Legislation to overhaul and strengthen Act 47 of 1987, Pennsylvania’s Financially Distressed Municipalities Act, is now on its way to the governor’s desk.  House Bill 1773, sponsored by Rep. Chris Ross (R-Chester), represents the most significant update yet to the laws governing economically distressed communities with the goal of returning them to fiscal stability.

A key provision in House Bill 1773 codifies an early intervention program to help municipalities experiencing financial difficulties to avoid Act 47 status,” said Ross. “Any municipality recommended for early intervention would be given priority for economic development matching funds to help improve their financial condition.

“Distressed municipalities that enter into Act 47, will have a limited time to implement their financial recovery plan,” said Ross. “Specific timelines have been established for getting a municipality’s financial recovery plan on track and achieving its incremental goals. 

“To help with this process, a municipality may opt to employ a receiver. The receiver would act as the coordinator who would work with the municipality to develop and implement its financial recovery plan.  A receiver proved successful in Harrisburg’s financial turnaround and serves as the model for this legislation.

“House Bill 1773 also contains revenue options for distressed municipalities. A municipality that enters into Act 47 may petition the court to substitute its Local Services Tax (LST) for an increased percentage in its Earned Income Tax (EIT).  However, my legislation blocks these municipalities from levying an increase in tax more heavily on non-residents than residents.

“The Act 47 plan was a success in helping our capital city come back from the brink of bankruptcy,” said Ross.  “The lessons learned in Harrisburg were used to make improvements to Act 47, which will benefit other municipalities facing the same fate.”