Report: 3 ways states can help local governments in Pa. and beyond shore up their bottom lines | Friday Morning Coffee

July 9, 2021 7:07 am

Good Friday Morning, Fellow Seekers.

With states and local governments across the country still working to emerge from the profound economic disruption brought on by the COVID-19 pandemic, those local governments have found their hands tied by state-imposed limits on their ability to raise or to impose new taxes.

“Most local governments are still allowed to collect only one or two of the three major taxes (property, sales, and income taxes),” scholars at the Pew Charitable Trusts observe in a new research brief.

“These fiscal restrictions also extend in many cases to smaller tax streams, such as excise taxes,” the Pew research continues. “The range of these limitations on local taxation reflects efforts by state leaders to increase government accountability, restrain the growth of government, prevent mismanagement of local finances, and boost a state’s ability to attract individuals and businesses.

Pew’s scholars conclude, however, that those limits can cause long-lasting fiscal headaches by constraining local leaders’ ability to offer additional public services or to recover from a recession.

“All [of our] taxes are limited in one way or another,” Geoff Neill, a legislative representative for the California State Association of Counties, told Pew. “Counties have essentially no budget flexibility at all. They can’t decide how much revenue they want; they just look at how much they will be getting, and budget based on that.”

(Image via

In Pennsylvania, for instance, the state limits local governments to a few broad-based revenue sources, for which the tax rates are capped, according to Pew. The state law for distressed municipalities, known as Act 47, does allow for local taxes to be raised beyond that state-imposed cap.

Based on that experience, local governments could benefit from additional flexibility, Andrew Sheaf, a a local government policy manager at the state’s Department of Community and Economic Development, told Pew.

“I think there’s value to having locally elected officials being able to look at their tax structure, their population, and make their own decision in terms of what the right tax structure should be,” Sheaf told Pew.

Pew’s research suggests three possible remedies to give municipalities that kind of flexibility. We’ll take a look at them below.

(Image via The Pew Charitable Trusts)

The Pew research suggests that state governments:

  1. “Temporarily lift limitations to give local officials more options for responding to extraordinary fiscal challenges, including recessions and natural disasters. For example, states could allow localities to pass temporary tax changes or use revenue that is normally restricted to specific functions for other purposes.
  2. “Adjust limitations that may prevent local government revenue from fully recovering after a downturn. In other words, states can allow tax revenue to grow as the economy recovers.
  3. “Increase local budget flexibility in the long term. For example, states can provide financial aid to local governments to mitigate the impact of tax limitations or offer relief from state mandates that increase costs for localities.”

Local officials, for their part, told Pew that they’d welcome any of those changes.

“We’d love to figure out new ways to do what we’re mandated to do. The challenge is that we’re required to do these things and yet we’re not given the tools to pay for them,” Lancaster Mayor Danene Sorace told Pew.

The Pennsylvania Capitol building. (Capital-Star photo by Sarah Anne Hughes)

Our Stuff.
When state lawmakers passed, and Gov. Tom Wolf signed, this year’s state budget, one thing was noticeably absent: The traditional funding for Pennsylvania’s public media outlets. In our lead story this morning, Stephen Caruso delves into what happened to the money and why it might have been eliminated.

As advocates for childhood sexual abuse plan for action when lawmakers return to town this fall, Senate Majority Leader Kim Ward, R-Westmoreland, says she’s considering the ‘best legal path’ to justice for them. Marley Parish has the story.

Pennsylvania is poised to receive $225 million over the next nine years in damages related to the opioid epidemic in a bankruptcy settlement with the family who owned Purdue Pharma, the maker of OxycontinCaruso reports.

Pennsylvania set a single-year record for natural gas production in 2020, but the state also saw an uptick in violations, Cassie Miller reports.

Chronic unemployment for Philadelphians is a marker for a higher risk of an early death, according to a report by the city’s Health Department, our partners at the Philadelphia Tribune report.

If Pittsburgh and the suburban borough Wilkinsburg merge, the Steel City’s controller says it should spur more municipal consolidations, our partners at Pittsburgh City Paper report.

On our Commentary Page this morning, opinion regular Bruce Ledewitz says Allegheny County District Attorney Stephen Zappala should resign or be impeached for sandbagging a defense attorney who criticized his office – but he shouldn’t be subjected to professional discipline. And an advocate argues that lawmakers need to support an important funding increase to Pennsylvania’s court-appointed guardianship program.

En la Estrella-Capital: La nueva ley podría ampliar el alcance del 5G en Pa. Y tras la liberación de Cosby, dos senadores de Pa. quieren ordenar acuerdos escritos de no enjuiciar.

William M. McSwain, United States Attorney for Pa’s Eastern District (U.S. Dept. of Justice photo)

Republican gubernatorial hopeful Bill McSwain is trying to avoid former President Donald Trump’s false election claims – but that’s not easyClout reports.

The NCAA hasn’t made a call on what will happen to athletic programs at six, state-owned universities that are set to merge, the Post-Gazette reports.

After a deadly holiday weekend, Pennsylvania’s fireworks law needs to change, the state Fire Marshal tells PennLive (paywall).

During a stop in Lancaster, Gov. Tom Wolf touted the $30 million in early childhood funding included in this year’s state budget, LancasterOnline reports.

A Pennsylvania man facing serious charges in the Jan. 6 insurrection built a model of the Capitol out of Legos, the York Daily Record reports.

Parents have until July 15 to decide if they want their kids to repeat a year of school because of the pandemic, the Morning Call reports.

Jill Garrett, the first Black news anchor in northeastern Pennsylvania, has died, aged 66, the Citizens’ Voice reports.

SEPTA has unveiled new transit cards for Philadelphia studentsWHYY-FM reports.

New data from UPMC show that immunocompromised patients also are benefiting from the COVID vaccineWESA-FM reports.

A Pennsylvania cyber-charter school has bought a building in downtown ErieGoErie reports.

A tire recycler is planning a new facility in the Mon Valley, the Observer-Reporter reports.

Lt. Gov. John Fetterman has raised $2.5 million toward his U.S. Senate bid during the second quarter, PoliticsPA reports.

States are sending less food to landfills, reducing a source of methane emissions, reports.

Facing backlash, Toyota says it will stop donating to Republicans who tried to reverse the election, Talking Points Memo reports.

Here’s your #Pennsylvania Instagram of the Day:

What Goes On
If you’re in a road-tripping mood (or live in Philly) today’s your day.
10 a.m., Independence Seaport Museum, Philadelphia: Pennsylvania and New Jersey lawmakers explain why Philadelphia should host the Navy and Marine Corps anniversary.
12 p.m., Sharon Baptist Church, Philadelphia: Gov. Tom Wolf, joined by lawmakers, mark the 15th, yes, the 15th, anniversary of the last time a minimum wage hike bill was signed into law.

You Say It’s Your Birthday Dept.
Best wishes go out to veteran Harrisburg PR exec Corinna Vescey Wilson, who celebrates today, and to ex-Rendell administration official-turned-college professor Joseph Powers, who celebrates on Saturday. Congratulations, folks.

Heavy Rotation
So here’s one that took me entirely by surprise when it popped up recently. It’s Icelandic rockers Of Monsters and Men doing their version of Post Malone’s ‘Circles,’ and it is shockingly good.

Friday’s Gratuitous Soccer Link
England manager Gareth Southgate and Italy boss Roberto Mancini have set an example that others should followPhilipp Lahm writes for The Guardian. The two face each other in the Euro2021 final on Sunday.

And now you’re up to date.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

John L. Micek

A three-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's former Editor-in-Chief.