to Act 47 will make a difference to our communities, if we don’t address the underlying causes of municipal distress. We simply cannot continue to allow our communities to fail,” said Mayor McMahon. “New tools and reform measures are essential and can only be provided by our General Assembly.”
Our 2010 Core Communities in Crisis Report (www.plcm.org) sets out what we believe to be the reasons for the fiscal crisis facing the Commonwealth’s older, full-service municipalities. It also provides the legislative and policy actions necessary for fiscal relief.
The Report addresses the impacts of hosting a high percentage of tax-exempt property; the inability to pay for current and future personnel costs, which can be half of a municipal budget; the impediments to regional thinking and shared municipal services; and an over-reliance on the inelastic real property tax. These are weighty issues, and change will not occur overnight, but change must occur.
PLCM has partnered with a number of local chamber executives who are also concerned with the future viability of their communities. Fiscally distressed communities do not attract new business and investment. Together, this partnership has concentrated its efforts on addressing personnel costs by developing language to amend the Act 111 collective bargaining laws covering police and fire, as well as reform of the municipal pension laws.
We need a bold group of bi-partisan sponsors to introduce our Act 111 amendments. This is in no way a call to eliminate our public safety personnel’s right to collectively bargain. It is, however, a call to equalize the inequities in the law and bring personnel costs in line with the revenue available to pay for them.
Over the last few years there have been studies, hearings, and reports all pointing to the need to reform the systemic failures in today’s local government structure. The policies and laws of the 1950’s and 60’s do not sustain today’s local governments, and no one should expect that they would.
“Pennsylvania’s local governments need new 21st Century tools aimed at building self-reliance and preventing fiscal distress. Only the General Assembly can provide these tools,” said McMahon. “The choice is clear – more Act 47 petitions, or a new path toward building sustainable core communities. PLCM chooses the new path and stands ready to support this effort.”
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