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PLEASE NOTE: THE FOLLOWING INFORMATION IS THE INITIAL DRAFT. THE PUBLIC MEETING TO VOICE ANY RECOMMENDED CHANGES IS TO BE DETERMINED
HISTORY OF ACT 47 IN BRADDOCK BOROUGH
In April of 1988 the Borough of Braddock officially requested that the Pennsylvania Department of Community Affairs (PA DCA) determine eligibility for the designation as a distressed municipality under Act 47, the Municipalities Financial Recovery Act. Act 47 has 11 criteria for determination of municipal financial distress, and if at least one is present and the Department assesses that it is a valid indication of municipal financial distress, then the PA DCA (now DCED) shall exercise its powers and duties as detailed in the Act. The Department conducted an evaluation of the fiscal condition of the Borough and found it to be distressed due to the following conditions under Section 201 of the Act:
(5) The municipality has failed to make required payments to judgment creditors for 30 days beyond the date of the recording of the judgment.
(6) The municipality, for a period of at least 30 days beyond the due date, has failed to forward taxes withheld on the income of employees or has failed to transfer employer or employee contributions for Social Security.
After conducting a public hearing, the Borough received official designation as a distressed municipality on June 15, 1988. The Western Division of the Pennsylvania Economy League was appointed the Plan Coordinator and designated to develop the original recovery plan.
The original recovery plan indicated that the Borough’s distressed status was not only a result of (then) current factors, but also due to decades of macro-economic factors affecting the community, including the decline in manufacturing base in the country and Southwestern Pennsylvania, specifically the steel industry and related businesses. The plan placed an emphasis on increased management capacity; stronger financial management controls and procedures; and a comprehensive code enforcement program. In addition, the plan recommended the development of a joint public works program operated by the Turtle Creek Valley COG in cooperation with neighboring municipalities that were also experiencing serious fiscal difficulties. The plan altered the Borough’s approach to service delivery, placing an emphasis on other intergovernmental approaches, the continued involvement in the Department’s Enterprise Zone Program, and implementation of key economic and community development strategies.
Since 1988, the Borough has greatly improved its overall financial position. During the recent decade, as finances improved, the Borough began to remove the Act 47 enhancements by lowering the rates of resident and non-resident earned income tax (EIT). In 2012, those rates were reduced to 1.2% for residents and 1.05% for non-residents, their lowest since 1988. The goal was to remove all enhancements by 2014 or 2015 and the Borough was on track to do so, before it was once again hit by events outside of its control. First, UPMC decided to close its Braddock Hospital and later decided to demolish the building and sell the property which was a major financial blow to the Borough. To lighten the impact, a five-year agreement was entered into under which UPMC would make a payment in lieu of taxes to the Borough of approximately $90,000 per year through 2014 and a payment of $45,000 in 2015. Despite these concessions, the Borough lost $90,000 per year in revenue from this source alone.
Second, in 2013 the United States Steel Corporation successfully appealed their increased tax assessment. Subsequently their assessment was drastically lowered. This also substantially affected the Borough’s revenue base, resulting in an additional loss of approximately $90,000 annually.
Third, a number of Business Privilege Tax (BPT) settlement agreements on back taxes with large taxpayers came to an end. This resulted in a further loss of revenue to the Borough. On a positive note, the implementation of Act 32 of 2008 led to an increase in EIT collections beginning in 2012. The Borough has also, through its own efforts, seen strong steady increases in delinquent tax collection and sewage fees.
In 2014, in order to make up for the cumulative loss of revenue caused by the events listed above, the Borough had to once again increase the EIT rates for residents and non-residents under Act 47, as well as slightly increase the millage rate.
Progress in Implementing Act 47 Plan Initiatives
Braddock Borough has accomplished a number of key initiatives since the adoption of the 2015 Act 47 Plan Amendment. The Borough formed a Home Rule Charter Commission in 2018 via a successful ballot initiative. This commission then developed and presented a Home Rule Charter that was approved by voters in November 2019. This Charter gives Council greater flexibility in its revenue generation efforts moving forward. Braddock also began a Joint Implementable Comprehensive Planning Process in Fall 2017 with the Boroughs of North Braddock and East Pittsburgh. Working collaboratively with DCED and Allegheny County Economic Development, the Boroughs’ completed the planning process and council adopted the plan in 2020. Beginning in 2021, Council began funding a Capital Budget to provide for the community’s long-term needs. Braddock Borough is currently exploring Regional Policing alternatives with East Pittsburgh Borough, North Braddock Borough, and Rankin Borough in an attempt to improve service quality at its current expenditure level. Finally, Braddock has leveraged technical assistance programs provided by DCED and built a strong cooperative relationship with Allegheny County to realize substantial economic development gains. All these efforts have helped the Borough prepare for its exit from Act 47 Distressed status.
Use the link below to view the full document.
415 6th Street, Braddock, PA 15104
Glenn Terry Jr.