Johnstown Delays Vote On Leaving Financial Assistance Program It Depends On

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Johnstown City Council was supposed to vote Wednesday to adopt an amended recovery plan in order to stay in Act 47, Pennsylvania’s assistance program for financially distressed communities. The vote was tabled.

This month marks Johnstown’s 25th year in the program; the city wouldn’t be able to cover its expenses without the tools the program provides, such as being able to restructure debt and collect a higher local services tax. So why the hold-up?

“Some of the council members weren’t at that last [council] meeting, our city manager wasn’t here tonight and I think our department heads all need to get together to make sure that we’re all working off the same page and working together,” said Mayor Frank Janakovic.

Janakovic hopes to hold that meeting in September at the latest.

Act 47’s goal is to help municipalities reestablish financial sustainability and then exit the program. To do that, communities work with a coordinator to come up with a plan; they can restructure debt, levy larger taxes, and postpone paying some of their obligations.

In 2016, Johnstown legally paid less into the its pension funds; an increase in the local service tax, from $52 to $156, generated more than $600,000 for the city.

For the first time in recent memory, those tools helped Johnstown to end 2016 with money in the bank. Janakovic took a moment to recognize that $87,000 surplus as a remarkable moment for the city. But it was a brief high.

The city’s broad financial picture remains bleak, said Councilman Jack Williams.

“Twenty-five years the city’s been distressed and it’s not any better today than it was 25 years. And that, look at Altoona, five years and they’re coming out,” said Williams, referring to Altoona’s intent to exit Act 47.

Altoona officials had the final meeting of the exit process Wednesday, and could leave the program within the next 10 days.

In Johnstown, officials expect costs to grow year over year, but revenue to remain static as the city struggles to attract business and population continues to decline.

Recent changes to Act 47 limit municipalities to five years in the program, which means Johnstown will have to decide next year whether to leave the program and fend for itself, or request an extension. The city's five-year term was dated retroactively to the last time they submitted an amended recovery plan, in 2013.

In the program’s 30 years, 12 of the 30 municipalities have exited Act 47 successfully.