Two NE PA Cities Get Different Distress Signals
This week the cities of Scranton (Lackawanna County) and Wilkes-Barre (Luzerne County) received news related to their interaction with Act 47 of 1987.
Scranton, which has been in Act 47 since 1992, is in a three year exit plan and in good financial shape according to its coordinator. The three year exit plan is one of the four options available to municipalities under the amendments made in 2014 to limit the time spent in distressed status.
However, lawsuits and other big systemic issues remain, one of which noted by the coordinator is the lack of a countywide reassessment; Lackawanna’s base year dates to 1967.
Yesterday in Wilkes-Barre the state held a public hearing to determine if the City should enter Act 47. Based on two of the eleven criteria in the law–a deficit over a three year period with a deficit of 1% or more in each of the previous years and expenditures exceeding revenues for a period of three years or more– the recommendation that the City be declared distressed was made.
Two interesting notes about Wilkes-Barre’s tax structure that will affect it should it enter distressed status are that the City has the power, as a home rule municipality and a former city of the third class, to one, have a higher than normal earned income tax on its residents and can set its own property assessment values.
To the first point, the earned income tax rate on residents of Wilkes-Barre is 2.5%, which is well above the rates in other municipalities in Luzerne County. Entering into Act 47 will permit the City to levy an earned income tax on non-residents (the resident rate would have to go up as well) or an increase in the local services tax on all workers in the City, regardless of place of residence. To the second point, like Scranton, the “archaic property reassessment practices and stagnant property values” of Wilkes-Barre were noted. Turns out that while Luzerne County reassessed in 2008 the City did not adopt updated values and has an assessment that likely dates back to the 1960s.