In 2016, Mahanoy City Borough Council approved an Act 47 Plan for an $800,000 loan to pay unpaid bills and to stabilize the borough's budget. After enacting Act 47, the borough would then have 5 years to get themselves out of the plan.
Under Act 47, DCED has a responsibility to assist Pennsylvania municipalities that are experiencing severe financial difficulties in order to ensure the health, safety and welfare of their citizens.
During the borough's February meeting, Mahanoy City Borough Council adopted an ordinance to submit a request to the county to place a home rule study commission question on the May primary ballot. That ballot would also included a list of candidates who would be interested in being on study commission to analyze the borough's government and determine what needs changed, and if needed adopt a home rule charter as part of Act 47.
On Tuesday evening, Matthew Domiles and Gerald Cross, of the Pennsylvania Economy League, gave a presentation to explain the process and what could be ahead for the borough. The PEC will be guiding the borough through the process.
Domiles spoke to the roughly 15 borough residents that attended and explained how the borough got to where they did.
Domiles explained how, in 2015, the borough was operating on a $1.1 million budget with $800,000 in past debts and expenditures, basically leaving the borough with no money after paying their bills.
Act 47 was approved by council in 2016 and loan helped the borough balance themselves at the time, and even though they are currently stable, the borough is still distressed.
Domiles explained the first step which requires the following question be placed on the ballot for borough voters to vote on.
"Shall a government study commission of seven (7) members be elected to study the existing form of government of the Borough of Mahanoy City, to consider the advisability of the adoption of a home rule charter, and if advisable, to draft and to recommend a home rule charter?"
According to Council Vice President Frances Burke, they were aware of at least 6 individuals who submitted petitions.
If approved, and if a commission study is established, the study would determine if the current form of government is working and make a recommendation to the borough voters on how to move forward.
"This essentially puts the power in the hands of the voters", said Domiles.
As part of being under Act 47, the borough is set to receive $477,894 from the additional 1% of the resident earned income tax.
The commission would need to decide how the borough replaces the money received through Act 47 plus the remain expenditures. Those options include:
- Increase Revenue (Raise income taxes, raise property taxes
- Decrease Expenditures (Reduce Police Force, Reduce Borough Expenses, etc.)
- Combination of Increasing Revenue or Decreasing Expenditures
- Adopt Home Rule Charter
An example provided by Domiles during the presentation was, if the borough eliminated their police force completely ($406,914) and with a 3.9 mil property tax increase ($70,980), the borough would make up for the $477,894. Many in attendance were against eliminating the police force.
The last option would be to adopt the Home Rule Charter, which was explained to be the transfer of basic authority to act in municipal affairs from the state law (Borough Code), as set forth by the General Assembly, to a local charter, drafted and adopted by a municipal's voters. Domiles explained that it puts the authority into the hands of the voters.
If the borough would adopt the Home Rule Charter, Domiles explained the following benefits to the borough
- Act 511 resident earned income tax rate limit of 1% is removed
- Borough can maintain a resident earned income tax above 1% after exit Act 47 in 2021
- Provides sufficient resources to maintain current level of borough provide public services to the community
- Property tax limit of 30 mils is removed
- Provides tax structures flexibility for future borough councils
If the commission study is established, they will have 9 months from the date of the election to report their findings and make recommendations in a final report to the citizens of the municipality. If the commission's findings recommend the preparation of a home rule charter, the commission is permitted an additional 9 months to issue a final report.
The final report will include
- Will the current form of government remain unchanged?
- Referendum to be held on the optional plan or home rule charter drafted?
- Any other actions needed to stay consistent with statutory functions?
If the Final Report includes a referendum for changes, a question for adoption or rejection must be submitted to the County Board of Elections to include the question on a ballot for voters.
The Commission Study will then be discharged after the final report is submitted.
A tentative timeline was provided if the borough went with the adoption of "Home Rule" assuming their is a majority vote to create the government study commission on May 21st, 2019 (Primary Election Day).
- June 2019 - Within 10 days of certification of election results, elected government study commission members to take oath office
- June 2019 - Within 15 days of certification of election results, Initial Meeting
- November 17, 2019 - Commission Final Report due
- May 15, 2020 - Commission Final Report Due if commission recommends drafting home rule charter
- November 3, 2020 - Borough Voters vote at General Election to approve or reject home rule charter proposed by the government study commission.