New Castle News

Closer Look

July 9, 2013

Our Opinion: Home rule review provides dose of reality

NEW CASTLE — There will be no push from New Castle government to pursue home rule for the city.

A committee exploring the possibility of advancing the home rule option concluded the concept served no constructive purpose. So if there is to be a drive for home rule in New Castle, it will be up to citizens to do so.

State law allows citizens to petition for such a government study in Pennsylvania municipalities. But if city residents were so inclined, we presume they already would have acted.

Exploration of home rule was a facet of New Castle’s recovery plan under Act 47. The state-mandated plan — designed to assist the financially distressed city government — included a recommendation that home rule be considered.

While home rule — essentially the opportunity for local people to design the structure of their municipal government — can include many variations, taxation seems to be a key issue in this instance.

State law imposes significant limitations on how municipalities can impose taxes. It also sets ceilings on rates.

Act 47, however, allows New Castle to exceed normal taxation rates on the wage tax, traditionally limited to 1 percent. In addition, Act 47 authorizes the city to impose taxes on non-residents who work in New Castle. Right now, non-residents pay a wage tax of 2.05 percent in the city, with 1 percent going back to their home municipalities.

If you have been following the saga of New Castle and Act 47, you no doubt have heard various officials express the desire to end this status. There are complaints the rules imposed by Act 47 are too restrictive and that the designation creates an economic stigma for the city.

Theoretically, home rule offers an option for exiting Act 47. But the catch is that any move to leave Act 47 would mean an end to the city’s ability to collect wage taxes from non-residents. It would then be up to those who live in the city to make up the difference.

Because home rule ultimately must be approved by voter referendum, we presume that scenario would be a tough sell.

Although New Castle has its share of challenges and problems, it’s difficult to cite the current structure of municipal government as the culprit or to credibly see an alternative as superior. But we’re sure there is always some value in assessing existing systems to consider other options.

The exploration of home rule for New Castle may make it clear there will be no quick exit from Act 47. New Castle’s budget situation in future years isn’t particularly bright, with higher taxes being recommended.

If New Castle is to ever leave Act 47, it will require years of hard work and effective leadership. With the home rule discussion apparently resolved, the city needs to devote its energy to these efforts.

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