- David Black, President & CEO Harrisburg Regional Chamber & CREDC

Transcription

1 Testimony for the September 25, 2018 Hearing of the House Finance, Local Government and Urban Affairs Committees concerning the Special Taxing Authority and Act 47 in the City of Harrisburg - David Black, President & CEO Harrisburg Regional Chamber & CREDC dblack@hbgrc.org Chairpersons Harper, Keller and O'Neill and distinguished members of the committees represented at this hearing, my name is David Black and I am the President and CEO of the Harrisburg Regional Chamber & Capital Region Economic Development Corporation (CREDC) serving the Harrisburg MSA comprised of Cumberland, Dauphin and Perry Counties which Includes the City of Harrisburg. Prior to joining the Chamber & CREOC, I served as a Deputy Secretary in the former Department of Community Affairs and then DCED with oversight of the Act 47 Program. Prior to that, I served nearly 15 years in county government in Northwestern Pennsylvania as a row officer then a County Commissioner. I appreciate the opportunity to present testimony today. I do speak today on behalf of myself and our organization. I am here today to respectfully ask for the consideration of you and your colleagues in the General Assembly for two things. 1. A bridge solution for Harrisburg, short term or long term, allowing them to keep the special taxing authority using the Local Services Tax and Resident Earned Income Tax 2. A longer term review and changes where and If necessary to Act 47, incorporating or providing other relief to the Harrisburg problem, as well as other Act 47 munlcipalltles. Harrisburg, I believe, is on the long road to fiscal recovery. Clearly, there is more work to do but the City and DCED via the Act 47 find themselves caught in what I believe are unintended consequence of changes to Act 47 a few years back. I am in no way critical of the INOrk of the General Assembly, the executive branch of state government and the state courts. The work the Commonwealth has done in Harrisburg, has been invaluable. The City would not be where it is today without the exceptional support of the Commonwealth, so from the regional business community a very well deserved Thank You. However, It appears the unintended consequences of Act 47 that created mandated exit paths could cripple Harrisburg's advancement and not solve Harrisburg's long term problems. Under Act 47, DCED was required to deliver a plan for Harrisburg's exit in 3 years from Act 47. Unfortunately, the only workable plan available to DCED was to recommend the near doubling of the property tax rate. Without special taxing authority, Harrisburg wl!i be forced into a massive property tax increase, and even with that may never be able to make the numbers work, (even with the suggestions to

2 cut expenditures suggested by the Act 47 Coordinator, which we support). Time is not on Harrisburg's side. This is nothing new for Harrisburg. Following the out migration of the 1950s and 1960s, followed by Hurricane Agnes in 1972, the city has struggled with revenues to cover expenditures. Were it not for many creative fiscal maneuvers over several decades, that included some bad decisions that placed Harrisburg in critical fiscal distress in 2010, Harrisburg would likely have been in Act 47 many years earlier. One only has to talk with long term and short term city employees. City Hall and the Public Safety Building are in bad shape, equipment is old, computers, printers, copiers are either outdated or in disrepair, police cars are constantly in the shop jeopardizing public safety. Poor support equipment has contributed to lack of candidates for key positions in the city, like police over the years. Harrisburg has difficulty recruiting qualified candidates for their police force and those they do hire are often lured away after getting some experience by suburban departments with better compensation packages, better equipment and arguably safer duty assignments. I say all this while adding City operations are better today than they were 5 years ago. Act 47 permitted Harrisburg to levy the Local Services Tax at a higher rate on those working in the city ($3.7 million) and charge an additional Earned Income Tax levied by the city on local residents ($7.3 million). The ability for the City to levy those taxes has been authorized under Act 47 and generate approximately $11 M annually. Harrisburg already has the higher property tax rate. The Local Services or LST is normally levied at $1 per week for every person working in a municipality. Currently, using Act 47, Harrisburg has been able to levy an LST Tax at $3 per week. This is a very fair tax for those working in Harrisburg and has the support of our organization. If you turn to the chart attached, this makes sense. I don't believe the City can provide the necessary services to both the residents and those of us working in the city under the reasonably "normal" tax structure. Harrisburg is the largest city in the state with more people working in the city than living in the city at a ratio of nearly 1.2 worker to 1 resident (see data attached). The biggest impact from that ratio manifests itself in public works and public safety. Harrisburg is our state's Capital which brings business to the city, but it also brings tax exempt properties to the city, which you have or will hear about. The legal authorjty for the City to enact a capped, long term higher LST tax would help Harrisburg exit Act 47 in a timely manner, help Harrisburg meet the public safety, public work and other responsibilities of the city to the residents and those like all of us who work in Harrisburg on a regular basis. The Earned Income Tax on residents is currently 1.5%, plus another.5% for the school district. In most municipalities the total rate is 1%. The extra 1% is authorized under Harrisburg's Act 47 status. I point this out to note the residents are paying to support the long term recovery of the city. The Act 47 EIT generates about $7.3 million per year. The extra LST tax generates about $3.7 million per year. This $11 million in revenue is critical to the City's long term ability to function. Let me also state, Harrisburg has been a responsible steward of tax dollars. They have underspend budgets, built surpluses and do their best to improve services, operations and 2

