Last week in a blog we wrote about the report on voluntary municipal disincorporation as proposed by a task force and the process it recommends for a municipality to move from incorporated to disincorporated and how services would be provided by the County. As proposed by the task force, any municipality in the County “regardless of geographic size, population, or finances” could disincorporate.
As noted, both in the report and by our 2014 Policy Brief on changes to Act 47, the state allowed for a possible avenue to disincorporation for municipalities in Act 47 status that are deemed “nonviable”: meaning, in essence, the municipality can’t function, can’t provide services, has a tax base that collapsed, and can’t find a municipality to merge into or consolidate with. In defining a “municipality” in the section on disincorporation, the definition does not include a city of the first class (Philadelphia) and says that a county, city, borough, incorporated town, township, or home rule municipality that would be in Act 47 status and does not provide police or fire service through its employees would be eligible for disincorporation procedures if found to be nonviable.
Of Allegheny County’s 128 municipalities, based on the 2015 reporting of municipal pension plan data on active employees, 98 municipalities reported actives for police and/or fire. If the state were to keep the requirement that a municipality providing police and/or fire could not disincorporate, that would severely limit the number of municipalities that could even consider the possibility. This goes without mentioning if the municipality is getting police coverage from another municipality, the state, or is part of a multi-municipal force and would have to compare the expenditures on that arrangement to what they would be paying the County if they disincorporate.
And then there is the question of what happens to municipal employees. Based on that pension data for just the municipalities (no authorities, associations, etc.) there are 6,125 municipal employees. Who knows what would happen with collective bargaining agreements should a viable municipality be able to disincorporate. Or what the County would need to do should it find itself providing service to municipalities that, in aggregate, have almost as many employees as the County itself (6,831 in 2015).
And then there is the pension question with municipalities handling retirement benefits for its employees. The 2014 law does give power to the unincorporated service district administrator to “provide for the transfer and administration of any municipal pension obligation to a private or public pension fund”. That would probably include PMRS, which is a voluntary system for municipal pensions. Since the task force report recommends municipalities coming into disincorporation debt free, how would pensions that are not funded above 80% be treated?