New Castle News


January 9, 2014

Our Opinion: Pittsburgh’s situation serves as message for New Castle

NEW CASTLE — Pittsburgh’s new mayor, Bill Peduto, wants to keep his city designated as financially distressed.

Peduto, who took office at the start of this week, has informed the Corbett administration that he wants Pittsburgh to maintain its Act 47 status. This is the same designation the city of New Castle now has.

The move by Peduto follows six years of balanced budgets and improved credit rating under the former mayor, Luke Ravenstahl. Such data could have allowed Pittsburgh to leave Act 47 with its state-ordered fiscal management team and operate as an independent municipality.

But Peduto is concerned Pittsburgh could relapse if it leaves Act. 47 now. He wants to give his financial team the opportunity to review the city’s fiscal data and pursue other reforms that will help to ensure long-term stability.

Peduto’s move may appear to be puzzling to many citizens and officials in New Castle. Ever since this city received Act 47 designation, a professed goal by most officials has been to find a way to get out of it.

In some eyes, Act 47 is seen as an embarrassment and perhaps a hindrance to growth. The question is sometimes asked: Why would a business want to locate in a city that’s officially labeled financially distressed?

One answer, we suppose, is that such a city is getting help with its finances and being forced to function in a responsible manner. That level of municipal stability might be attractive to a business worried about the future.

As we have said previously, New Castle should be in no hurry to free itself of Act 47 status. It makes little sense to do so and then wind up in a financial hole a year or two later.

We note that Act 47 allows for additional taxing power for New Castle that would not exist otherwise. Primarily, the city can assess wage taxes on anyone who works in the city, regardless of residency. That ability would go away with Act. 47.

But more to the point, Act 47 demands a proper accounting of municipal money to ensure budgets are accurate and all responsibilities are met. Sometimes governments get into trouble by being overly optimistic with revenue projections or spending money they don’t have. Act 47 seeks to avoid those problems.

We don’t claim that Act 47 is perfect. Some officials grouse that it fails to develop growth and development strategies.

Yet there is nothing prohibiting Act 47 municipalities from creating and pursuing their own initiatives — so long as the budgets balance. Being financially distressed does not preclude innovation and implementing fresh ideas. Cities just have to pay for them. But that should always be the case.

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