I remember asking a candidate running for mayor of Chester in 2008 why city finances are never mentioned when he talks to people at campaign appearances. He told me, ‘All Chester people care about is crime and twice-a-week trash collections.’
Here we are twelve years later and city officials still never talk details about the state of Chester’s finances beyond statements of Chester having a balanced budget year after year.
Yet, Chester is one of 15 municipalities in Pennsylvania currently in ‘Act-47 Fiscal Distress.’ There are 2650 municipalities in Pennsylvania, so that puts us in a small and exclusive group.
Under Act 47, the Department of Community and Economic Development (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.
Chester has been receiving this assistance from the state since 1995.
There’s no words in the English language that can spin receivership to be defined as a welcome imposition on your city. To even conflate the coronavirus as the reason Chester is going into receivership should make you wonder what the other 15 Act-47 cities are doing so right with coronavirus that it’s not putting them in receivership, especially the towns up in the Poconos where coronavirus is rampant.
A fiscal emergency can only be declared by the Governor and is defined as the time when insolvency or an inability to provide vital services exists or appears likely within six months. Delaware County Commonwealth Court approval is required for the state appointed receiver (just like they just approved Dr. Juan Baughn as the receiver for the school district). It’s a full-time position with enhanced powers to take steps to resolve a municipality’s fiscal problems. The receiver cannot unilaterally levy taxes, or modify debt, nor can the governor. Receivership expires after two years unless DCED seeks and the court grants an extension.
Although Chester signed off on the state issued recovery plan and the exit plan, they executed very little of those plans. The new receiver will likely come in and demand much more of the exit plan is executed. It does take some of the burden off the local government officials because they won’t be labeled as the ones making the tough decisions, which would have been political suicide for them. Having a state receiver as a buffer takes local government out the loop – unless they want to be in the loop which is the sense I get from the mayor’s written response to being in receivership. Unless the state has a new brand of receivership, I would advise our home team to step aside and let the state do what they’ve come to do. If we don’t like it, take them to court like Harrisburg City did. If we like it and it works, thank them on their way back to Harrisburg.
Harrisburg city government fought Act 47 tooth and nail. Their involvement with Act 47 back in 2010 proved so tumultuous it led to a new, more intense level of intervention: receivership. Harrisburg was the first and only city ever placed in receivership. Now, Chester is the second.
In review, the Pennsylvania fiscal disaster timeline goes like this: Act 47, Recovery Plan, Exit Plan, Receiver, Bankruptcy.
If you followed this blog over the years, you would have seen what brought us to this point.
Let’s take a trip down memory lane starting with a quote from a February 20, 2019 article in the Daily Times…
The Pennsylvania Department of Community and Economic Development (DCED) hired Econsult to draft Chester’s Act 47 Recovery Plan in August 2016, which requires the city to eliminate its budget deficiencies and address its funding deficit by May. If the city can provide a sound fiscal plan for exiting Act 47 by that time, then the deadline may be extended to 2021. Otherwise, the city will enter receivership.
Chester Mayor Thaddeus Kirkland sent a letter to the Chester Water Authority in August 2017 after Econsult concluded selling the authority was the only way to reach that goal.
Here’s a couple old blog posts of mine to catch you up…
Nothing to Report on the Exit Plan – Sept 2018. https://wp.me/p2kkJO-68a
My Overview of the Exit Plan – Aug 2018. https://wp.me/p2kkJO-67F (a must read)
You can read the actual Exit Plan here. Go right to page 59 and read the summery to get a glimpse of what’s likely to happen around here.
(FYI: In 2015, Colwyn joined Chester City as the only other municipality in Delaware County to be placed in Act-47 and they are at the Recovery Plan phase – have not advanced to the Exit Plan phase).