3 overall efficiency while recognizing where tax dollars are coming from. Back in 2010 under then Mayor Thompson, the city turned over 911 responsibilities to Dauphin County, providing better service and lower cost to city residents. Harrisburg also appreciates the extraordinary support from the Commonwealth solving the Incinerator debt issue and helping to pay off the debt and remove the incinerator from Harrisburg's assets and liabilities. The support of the Commonwealth in keeping state offices in the City, more recently moving state employees back into the city from suburban locations and providing $5 million per year for professional firefighting protection and equipment. My second request concerning longer term review and changes where necessary to Act 47, It's clear that the symptoms of distressed municipalities are similar, but there are unique twists with each municipality. I understand the Local Government Commission is conducting a thorough review of Act 47, which is timely and needed. I would ask consideration in this study to include the following issues: There are multiple and sometimes differing root causes to the problems that force Pennsylvania municipalities into Act 47. Larger communities have legacy systems, processes, programs and services that are no longer affordable given the shrinking population and tax base. Smaller communities continue to lose population and taxable properties having difficulties providing even limited services. Problems also include ineffective governance, lack of interested, available, capable talent to serve in municipal government, people serving in municipal government for the wrong reasons or those with self-sening interests on occasion. Another root problem could be bad decisions. We are all human. Municipal officials sometime make bad decisions, not illegal decisions, simply bad decisions that cause problems in future years, or opt for short term fixes vs long term solutions, arguably part of Harrisburg's legacy. There are other examples, but all of these issues, on an individual basis are worth examination. Let's face it. We have 2,562 municipalities with various strengths and weaknesses, and given population losses in parts of Pennsylvania fiscal challenges ahead. The Commonwealth has kept Act 47 up to date, in Harrisburg's case the mandated exit data may have created an unintended consequence, but I fear there are other challenges ahead. An in-depth look at distressed municipalities of the past, present and what may lie ahead is timely. Perhaps there is something better in that in-depth exploration for Harrisburg, but for now time for Harrisburg is running out and the need for a prompt solution is at hand. I thank you for calling this hearing and asking our organization to participate. 3

