Receiver Completes Triple Option for PA Cities

On January 3rd of the coming year, the newly appointed receiver for the City of Harrisburg is to submit a recovery plan to the state and City officials. Harrisburg is in Act 47 distressed status and filed for Chapter 9 municipal bankruptcy. The former designation remains while the latter was dismissed by a judge. The City will appeal the decision.

The position of receiver came about when Harrisburg punted on adopting an Act 47 recovery plan and then the amended plan written by the mayor as required by the statute. The Legislature amended Act 47 as it applies to cities of the third class who had not adopted a recovery plan (read Harrisburg) and that is how the position of receiver came about.

If anything can be taken from the creation of the position it is that financial recovery for municipalities as envisioned in 1987 has definitely changed. That was when Act 47 was established and it has twenty municipalities under its umbrella. But the application of the law and the idea of recovery is getting tweaked. Harrisburg has the receiver; Pittsburgh has an Act 47 team coupled with a separate oversight board and has a prohibition on using a higher earned income tax to tap non-residents; Harrisburg likewise is forbidden from using that tool; Philadelphia is not in Act 47 but it has had an oversight board since 1991, with that agency primarily in place to administer the payback on bonds that were sold to erase other obligations. That board was the inspiration for placing one in Pittsburgh, where no long-term debt has been incurred as a way to get rid of outstanding costs.

More than half of the twenty municipalities are operating under their initial recovery plan without amendments, some of them stretching back to the late 1980s when the law was passed. When the next community gets declared financially distressed, who knows whether a coordinator, receiver, board, or some combination will be in place to guide it back to health.