Corbett signs state takeover bill

By - Last modified: October 20, 2011 at 9:13 AM

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Gov. Tom Corbett today signed legislation that authorizes him to declare a fiscal emergency and petition the Commonwealth Court to appoint a receiver to force the implementation of a recovery plan when third-class distressed cities fail to do so under the state's Act 47 program.

An amended Senate Bill 1151 cleared the final hurdle Wednesday by passing the House.

"I remain a strong proponent for municipal governments tackling their own problems and coming together to develop a fiscal recovery plan when necessary," Corbett said in a news release. "But when that fails to happen, the state has to take action to ensure public safety."

SB 1151, which was directed at Harrisburg for the lack of an approved plan under Act 47, is designed to give the governor power to declare a fiscal emergency to ensure a city's vital and necessary services are funded.

The Harrisburg City Council in July and August rejected plans put forth by a state-appointed Act 47 team and Mayor Linda Thompson. The council has opted to file for Chapter 9 municipal bankruptcy protection rather than continue to work on another Act 47 plan.

It remains unclear how the takeover law would be affected by the bankruptcy petition filed on Oct. 11. A bankruptcy judge has scheduled a Nov. 23 hearing to decide the legality of the petition, which is being challenged by the mayor, Dauphin County and the commonwealth.

Even when fiscal emergency is declared, the distressed third-class city is given a final opportunity to develop a fiscal recovery plan that is acceptable to the secretary of the Department of Community and Economic Development. If an acceptable plan is adopted, a takeover is averted and the distressed city moves forward with implementing the plan, according to the law.

The governor then has the option of directing the DCED secretary to petition the court to appoint a receiver. The receiver would have 30 days to develop a recovery plan that must be approved by the court.

The City Council still could approve a recovery plan of its own during that 30-day window, according to the law.

Additionally, SB 1151 would provide for the creation of a four-member advisory committee that includes the mayor and city council president, an appointee of the affected county and an appointee of the governor. It also prohibits the levying of a commuter tax on nonresidents.

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