- Associated Press - Thursday, May 1, 2014

DUQUESNE, Pa. (AP) - Frank Piccolino has been Duquesne’s manager for a decade, about half as long as the city has met the state’s dubious “financially distressed” standard.

“They’re trying to have us out in five years,” he said. “But you know, that has to go according to plan.”

Since 1991, Duquesne has languished in Act 47 status, Pennsylvania’s oversight program intended to guide municipalities out of fiscal crisis. State-approved financial recovery plans prescribe ways to eliminate deficit spending and reduce debt, yet the designation is a millstone. Only seven of 27 communities have retaken control of their financial planning.

Thirteen municipalities have been in Act 47 for a decade or more, five of them in Allegheny County: Rankin, Braddock, Duquesne, Clairton and Pittsburgh. A bipartisan group of lawmakers in Harrisburg is pushing to rewrite the law and require an exit strategy, but legislators put the bill on hold this week.

It would institute a 10-year timeline for new Act 47 municipalities, and offer taxing options to aid recovery plans. Municipalities could choose to raise the local services tax on workers from $52 a year to $156 a year, or increase the earned income tax.

Rep. Nick Kotik, D-Coraopolis, said the local services tax option could kill the bill.

“A tripling of the tax, I don’t think, is going to fly, especially in an election year,” Kotik said. “It’s just the reality of life.”

Rep. Dom Costa, D-Stanton Heights, said he supports the revised rules but wants to remove the local services tax option from the bill.

The proposed timeline for newly designated communities includes two years in an early intervention program, a five-year recovery plan, and a potential three-year extension. If those steps do not lead to sound financial health, the Act 47 coordinator could recommend filing for bankruptcy, merging with another municipality, or becoming an unincorporated service district.

Sen. John Eichelberger, R-Blair County, sponsor of the Senate version of the bill, said the goal is to get municipalities to abide by recovery plans.

“Part of the concept is forcing the timeline, forcing local officials to make tough decisions,” Eichelberger said. “They’re not going to have long to do it.”

Rick Schuettler, executive director of the Pennsylvania Municipal League, said the bill has some positives, but local governments require systemic reforms, such as flexibility in collective bargaining.

“We would like the same amount of focus on preventing people from getting into Act 47, and that hasn’t occurred,” he said.

Rep. Chris Ross, R-Chester County, sponsor of the bill, proposed to exclude Pittsburgh from the local services tax option, citing conflicts with city tax laws. The rewrite, he said, is not intended to interfere with Pittsburgh’s recovery.

The city and its coordinators are crafting a five-year plan that Mayor Bill Peduto has called an exit strategy. The city’s finances improved since it entered Act 47 in December 2003.

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