Senate Democrats’ Plan for PA’s Distressed Older Cities Falls Far Short of What’s Needed

I was venting about this on Twitter earlier, but it deserves a proper blog post.

The problems of PA’s distressed mid-sized cities are an issue I care about a great deal. Older cities are badly disadvantaged by state-level municipal finance and annexation policies, which set them up for decline.

Setting up mid-sized cities for success will require changes to a variety of these state-level policies, and so of course I am very glad to see PA Senate Democrats prioritizing this issue. It’s a huge deal that state-level politicians are interested in engaging with these problems, and they deserve a lot of credit for taking this up. What a party chooses to talk about when it’s out of power tends to be a pretty good predictor of what it will try to do when it gets power, so it’s heartening to see metropolitics becoming subsumed into the state-level Democratic political agenda.

That said, the policy ideas that Senate Democrats released fall far short of the scale of the problem.

None of them are bad ideas, but all suffer from the same mistaken premise – they locate the source of distressed cities’ problems at the city level, not the regional level.

Here are some of the big ideas mentioned in Robert Swift’s article on this:

– Provide school district property tax rebates to first-time homebuyers who purchase a primary residence in a mid-sized city school district

– Use table game revenues to reduce property taxes in urban areas to promote home ownership and rebuild the tax base.

– More rigid Act 47 review process with fiscal “stress tests”, earlier disclosure of negative signs like underfunded pensions, and mandates to identify what economic strengths municipalities can build on.

– Give municipalities other than Pittsburgh the option of creating an Intergovernmental Cooperation Authority

– Safeguards for municipal borrowing under the Local Government Debt Unit Act

– Requiring cooperation between cities and school districts on comprehensive fiscal recovery plans

– Consolidating school district transportation services at the Intermediate Unit level

– Surcharge on traffic violations to pay for state grant program for municipalities with part-time police officers

That last idea really gets at the weakness of the Senate Dems’ theory of change. The root problem there is that there are municipal tax bases so small that part-time police officer is a job that exists.

Subsidizing the choice to have tiny political units that can’t afford full-time cops isn’t a solution. The solution is to push those municipalities to:

1. contract for police services from the County government

2. contract for police services from a larger neighboring municipality that can afford full-time police, or

3. disincorporate and allow a neighboring municipality to annex their land area

If the problem is that there are so many political units with tax bases too small to afford professional services, then the solution needs to be enlarging the local tax bases.

This is also a problem with other recommendations like property tax rebates for first-time homebuyers in urban school districts. The actual problem there is that there are urban school districts with separate tax bases from suburban school districts.

Rather than introducing a new tax subsidy that will lose revenue for the state or for school districts (depending on who pays), the obvious solution is to consolidate school district tax bases at the Intermediate Unit level.

Then it doesn’t matter at all whether homebuyers choose homes in the suburbs or in the cities – they’re all paying taxes to the same government. The Senate Dems have a good idea to consolidate school transportation services at the Intermediate Unit level. They should run with that logic, and explore what other savings could be had by consolidating services at the County or Intermediate Units.

Right now the Intermediate Units are deliberately designed to be largely powerless advisory-only bodies, and not real governments. If the goal is to level the playing field for cities by improving the quality of public services and lowering tax rates, then a pretty obvious move is dissolving the arbitrary political boundaries that keep urban areas from getting their fair share of the tax revenue produced by metro economies.

What would a better plan look like? I have a few ideas, and the common thread is leveraging state aid to municipalities and school districts to push them to share services, or consolidate political units.

New Jersey’s state Senate recently passed a bill that Senate Dems should look to as a model. The state would force municipalities to share services or else they’d lose state aid:

For Sweeney, who championed shared services on a county level as a Gloucester County freeholder, yesterday’s 25-9 Senate vote was the latest step in his 22-month battle to hold down property taxes forcing municipalities to share services where savings can be proven. “We’ve tried the carrot. We need to try the stick,” Sweeney is fond of saying. “We need to try the stick.”

“If governments don’t wish to run their towns more cost-effectively, there is no reason the taxpayers of New Jersey should have to foot their bill,” Sweeney said yesterday, referring to the provision in his bill that would give voters the option of approving shared services, but take away state aid equivalent to the projected cost savings from any town whose voters reject shared services. “Taxpayers of this state need a break and shared services is one way to give it to them.”

Sweeney’s bill shifts the principal responsibility for initiating shared services from municipalities to New Jersey’s Local Unit Alignment, Reorganization, and Consolidation Commission (LUARCC), which would be empowered not only to study municipal governments to determine where taxpayer dollars could be saved. If the towns involved fail to enact a LUARCC-recommended shared services agreement, the plan would go on the ballot as a referendum question. Voters in any town rejecting such a shared-services ballot question would lose state aid.

