Luzerne County's three financially distressed municipalities are on track to shed their dubious distinction.
Nanticoke City, Plymouth Township and West Hazleton Borough have all been making financial improvements and could emerge from their state-designated Act 47 status this year or next.
"I don't see any reason for us not to get out this year," Nanticoke Mayor Joseph Dougherty said. "We're in better shape than we have been in decades, and our audits prove that."
The state Department of Community and Economic Development makes the decision whether or not to grant distressed status. West Hazleton was declared Act 47 in November 2003, Plymouth Township in July 2004 and Nanticoke in May 2006.
Under the designation, all three municipalities have been required to maintain balanced budgets, follow plans drawn up by their financial recovery coordinators and adopt better accounting practices, among other things.
Professionals with Pennsylvania Economy League, recovery coordinator for Nanticoke and West Hazleton, and Northeastern Pennsylvania Alliance, which is Plymouth Township's, say the municipalities are really making progress.
"We're hoping by the end of this year (Plymouth Township) will be in a position to present its case to the state for exit of distressed status," said Alan Baranski, vice president of community and government services at Northeastern Pennsylvania Alliance.
Joe Boyle of Pennsylvania Economy League said emerging from Act 47 will happen. "Clearly in the next year or two for Nanticoke and West Hazleton."
The three municipalities just need to keep doing what they're doing, he said.
Plymouth Township
Even natural disasters couldn't keep Plymouth Township down.
The township's financial situation has improved to the extent officials were able to handle infrastructure expenses such as damage to roads, sewers and drainage systems, created by flash-flooding on July 3, Hurricane Irene on Aug. 28 and severe flooding from Tropical Storm Lee on Sept. 8-9.
"Even despite the recent flooding event they had there, which normally would have crippled them - which would cripple a financially healthy community - they're doing well," Baranski said.
Disasters are nothing new to the township. It suffered flooding in September 2004, April 2005 and June 2006, plus there was a Dec. 17, 2004 fire that ruined the public works garage.
"You almost have to say we've been tested, and tested, and tested," supervisor Chairwoman Gale Conrad said.
It was overspending in the aftermath of the 1996 flood that started Plymouth Township on the road to financial distress. A previous administration spent money on things such as road repairs, without governmental guarantees they would get the funds back.
That taught the current administration a lesson: "We are determined not to spend what we do not have, and until we are approved for things by the government, we do not do it," Conrad said.
This time, township officials worked hard to get grants and find other sources of money to ensure there would be no negative effects on residents' pockets, Conrad said.
"Those days are gone," she said. "The people have given enough with this earned income tax."
Township officials rolled up their sleeves and did what they had to do in terms of cleaning up, engaging the right professionals and using the federal and state emergency management agencies to get the damage assessments in for the hazard mitigation grant program, Baranski said.
Supervisor Joe Yudichak, who is head of the road department, "is doing an excellent, excellent job," Conrad said. She said for weeks after the flood, he ran machinery on his own time, unpaid, to help the department get a handle on the huge amount of work to be done.
Money is starting to trickle in, Conrad said. She estimates at least 90 percent of the businesses - the backbone of the township's revenue - have bounced back.
Conrad said Plymouth Township's home-rule charter, which kicked in this year, is crucial to the recovery. It changes very little, but it allows the township to keep the 1.5 percent earned income tax it would have to give up when it gets out of Act 47.
The township's home-rule charter more or less institutionalizes the changes township officials have been following under the Act 47 plan, Baranski said.
"It is a big step to stabilize the financial condition of the township for the future," he said. "This is huge: realizing the recovery practices have worked for them. We're proud of the results there."
Plymouth Township has persevered through all the adversity and is better as a result of it, Baranski said.
"We hope this year will be one of recovery and emancipation," he said.
Nanticoke
What stands out about Nanticoke's most recent audit - for 2010 - is what isn't in it.
The independent auditor, Certified Public Accountant Joseph Mazzoni, wrote in his report for the 2003 audit that conditions "do raise substantial doubt about the City's ability to continue as a going concern."
By contrast, the last audit had no such dire warnings that the city might have to shut down.
For years Nanticoke was plagued by a cycle of borrow and spend. City officials borrowed more and more to pay its bills. The bills kept accumulating to the point the city would run out of money by July and have to borrow still more.
"That catches up to you after a while," PEL Executive Director Gerald Cross said.
Add to it a former tax collector who was found guilty of stealing thousands of dollars from the city's coffers, and it was a recipe for financial disaster.
Gone are the days of slipshod record-keeping and defaulting on tax anticipation notes, according to PEL.
"The city is now on a firmer financial footing, with professional management and a dedicated council and mayor," Cross said.
Boyle credits City Administrator Holly Cirko and Director of Finance Pam Heard with making an impact, noting, "When you put professionals in there to do the job and support them, they will make progress."
Dougherty thinks the city's new home-rule charter, which took effect this year, will help the city.
"Act 47 was the vehicle that helped us become financially solvent," he said. "But now that home rule is passed, we have the ability to do what we need to do. We are always trying to improve our finances. Continually, as the audits show."
Nanticoke's charter, which is more comprehensive than Plymouth Township's, calls for numerous changes including a strong-mayor form of government. The charter allows Nanticoke to keep the 1.5 percent earned income tax that is permitted under Act 47 but would revert back to the state-mandated level of 0.5 percent without home rule, and formalizes the city administrator position to make it permanent.
Boyle called Nanticoke "an excellent example of how Act 47 can work" if city officials take it seriously and cooperate with DCED and their financial recovery coordinator.
Dougherty gives kudos to PEL as well.
"Did I always agree with what they wanted to do? Absolutely not. But it worked," he said.
West Hazleton
Things look good financially for West Hazleton in the upcoming year. The budget calls for income of $1.9 million and expenses of $1.85 million, which means an anticipated $76,948 surplus. There's no tax increase, either. The fire department is changing over from partially paid, with the retirements of fire Chief Robert Ward and an engine driver, to all-volunteer, which will save about $132,000.
But in contrast to his Nanticoke counterpart, West Hazleton Mayor Frank Schmidt doesn't have much faith in Act 47 and doesn't think it helped the borough.
He said West Hazleton has debt of more than $1.5 million, including a $300,000 interest-free loan from the state and a $1 million loan taken out 15 years ago. Schmidt said the previous administration that took out the $1 million loan kept refinancing it instead of paying it down, which is how the financial trouble started.
The borough had to give up its 1-percent earned income tax, "and now we have to really struggle to survive, without raising taxes," Schmidt said.
Home rule would have allowed the borough to keep it, but West Hazleton voters struck down a ballot question to form a study commission, so the earned income tax rate reverted back to the state-mandated 0.5 percent.
Schmidt calls home rule a big gamble: you don't know who's going to run, who's going to get elected, and whether they're qualified to make changes.
"As mayor, I would be glad to give up my position if I knew somebody was going to come in and do a good job," he said.
Schmidt said he would like to see changes made in Harrisburg that would allow municipalities like West Hazleton to keep higher earned income taxes.
"The last thing we want to do is raise taxes on homeowners, because they've been taxed enough," he said. "We're hoping the state changes Act 47 and gives us permission to get that 1 percent. We wouldn't have to worry ever again."
eskrapits@citizensvoice.com, 570-821-2072
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