Act 47 Changes Are Now Law

Act 47 Changes Are Now Law

oversight

On October 31, 2014, the Governor signed into law the changes proposed to the municipal fiscal distress status, Act 47.  The new law is Act 199, and it contains language on time limits for distress, new taxing options for municipalities in fiscal distress, and options for disincorporation of non-viable municipalities, which we wrote about recently.

In the week before the Governor signed the law two municipalities (Westfall in Pike County and West Hazelton in Luzerne County) were released from distressed status.

There’s plenty in the act to digest, but let’s focus on the time limitation and how that would affect the distressed municipalities in Allegheny County currently: Clairton (declared distressed January 1988); Braddock (declared distressed June 1988); Rankin (declared distressed January 1989); Duquesne (declared distressed June 1991); and Pittsburgh (declared distressed December 2003).

A fiscal note on the act states “for municipalities in distressed status as of the effective date of the section, the five year period [to exit distressed status] will begin to run from the effective date of the most recent recovery plan or amendment”.  A coordinator could recommend an additional three years, but let’s assume that the five year deadline is a firm one. Pittsburgh’s adoption of a new plan this year would put the expiration date in 2019; Duquesne also adopted a new plan this year, so 2019 would be that city’s target year.  Clairton has a recovery plan dated 2007 that covers that year through 2009—that would seem to indicate that the city would have to get a three year extension from the coordinator, or, if that plan somehow applied to the subsequent years including 2014, then the fiscal note states the extension for three years will be automatic.