The City of Harrisburg has moved into another phase of trying to recover from financial distress.
Harrisburg Mayor Eric Papenfuse has declared a fiscal crisis.
“With the state Legislature’s failure to act Friday to extend Harrisburg’s taxing authority beyond Act 47, the City now faces a looming financial catastrophe that will require immediate implementation of austerity measures to begin to close a projected $12 million budget deficit over the next three years,” said Papenfuse.
Act 47 is an oversight program for financially distressed cities. The mayor and at least one member of the city council want out of the program because of its restrictions.
“Over the past few years, we’ve been working closely with the Legislature to try and show them the fiscal reality of our city, to try and have them recognize how dependent we are on those elevated taxing rates,” said Papenfuse.
Exiting the program and keeping the city’s current taxing authority in place, ultimately charging taxpayers the same local services tax and earned income tax, would have reportedly signaled that Harrisburg is doing better and would have allowed the city the ability to refinance a number of things with a lower interest rate, raising the credit score.
“You can’t expect to fill a $20-million gap with five years of growth. It’s a project that is going to take a generation. It’s going to take 20 years perhaps to live without that elevated authority,” said Papenfuse.
The vote on the amendment that was supposed to allow all of that to happen did not take place Friday because House Speaker Mike Turzai never allowed it to be considered.
Turzai has been critical of the city, saying more could have been done to generate revenue and cut expenses.
Rep. Greg Rothman plans to introduce legislation getting Harrisburg out of Act 47 but keeping its taxing authority.
“It would allow the city early exit out of Act 47 with revenue-neutral taxes, so they would still be able to keep the taxing authority, at least on the earned income and maybe do something with the local service tax,” Rothman said.
Harrisburg has until the fall to decide whether it wants to come up with a plan to file an extension.