Harrisburg mayor declares ‘fiscal crisis’ after failing to get budget provision

Mayor Eric Papenfuse said Harrisburg is in “fiscal crisis” after the state declined to agree to a budget provision that would allow the city to keep its current taxing authority. The city will face a $12 million dollar budget shortfall over three years unless the state takes action, Papenfuse said. 

Harrisburg has been in Act 47 status since 2010. The status allows it to levy additional taxes, but it also has some drawbacks. Act 47 brands the city as financially distressed, and it can make it harder to attract businesses or get loans.

Papenfuse wants to exit Act 47 while keeping the additional local services tax and earned income tax associated with the designation. Otherwise the city faces a considerable gap in its $60 million annual budget, which Papenfuse said consists mainly of employees’ salaries and health care. 

Papenfuse has declared a hiring freeze for city employees and other austerity measures until the spending gap is resolved.

“They’re asking us to cut approximately 20 percent of our budget, and the only place that can come from is personnel,” Papenfuse said at a press conference. “Police and fire and essential public safety personnel, a group i’ve been trying to build up, not tear down.”

State Representative Greg Rothman, R-Cumberland County, said he supports Papenfuse’s effort to transition out of Act 47. However, allowing Harrisburg to keep its higher taxes would set a precedent some house GOP members didn’t feel comfortable with, Rothman said.

Rothman said he welcomes conversations about how to bring the meet the city’s budgetary needs and is planning legislative hearings for later this year. 

“What the city was asking for was to be taken out of Act 47 but to keep those taxes in place,” Rothman said. “They weren’t losing anything from the state. If they get out of Act 47, they lose those taxes.”

Editor’s note: An earlier version of this story said State Representative Rothman opposed Papenfuse’s effort.