September 18, 2017 — The last time Pennsylvania looked seriously at how local municipalities generate tax revenue was about 60 years ago. At that time, Pennsylvania’s cities were largely centers of wealth and Pennsylvania policies pretty much assumed that every other municipality was mostly farmland.
Over the past 20 years, this system has put great strain on cities. With increasingly poor populations and unable to grow because of fixed boundaries, many cities have turned to Pennsylvania’s Act 47 program. Under that program, the cities get a small amount of relief in the form of technical assistance, the ability to impose a small tax on commuters, and some supposed priority in receiving state grants.
But the state changed the law and now requires cities to exit Act 47, usually after about five years.
A group of Pennsylvania’s community foundations provided funding to the Pennsylvania Economy League to look at the state of the financial health of all of our communities. The results were shocking:
- Across Pennsylvania, virtually every type of municipality (cities, boroughs and townships) is feeling more financially distressed. They’ve had to increase their taxes at a much faster rate than the tax base has grown.
- Financially healthier municipalities tended to be ones that rely on “free” police protection from the Pennsylvania State Police rather than have their own police forces. But the growing costs of providing that service is depleting the state fund that fixes bridges and roads.
- The municipalities that were under Act 47 protection actually performed worse in the study than other municipalities, suggesting that the law is poorly designed to meet its objectives.
- The Commonwealth has done little to take this issue seriously. The Legislature has shown little or no interest in bringing our laws into the 21st Century.
You can find a full copy of the report here. It should be required reading for all Pennsylvania voters.
Kevin K. Murphy, President
Berks County Community Foundation