PRINTER'S NO. 2560
No. 1996 Session of 1975
INTRODUCED BY WALSH, NOVEMBER 25, 1975
REFERRED TO COMMITTEE ON STATE GOVERNMENT, NOVEMBER 26, 1975
AN ACT
1 Providing for distressed municipalities; creating and
2 authorizing a special board of control for such
3 municipalities; providing powers and duties for the Secretary
4 of Community Affairs; authorizing the levy of additional
5 taxes in certain cases and imposing duties on the legislative
6 and executive branches of municipal government.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short Title.--This act shall be known and may be
10 cited as the "Distressed Municipalities Act."
11 Section 2. Definitions.--As used in this act:
12 "Department" means the Department of Community Affairs.
13 "Municipality" means any county, city, borough, incorporated
14 town or township including any municipality operating under the
15 provisions of a Home Rule Charter.
16 "Secretary" means the Secretary of Community Affairs.
17 Section 3. Determination of Distressed Municipality.--(a) A
18 municipality shall be deemed to be distressed when any one of
19 the following circumstances shall arise and the secretary after
20 proper investigation of the financial condition of the
1 municipality, the administrative practices of the legislative
2 and executive officers and such other matters as may seem
3 pertinent, has issued a certificate declaring such municipality
4 in financial distress:
5 (1) The salaries of any public employees have remained
6 unpaid for a period of 90 days.
7 (2) The municipality has defaulted in payment of its bonds
8 or interest on such bonds or in payment of rentals due any
9 authority for a period of 90 calendar days and no action has
10 been initiated within that period of time to make payment.
11 (3) The municipality has contracted any loan not authorized
12 by law.
13 (4) The municipality has accumulated and has operated with a
14 deficit equal to 2% or more of the assessed valuation of the
15 taxable real estate within the municipality for two successive
16 years.
17 (5) Ten per cent (10%) of the elections of the municipality
18 who voted at the last municipal election present a petition to
19 the department alleging the occurrence of the other conditions
20 stated herein.
21 (b) No municipality shall be deemed to be distressed by
22 reason of any of the above circumstances arising as a result of
23 the failure of the Commonwealth to make any payment of money due
24 the municipality at the time such payment is due.
25 Section 4. Special Board of Control; Petition;
26 Appointments.--(a) Whenever on the basis of a proper
27 investigation as herein provided for, the secretary has declared
28 any municipality to be a distressed municipality he or his
29 designated representative who shall be a person trained in
30 municipal administration, shall petition the court of common
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1 pleas of the county in which such municipality is located to
2 appoint two citizens who shall be qualified electors and
3 taxpayers in the county in which the municipality is located.
4 Municipal legislative and executive branch officers and
5 employees of the municipality shall be ineligible for
6 appointment by the court. The court shall appoint the members
7 within 30 days from the date on which the petition is presented.
8 (b) The appointees, together with the secretary or his
9 designated representative, shall constitute a special board of
10 control. Vacancies occurring because of death or resignation of
11 appointed members of the board shall be filled by the court. The
12 special board of control shall assume control of the fiscal
13 affairs of the municipality and operate it in conjunction with
14 the elected officials of the municipality during the period
15 necessary to reestablish a sound financial structure in the
16 municipality. The costs of the court proceedings shall be paid
17 by the department.
18 Section 5. Compensation of Special Board of Control.--The
19 members of the special board appointed by the court other than
20 the secretary or his designee shall be paid $35 for each meeting
21 of the municipal legislative branch of the distressed
22 municipality which they attend: Provided, however, That the
23 total amount to be paid in any fiscal year to each such member
24 shall not exceed $500. Such payments shall be made from the
25 funds of the municipality and shall be charged to administrative
26 services even though no previous provision has been made in the
27 budget of the municipality for such expenses.
28 Section 6. Powers of Special Board of Control.--When the
29 special board of control assumes control of a distressed
30 municipality, it shall have power and is hereby authorized to
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1 exercise all the rights, powers, privileges, prerogatives and
2 duties imposed or conferred by law on the legislative body of
3 the distressed municipality and the legislative body of the
4 municipality shall have no power to act on fiscal affairs
5 without the approval of the special board of control. In
6 addition thereto, the special board of control shall have power
7 to require the legislative and executive officers within 60 days
8 to revise the municipal budget for the purpose of effecting such
9 economies as it deems necessary to improve the district's
10 financial condition. To this end the special board of control
11 may require the legislative and executive officers:
12 (1) To cancel or to renegotiate any contract other than
13 police or fire employees contracts to which the municipality is
14 a party, if such cancellation or renegotiation of contract will
15 effect needed economies in the operation of the municipality.
16 (2) To increase tax levies in such amounts and at such time
17 as is permitted by law.
18 (3) To appoint a special collector of delinquent taxes for
19 the municipality. Such special tax collector shall exercise all
20 the rights and perform all the duties imposed by law on tax
21 collectors for the various municipalities. The superseded tax
22 collector shall not be entitled to any commissions on the taxes
23 collected by the special collector of delinquent taxes.
24 (4) To appoint a competent independent public accountant to
25 audit the accounts of the distressed municipality.
26 (5) To dispense with the services of such nonprofessional
27 employees as in the board's judgment are not actually needed for
28 the economical operation of the municipality.
29 (6) To have full and complete control over the fiscal
30 affairs of the distressed municipality.
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1 Section 7. Additional Tax.--When the operation of a
2 distressed municipality has been assumed by the special board of
3 control, the legislative branch of the municipality shall, upon
4 the recommendation and with the approval of the special board of
5 control, levy an additional tax or taxes sufficient to liquidate
6 the indebtedness of the municipality: Provided, That when such
7 legislative officers fail to levy such additional taxes within a
8 reasonable time, the special board of control may petition the
9 court of common pleas of the county in which such municipality
10 is located to issue a writ of mandamus requiring the board to
11 levy such additional tax or taxes, or he may, in his own name,
12 initiate action to have the legislative and executive officers
13 removed from office for neglect of duty. Notwithstanding present
14 limitations on tax rates imposed by law, such limitations shall
15 not apply to distressed municipalities.
16 Section 8. School Directors to Remain in Office;
17 Elections.--The elected officials of a distressed municipality
18 may not resign their offices, except with the unanimous consent
19 of the special board of control and shall continue in office,
20 unless removed from office for neglect of duty by the court of
21 common pleas of the county in which such municipality is
22 located, or unless any of such officials are elected to another
23 position not compatible with their present position or are
24 appointed to any position for which there is a requirement that
25 said appointee shall hold no elective office, for the remainder
26 of their terms during the time the municipality is operated by
27 the special board of control and shall perform any duties
28 delegated to them by it. The assumption of control of a
29 distressed municipality by the special board of control shall in
30 no way interfere with the regular election or reelection of
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1 officials of the municipality.
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