4 Resident and Commuter Workers in Pennsylvania Cities U.S. Census Bureau, Commuter Flows, ACS Prepared by the Pennsylvania State Data Center City County % worller5 worker Resldl!nt Total Total Commuter to ratio per Worker Worken Population residents resldllll\t Greensburg city Westmoreland County 2,598 16,431 19,029 14, % 1.29 DuBois city Cleatiield County 2,159 7,410 9,569 7, % 1.23 Harrisbura cibl Dauohin Countv ,533 58,842 49, % 1.19 Washington city Washington County 2, ,242 13, % 1.10 Latrobe city Westmoreland County ,695 8, % 0.9& Warren city Warren County G,382 9,275 9, % 0.96 Pittsburgh city AllL'Qheny County , , % 0.96 Uniontown city Fayette County ,039 9,493 10, % 0.92 franklin city Venango County 1,269 4,588 5,857 6, % 0.90 Meadville city Crawford County 3,454 8,188 11, % 0.87 Williamsport city Lycominq County 7,109 16,977 24, % 0.82 Johnstown city Cambria Cou ntv 3,219 13,080 16,299 20, % 0.79 Pottsville city Schuylkill County 2,646 a.on 10,723 14, % 0.75 Butler city Butler Countv 1, ,270 13, % 0.75 Wilkes-Barre city Luzerne County 6, ,762 29,379 41, % 0.71 Lancaster city LancBster County 9,955 30,587 4ll,542 59, % 0.68 Bradford citv McKean County 1,605 4,325 5, % 0.68 Bethiehem city Lehiah County 1.Em 11,288 12,925 19, % 0.66 Hermitage city Mercer County 2,660 7,867 10,527 16, % 0.65 York city York County 4,063 24,102 28,165 43, % 0.64 Pittston city Luzerne County 616 4,257 4,875 7, % 0.63 St Marys city Elk County 4, B,192 13, % 0.63 Corry city Erie County ,870 6, % 0.59 Erie city Erie County 25,812 32, , % 0.57 Titusville city Crawford County ,072 5, % 0.56 Altoona citv Blair County 10,714 14,822 25,536 46, % 0.55 Lock Haven city Clinton County 1,790 3,601 5,391 9,B % 0.55 Scranton city Lackawanna County 17, ,530 75, % 055 Beaver Falls citv Beaver County 1,204 3,595 4,799 8, % 0.54 New Castle city Lawrence County 3,51B 8,501 12,019 23, % 0.52 Sunbury city Northumberland County ,109 9, % 0.52 Hazleton citv Luzerne Countv 4,21 0 B,76S , % 0.51 Bethlehem city Northampton County 6,945 19,036 25,981 55,577 46,7% 0.47 Philadelphia city Philadelphia County 460, , ,942 1,536, % OA7 Lebanon citv Lebanon Countv 3,113 B,524 11,637 25, % 0.46 Allentown city LehiQh County 16,667 35,942 52, , % 0.44 Sharon citv Mercer County 1,199 4,939 6, % 0.44 Clairton city Alleohenv Countv 392 2, , % 0.44 Oil City city Venanoo County 1, , % 0.43 Readino city Berks Cou oty 11,118 26, , % 0.42 Farrel I city Mercer Countv 297 1,749 2,046 4, % 0.41 Easton city Nodba.mcton Countv 2,278 8,805 11,083 26, % 0.41 Monongahela city Washington Count'I 333 1,397 1,730 4, % 0.40 Jeannette city Westmoreland County 894 2,966 3, % 0.40 Connellsville ci~/ Favetta County 930 2,031 2,961 7,636 38,8% 0.39 McKeesport city AlleQheny County 2, ,555 19, % 0.38 Carbondale city Lackawanna Coun~ 1,130 2,092 3,230 8, % 0.36 New Kensinqton city Westmoreland Co1 onty 1, , % 0.36 Chester city Delaware County 2,461 8,391 10,874 34, % 0.32 Nanticoke citv Luzerne County 869 1, , % 0.27 Coatesville city Che>ter County ,390 13, % 0.26 Arnold city Westmoreland County ,249 S, % 0.24 Parker city Armstrong County % 024 Shamokin citv Northumberland County 465 1,291 1,756 7, % 0.24 Monessen city Westmoreland County , % 023 Duquesne c:ily Allegheny Countv ,254 5, % 0.22 Aliquippa c.ity Beaver County , % 0.21 lower Burrell city Westmoreland County 903 1, , % 0.21

5 DAUPHIN COUNTY MILLAGE RATES FOR REAL ESTATE TAXES LEVIED IN THE YEAR LBRARY AL OTAL s.81s 0.35 NIA NiA L oo4o L s.65oacr I *- -~ ; t4870' L, T , r- <O~~ ( ~ H,l I NIA H WA S.T S,T ' : i ~ ~ ~ H.L (LAND) & 17.0 (BUILDING) NIA H,L L : T 2' t:!,l 18.8n o H,l I 25.6SSOO.6.876: 0:35 l l\and) &..5.16i(lll)llDING) N/,; are 100%. Souroe: DAUPH N COUNTY ASSESSMENT OFFICE Jul 2018