Service Authorities Can No Longer Transfer Money To Municipalities

Sep 17, 2012 Wrap_Mary Wilson.mp3

Pennsylvania’s municipalities are going to have a harder time getting a little help from their friends under a new state law. Municipal authorities, who provide services like maintaining water lines and sewer systems, are no longer allowed to transfer money to assist the municipalities that created them.

John Brosious, Deputy Director of the Pennsylvania Municipal Authorities Association, said it is a practice that has become increasingly common in the economic downturn. The law, which went into effect in late August, prohibits municipal authorities from spending the money they receive in fee payments on anything other than their mission.

“If you’re paying a water bill or sewer bill or garbage bill, that what you’re paying for that service, is, essentially, for that service, and that some of that money isn’t being used for other purposes, such as going back to a municipality to cover some of the costs that they may have incurred,” Brosious said.

Many municipal authorities tend to contribute money and services for community groups and events.  Brosious said those community contributions are now capped at one thousand dollars. “The other side of the equation was pretty much the straight transfer of money, and in many cases, that was a lot bigger sum of money than the community events,” Brosious said.

Brosious said such handouts amounted to millions of dollars in the most extreme cases. “With more and more municipalities trying to figure out how to deal with their financial situation, they wanted to be sure that this was you know not a monetary house of cards that would kind of collapse on everybody that was involved,” Brosious said.

He noted it was a small issue, compared to the practice of simply transferring money from authorities to municipalities that could not pay their bills.