The Harrisburg, Lancaster and York chambers of commerce are pressing forward with a group of peer organizations and other allies to help free the state’s cities from their fiscal straitjacket.
“We continue to keep this a high-priority issue,” said Tom Baldrige, president of the Lancaster Chamber of Commerce & Industry.

Horan is spearheading the so-called Sustainable Cities Initiative, formerly known as the Third-Class Cities Initiative. Six chambers, including three from the midstate, endorsed a white paper last year outlining the initiative’s philosophy and goals; two more have since signed on.

Also collaborating on the project are the Pennsylvania League of Cities & Municipalities and the state Local Government Commission.

Governments at all levels face escalating costs they must meet with limited revenue. Cities’ efforts, however, are complicated by myriad state mandates that hobble their efforts to control expenses, Horan and others said.

Recognizing the threat posed by their core cities’ declining fiscal condition, business leaders decided it was time to lend a helping hand.

Businesspeople know an unsustainable financial burden when they see one, Lancaster Mayor Rick Gray said.

“They’re the easiest people to explain this to. … They’re the quickest to understand,” he said.

The League of Cities & Municipalities is pleased the chambers have gotten involved, deputy executive director Richard Schuettler said.

Their independent voice adds weight to arguments the league has long been making on municipalities’ behalf, he said.

Two of the biggest problems are pension costs and arbitration rules, the chambers say. Cities must provide expensive defined-benefit plans to their police, firefighters and other workers and must make up the difference when the plans fail to meet investment goals that critics call far too optimistic.

Critics also say Act 111, the law that governs arbitration with public safety unions, puts cities at a disadvantage.

“The neutral arbitrator … often just splits the differences in the positions of the two sides and does not look at the fiscal situation of the municipality,” said G. Terry Madonna, director of the Center for Politics and Public Affairs at Franklin & Marshall College in Lancaster.

These two issues — pensions and arbitration — form the focus of the chambers’ initial legislative “ask,” Horan said.

“After we have that further defined — next month, likely — we will seek champions and co-sponsors,” she said in an email.

The proposed pension reforms would permit cities to shift to defined-contribution benefit plans. Proposed arbitration reforms would account for cities’ ability to pay and include a robust appeals process.

State legislative leaders have said they recognize cities need help.

“Generally speaking, mandate relief is an issue we are interested in pursuing,” Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, said in an email.
However, it will likely be awhile before legislators have much attention to devote to the chambers’ proposals, Gray said.

That’s because the Capitol is caught up in negotiations over Gov. Tom Corbett’s 2011-12 budget, which seeks to bridge an estimated $4 billion spending gap without raising taxes.

Once that’s resolved, “then there will be time to raise some other issues,” Gray said.
The chambers know they will face opposition, primarily from the public-sector unions that would be affected, said Gray and David Black, president of the Harrisburg Regional Chamber and CREDC.

“It’s a tough political lift,” Black said. “Any time you open a piece of legislation like that, the other side sees it as a threat.”

Nevertheless, Gray said, the proposals aren’t anti-union, but “pro level playing field.”

The initiative’s backers have presented it to more than a dozen chambers at recent meetings in western Pennsylvania, Williamsport and Scranton.

“Receptivity is high, though some chambers are not sure about jumping into controversy,” Horan said.

Gray said he hoped reform legislation would enjoy broad bipartisan support.

Multiple studies of cities’ financial woes have reached virtually identical conclusions, Gray said.

“It’s obvious where the problems lie,” he said.

The same issues affect boroughs, townships and counties, he said.

“It’s not a Republican or Democratic issue,” Gray said. “It’s a problem of municipalities, period.”