On Tuesday we blogged about Virginia’s efforts to develop an early warning system for municipalities in financial trouble; today we write about a municipality in PA that has been in distressed status for some time and is coming to a juncture where it has to assess whether to continue in Act 47 or to leave, and the implications of either decision.
We wrote a full length report on Johnstown in 2010, and in December of this past year we checked back in on the municipality. Now, with a five year timeline from the date of the last recovery plan coming into play from 2014 reforms by the state, Johnstown is looking to next year when it would have to exit Act 47 or stay in for a three year extension, which would have to be recommended by the recovery coordinator.
Johnstown is looking at the loss of higher tax revenues that are permitted while in distressed status that would not be available upon exit, such as a tripling of the local services tax, and would think about monetizing assets. That was a course of action taken by several municipalities in Allegheny County when they exited Act 47 prior to the 2014 reforms; we discussed these actions in a 2005 report.
