Wolf signs bill to let Harrisburg exit Act 47. What’s next?

After clearing the Senate last week, a bill allowing Harrisburg to exit Act 47 has been signed by Gov. Tom Wolf.

The measure will allow Harrisburg to preserve through 2023 the special authority that has allowed it to levy higher taxes under the state program for distressed municipalities. That includes the city’s 2 percent earned-income tax on residents and a $156-per-year local services tax on people who work in the city — taxes that provide about $12 million per year in revenue but that are higher than they would be absent the special authority.

The power to continue levying those higher taxes also will come with oversight from a new five-member authority that has yet to be formed. 

The new authority will be tasked with developing a financial plan for the city, including how it will account for the loss of the higher taxation heading into 2024. At that time, Harrisburg will be required to lower its earned income tax rate back to 1 percent, while the local services tax would drop back to $52 per year.

According to the legislation, the authority members will be appointed by the governor, Senate president pro tempore, speaker of the House, Senate minority leader and House minority leader. Members of the authority must have financial management experience and either be residents of the city or have their primary places of business or employment in the city.

The board also would include two non-voting members: the state secretary of the budget and Harrisburg’s finance director.

The legislation provides a $100,000 appropriation to be used as operating funds for the authority. The authority will approve annual city budgets and review quarterly financial reports to ensure the city is repaying its debts over the five-year period.

Under the legislation, Harrisburg will not be able to actually exit Act 47 until the board is in place and the city enters into an agreement with it. The agreement would allow the authority to review the city’s finances and begin developing the five-year financial plan.

Jason Scott
Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com.

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