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Distressed Cities Need State Help

by | Mar 11, 2014 | Government Entities

iStock_000008579439Medium_200_150Scranton, Pennsylvania, a city of about 76,000 people, has been progressively falling into financial trouble since the collapse of coal mining in the 1950s. Other contributors include an eroding tax base, an aging population and rising retiree and personnel costs.

In 1992, the city council voted to enter into the state’s Act 47 program. It provided loans and grants to help them develop a financial recovery plan. Unfortunately, most of the cities that have entered into the program have not met with success.

While municipal bankruptcies garner a great deal of attention, it’s the ones on the financial edge that are often referred to as the “distressed” cities, those that likely will never declare bankruptcy, but are struggling to become economically workable again.

The discord between distressed cities and their states contributes to the stress. Finding a common goal and working together would go a long way toward arriving at a viable solution.

Though many states have put legislation in place to assist such troubled cities, the level of involvement varies. Just 19 states have intervention programs for distressed municipalities.

Political pressures, a more open dialogue between cities and states and a non reliance on property taxes are just a few issues that can be reviewed and addressed, in order to help distressed cities and get them back in the black.

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