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Rendell: Change Act 47, and Soon

MAR 28, 2012 10:20am ET
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PHILADELPHIA — Pennsylvania’s program for distressed communities provides only temporary help, and other measures are necessary for the long-term health of cities, former Gov. Edward Rendell said Tuesday.

Speaking at The Bond Buyer’s Symposium on Distressed Municipalities at the Hyatt at the Bellevue hotel, Rendell, a former Philadelphia mayor who governed the state from 2003 to 2011, called for measures to “redefine charity” and obtain more income for localities from nonprofit organizations such as hospitals and colleges. “It’s the single biggest problem for cities,” said Rendell, who cited Pittsburgh, where about 40% of the real estate is non-taxable.

He also urged consolidation among Pennsylvania cities and towns to cut municipal costs. “We have to up our management skills and soon,” he told a gathering of about 260 persons. He said expenses used to promote consolidation will pay off in the long run. “Incentive the process because it’s money well spent. Otherwise, the state will come in and write a bunch of checks, as I did with Harrisburg.”

Capital city Harrisburg is more than $300 million in debt related to cost overruns for an incinerator retrofit project, and has skipped $65 million in incinerator bond payments. Two weeks ago the city, under the behest of state-appointed receiver David Unkovic, missed two general obligation bond payments totaling $5.3 million. In September 2010, when Rendell was governor, the state advanced an aid package to keep the city from defaulting on its GO bond payments.

Rendell also called for changes to the distressed communities program, known commonly as Act 47. “The decision by the Supreme Court is disastrous,” he said of the court’s ruling last fall, in a case involving a Scranton firefighters union, that the state’s collective bargaining law eclipsed cost-saving measures under the Act 47 program, in which 26 communities are enrolled.

He also wants to allow third-class cities, in which Harrisburg and many other Act 47 communities are categorized by population tier, to charge a commuter tax. A state law, passed after Harrisburg’s City Council rejected an Act 47 workout plan, now prohibits such a tax in Harrisburg.

“The road map is there. We need a little bit of leadership,” Rendell said.

 

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