The other idea Senate Democrats need to incorporate into their plan is building Counties’ capacity to deliver municipal services. Chris Briem has persuaded me that the best political strategy for accomplishing this is for Counties to start offering a menu of municipal services that their constituent municipalities can choose to buy. Rather than administering police services in-house, those cities with part-time police officers could choose to contract with their County government for police. They would lower their municipal property taxes since those taxes would no longer pay for police, and they’d pay somewhat higher County taxes.

As Counties deliver police (and fire, and 911, etc) services to more of their municipalities, the per-person costs of providing those services will go down. Property taxes will be lower, and you’ll basically have something pretty close to a regional tax base for public services. Cities will no longer be competing at a disadvantage on service quality or taxes.

There are a lot more good ideas out there for making PA’s older cities more competitive, but what most of them have in common is that they locate the source of the problems at the metro level, not the city level. Any plan that’s going to work will need to enlarge the tax base for public services like police and education, and give cities access to their fair share of the tax revenue produced by regional economies.


  1. Jon,

    I don’t know about this entire platform in detail to comment, but many of the ideas seem bad or at best vague. Tying city budgets to anything having to do with gambling is a terrible idea–competition is only increasing, which doubtless with push the gambling companies back to the state to demand a new deal on the revenues.

    I don’t know what “safeguards for local borrowing” means, but that sounds potentially rather counterproductive as well.

    The document you attached is complicated and comprehensive, but while a more regional approach might ameliorate some of the negative aspects of urban governance in PA these days, the authors seem to shy away of saying such an approach would solve them.

    The maps themselves reminded me of the county maps Republicans like to show to demonstrate that “more counties” voted for the Romney ticket, as if that means anything. A “green” municipality on the map might have decent population growth (for PA) and probably decent civic finances, but you could probably add up 20 of those green dots and it wouldn’t make up the massive problems of cities like Harrisburg or Altoona.

    While I think, in general, towns should pay for today’s services with today’s dollars, there is nothing inherently wrong with the idea of a part-time policeman. Given everything you’ve described–the worst thing you can do is overbuy on services. Some communities can be adequately serviced by part-time services, and paying for more because of some arbitrary standard of “that’s how its done” doesn’t help.

    Pennsylvania has very slow population growth and many communities who, quite frankly, have seen their day come and gone. Outside of a return of extraction industries, we probably aren’t going to see a return to wealth of much of western, central, NW, and NE Pennsylvania. How do we deal with that?

    I’d also like to know what’s up with Emmaus–good finances now, but I suspect the loss of a lot of formerly big businesses creates the “big dot”.

    • Jon Geeting says:

      The point is that older urban areas should also benefit from the increased revenues created by population growth in their suburbs and exurbs. That money should not stay locked up in the township governments. I think the problem with part-time police is that crime markets are regional, and everybody should have to pay in equally (in proportion to their land wealth, as it goes with prop taxes) for the region’s police services. You can’t have people paying less to have part-time cops just because their particular area doesn’t see a lot of crime. That’s not fair. Everybody has an interest in the whole region having less crime.

      It’s funny you should mention Harrisburg, since their big financial problems are the result of the Harrisburg Authority’s botched incinerator project – a separate independent government. You see a lot of lazy commentary wanting to make this about irresponsible Harrisburg, but that’s ridiculous. Dauphin County guaranteed the debt too and they haven’t shouldered nearly enough of the downside. Before anybody talks about municipal bankruptcy for Harrisburg, the option of a shotgun wedding between the city and the County needs to be looked at. If Harrisburg’s going down, then their immediate neighbors in Dauphin County should be forced by the state to take over provision of city public services.

      I think we deal with population decline in the T and rural parts of the state by deliberately pursuing policies that nudge those residents to move to the big metros, and focus exclusively on boosting population/economic growth in the top 5 metros.

  2. GDub what’s your question on Emmaus? I don’t have the time to weed through these links but I’m pretty familiar with the town.

  3. On the map of changes in financial status between 1970-2003, it is the community in the Lehigh Valley that has relatively changed for the worst (if I am reading the map right). it is on page 93 (second last page). Not a lot of amplifying data, but the study covers the whole state.

  4. That’s bizarre. Emmaus’ finances have always been solid. In fact the town happily has a higher tax bill in order to keep their own police, fire and EMT departments and the citizens damn near overran borough hall when there was talk of selling the water department.

    There was a large exodus of manufacturing back in the 1970s but that was more than replaced.

    No idea.

  5. Maybe I missed it, but I’d like to see a review of the Sands Casino’s revenue contribution each time Bethlehem proposes a budget. The promised homeowners’ tax reduction comes up whenever residents grouse about taxes or services. It may be old news to the Callahan administration but everyday citizens could use a refresher.

    • Jon Geeting says:

      It basically got eaten up by the recession and pension payments. When the economic growth picks up, they’ll probably be able to deliver some tax savings.

  6. That seems like the right way to use gambling money–as a “rainy day” fund during bad economic times and or for some specific, short-term projects. Tying anything like that to supporting personnel salaries and benefits is a recipe for disaster if something external happens to the amount of money provided.

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