State denies Wilkes-Barre’s Act 47 request

By Jerry Lynott - [email protected]
Wilkes-Barre City Hall is seen in June, at the time when the city announced it was seeking Act 47 distressed status. That petition was denied, city officials learned Friday. - Times Leader file

WILKES-BARRE — The state on Friday denied the city’s request for Act 47 designation and encouraged the administration of Mayor Tony George to pursue other measures toward financial stability.

Officials with the state Department of Community and Economic Development informed the George administration of its decision during a telephone conference call.

“Our petition was denied,” said city Administrator Ted Wampole.

DCED, which makes the determination of declaring a municipality financially distressed, said it believed Wilkes-Barre could straighten out its finances by further pursuing measures through the Early Intervention Program designed to avoid Act 47, Wampole said.

A meeting with DCED, city officials and PFM, the consultant hired to assist Wilkes-Barre with the EIP, will be held next week, Wampole said.

But a flustered mayor wondered what good it will do.

“We’ve been sticking with the Early Intervention Program. We haven’t gotten any support from council and the unions,” George said.

The financial picture George painted for DCED at the public hearing it held at City Hall on Aug. 1 on his petition for Act 47 remained dismal. He estimated a deficit next year of approximately $2 million and close to $7 million in 2020.

Act 47 would have allowed the city to triple the emergency services tax to $156 a year, attempt to impose a commuter tax and provide access to a $3 million loan that was interest-free for 10 years.

“I don’t understand what you (DCED) want us to do,” George said.

At the hearing last month, the Governor’s Center for Local Government Services presented the findings from its investigation into the city finances that Wilkes-Barre met two of the 11 criteria to qualify for distressed status — recurring deficits and expenses exceeding revenues for three years or more.

Factors enumerated

The center, an agency within DCED, listed other factors affecting the finances:

• A stagnant tax base

• A decreasing fund balance that makes it difficult borrow money in short term

• Declining pension assets that will not satisfy long-term liabilities

• Declining population

• Comparatively low median household incomes, education levels and home values

• High poverty levels, unemployment and crime rates

• A $16 million cumulative deficit by 2021.

“These conditions make it difficult for the city to continue to fulfill its responsibilities to provide for the health, safety and welfare of the citizens,” the center said.

Legislators opposed

Still DCED was reluctant to grant the mayor’s request and in support of its decision relied on the report of the C. Kim Bracey, the hearing examiner who presided at the August public hearing. Her report included letters from citizens, councilwoman Beth Gilbert and state Sen. John Yudichak, D-Plymouth Township and Rep. Eddie Day Pashinski, D-Wilkes-Barre, who opposed Act 47 designation.

“One year into the EIP, with the investment of state grants totaling $260,000, a financial recovery plan has been developed for Wilkes-Barre and much progress has been made. The road to full recovery, however, requires many more tough decisions ahead,” the legislators said in the their letter to DCED.

Gilbert called on the mayor to look beyond raising taxes and fees and demanded that he present realistic budgets that contain guaranteed revenues.

“He is simply placing blame on council for applying for Act 47 status for political spin instead of working with council to come up with viable solutions to help our city,” Gilbert said in her letter.

DCED offered its assistance to work with George and city council on preparing next year’s budget and making the most of the five-year financial management plan proposed in the EIP.

“The City of Wilkes-Barre and its citizens deserve every opportunity to retain its fiscal independence,” DCED Secretary Dennis Davin said in his letter Friday to George.

Davin said the city must consider “each and every viable option” including a property reassessment and recommendations to monetize assets.

“Opportunities remain to keep the City out of financial distress and DCED wants to ensure that the City has the opportunity to exhaust any and all options before issuing such a designation,” Davin said.

Wilkes-Barre City Hall is seen in June, at the time when the city announced it was seeking Act 47 distressed status. That petition was denied, city officials learned Friday.
https://www.timesleader.com/wp-content/uploads/2018/08/web1_TTL063018CityHallCMYK-3.jpgWilkes-Barre City Hall is seen in June, at the time when the city announced it was seeking Act 47 distressed status. That petition was denied, city officials learned Friday. Times Leader file
State tells city to continue with Early Intervention Program

By Jerry Lynott

[email protected]

Reach Jerry Lynott at 570-991-6120 or on Twitter @TLJerryLynott.

Reach Jerry Lynott at 570-991-6120 or on Twitter @TLJerryLynott.