Mahanoy City poised to leave Act 47 program for distressed municipalities

Feb. 16—MAHANOY CITY — After a seven-year recovery process, the borough is set to leave Act 47.

Since 2016, Mahanoy City has been receiving assistance through the Department of Community and Economic Development under its Act 47 program.

The program is intended to assist municipalities that are deemed financially distressed and to ensure the health, safety and welfare of their citizens.

Gerald E. Cross, senior research fellow for the Pennsylvania Economy League, which has coordinated the borough's recovery plan, said Mahanoy City had started running out of money by mid-2015.

Due to an outstanding balance on garbage collection, the borough had difficulty meeting its annual expenditures and ultimately sought help from the DCED.

Cross said the PEL was appointed to oversee the recovery plan and, over the next few years, helped implement changes to the borough to get it back on good financial footing.

"We've made a lot of progress," Cross said.

One significant change was to the borough's tax structure, as the earned income tax was raised from 1% to 2%, with 1.5% going to the borough and the remaining 0.5% to Mahanoy Area School District.

Cross said the tax increase put the borough on a "sound money basis." With the additional revenue, the borough invested in personnel improvements, debt restructuring and blight demolition projects, as well as rebuilding and restaffing the police department.

Then, in 2020, came the most significant milestone: After a monthslong process in which a committee was appointed to examine the borough's government, the borough adopted a home rule charter, which went into effect in January 2021.

The charter allows the borough to retain its tax increase beyond Act 47, as well as other advancements made throughout the recovery process.

"That institutionalized a lot of the changes under the Act 47 plan and made them permanent," Cross said. "Under (state law), all the changes that we put up, if you leave Act 47, they go away."

A home rule charter allows more local control over municipal governance, transferring the basic authority to act in municipal affairs from state law to the local charter, which is drafted and adopted by the municipality's voters.

Mahanoy City is the first municipality in Schuylkill County to approve and establish a home rule charter, which includes reducing the council from seven to five members and eliminating the office of mayor.

"We were able to maintain the new tax structure, which proved very helpful," Cross said. "Citizens seem to prefer that over real estate taxes, so that worked out. But all in all, it's been significant change over seven years — and positive change."

Cross also credited the residents' cooperative attitude as a key part in advancing the recovery process.

"In 2019, everybody stepped up," he said. "(The borough) had to sell the idea of the home rule charter. ... But when you have cooperation with the locals, you can solve their problems."

Compared to years past, he said, the borough is now "very financially and operationally stable."

"We're not wealthy, but we're not poor," Cross said.

Operations

Borough Council Chairperson Michael Connolly, who was elected in 2019, said the borough operations have improved dramatically since his first days on the council.

"We've come a long way since 2019, and it shows," he said. "It's so differently run from my first day here. It's actually a business, and it's run like a business now."

The borough has acquired state grants and other resources to fund a slate of ongoing projects, such as the demolition of blighted and aging properties along Centre Street, which includes the former Teen Canteen building.

Another project, Cross said, includes a survey of all blighted properties in the borough.

Council member Patricia Mullins noted that as the borough has become financially stable, the real estate market and blight remediation efforts have improved significantly.

"There were some houses that I would consider blighted that (people) purchased and are totally remodeling," Mullins said. "It's incredible."

Mahanoy City will hold its Act 47 exit ceremony next Thursday at borough hall, marking the borough's formal graduation from the program. The event is expected to draw several visitors, including Cross, DCED officials and state lawmakers.

Mahanoy City will be the 20th municipality to leave Act 47, joining Reading, Scranton and other recent graduates. The City of Hazleton will leave the program in about two months, according to Cross.

Contact the writer: hlee@republicanherald.com; 570-628-6085