The Latest Pennsylvania Town That Can't Pay Its Bills

Times are so tough in Shamokin, City Hall had its gas cut off last month.

Image
Reuters

Shamokin, Pennsylvania, wants to enter a join financial oversight system which many enter but few leave.

Known as "Act 47," the "Financially Distressed Municipalities Act" gives Pennsylvania's Department of Community and Economic Development help cities and towns restructure their debt and control their ability to receive government funding. It also gives the financially strapped municipalities access to credit and can levy certain taxes.

For Shamokin, Act 47 is a last resort. The city council and mayor unanimously voted earlier this week to ask the state for help through the program. According to Reuters, the town of 7,300 has $800,000 in unpaid bills and can't find a bank willing to lend them money. City Hall even had its gas temporarily cut off last month. 

As bad as things may seem for Shamokin, it's hardly alone. Twenty-seven municipalities in Pennsylvania, including Pittsburgh, have entered into Act 47 since it was created in 1987. Six have been in the program for 25 years or more; only seven have found their way out. That concerns some lawmakers in Harrisburg, enough so that state legislators are asking for a cap on how long a municipality can remain under state oversight.

In a state where economic growth has been absent for decades in so many of its small cities and towns, the bill currently moving through the state legislature would essentially punish Act 47-designated municipalities for failing to become financially independent after five years (eight for extreme cases).

Reuters reports that under the proposed bill, once a city met its cap, a "death penalty" would take place, resulting in the municipality being "disincorporated and converted into 'municipal service districts' run indefinitely by court-appointed administrators, not local elected officials." One of the bill's prime sponsors, Republican John H. Eichelberger from Hollidaysburg, tells the news wire that such an event "would almost never happen." Proponents of the bill are hoping to have something ready for Governor Tom Corbett  to sign by next month.

Giving Act 47 municipalities hard deadlines to get their finances in order may force shortsighted decisions like raising taxes and cutting public sector jobs. With so many cities and towns around Pennsylvania dependent on and unable to operate without the program, it's hard to argue that the problem lies within so many different city halls.

Like most individuals who resort to bankruptcy, when a town decides to enter state oversight, it is hardly a proud moment. "I fought it tooth and nail," Shamokin Mayor William Milbrand told WITF earlier this week. "I'm proud of this town and it's really a pride thing. It hurts my pride to say that we had to go Act 47."

Bruce Zigarski (C), 60, a retired heavy equipment operator, stands on the steps of his apartment building, in Shamokin May 1, 2014. (REUTERS/Mark Makela)
A view of Market Street in Shamokin as seen from a hill near the mining site that once made the area prosperous May 1, 2014. (REUTERS/Mark Makela)
Eric Feese, 31, and his four-year-old daughter, Gianna Mannion, knock on the door of his landlord to pay his rent in Shamokin May 1, 2014. (REUTERS/Mark Makela)
Mayor Bill Milibrand, 54, who has been in office for four months, is photographed in his office in Shamokin May 1, 2014.  (REUTERS/Mark Makela)

Top image: A man drinks a beer on a front porch in Shamokin May 1, 2014. (REUTERS/Mark Makela)

About the Author