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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: June 22, 2018 04:16 PM
From: Representative Greg Rothman
To: All House members
Subject: Municipalities Financial Recovery Act Tax
In the near future, I plan to introduce legislation that will update the way municipalities, that have been under state receivership, exit Act 47.

As you may know, in October of 2011 the City of Harrisburg filed for Chapter 9 bankruptcy. At the time, Harrisburg compiled more than $600 million in debt. Shortly thereafter, Harrisburg entered receivership and the Harrisburg Strong Plan was confirmed by the Commonwealth Court in September of 2013.

As part of the Harrisburg Strong Plan, all city assets were turned over to the private sector, including water, sewer, parking and trash. All the proceeds from the sale of these assets went to pay down the city’s substantial debt. Labor concessions were made, which included limiting city employees to a 1% annual raise, restrictions on hiring new staff including EMS and police, and all employees increasing their healthcare contributions based upon individual salaries.

Fast forward to today, the City has experienced operating budget surpluses, two fully funded pensions systems and the third pension system that is over 80% funded, all since adopting the 2013 Strong Plan. As part of the Strong Plan and being in Act 47, the city implemented a local services tax and an increased earned income tax on city residents. Under my legislation, revenue collected from the local services tax and earned income tax would be dedicated funding. Any amount, in excess of the allotted collection, would be designated to the Other Post-Employment Benefits Trust (OPEB Trust), which was created as part of a recovery plan approved in accordance with the Municipalities Financial Recovery Act. These additional funds would be used solely to meet the municipality’s annual OPEB obligations and the underfunded OPEB Trust. Upon the OPEB Trust becoming 85% funded, the City will no longer have the taxing authority granted to it under Act 47.

My legislation will allow Pennsylvania’s capital city to exit Act 47 status, while ensuring their pension obligations and OPEB Trust remain funded. Allowing Harrisburg to continue on the path to prosperity and growth is good for our region, our state and our taxpayers.

Please join me in co-sponsoring this important piece of legislation.

Introduced as HB2557