For the second time in 12 years, the city of Lancaster plans to recruit a consulting firm, to be paid in part with state assistance, to see what the city can do to operate more efficiently and improve its financial stability.
Current projections show that Lancaster will deplete its reserves and notch a $6.4 million deficit as soon as 2022 if it doesn’t raise taxes — as it has had to do eight times in the past 14 years, Mayor Danene Sorace said during remarks at Tuesday’s city council meeting.
The problem, the mayor said, is Pennsylvania’s antiquated system of local governance, which simply doesn’t give municipalities the tools they need to prosper.
“The issues are structural and long term,” she said, “and as such, need structural, long-term fixes.”
The city hopes to pick the consultant by the beginning of September.
It will seek a grant to offset half the cost — which remains to be determined — from the state Department of Community and Economic Development’s Early Intervention Program, or EIP.
EIP is sometimes seen as the first step on the way to a “financial distress” designation under Pennsylvania’s Act 47, but it isn’t, DCED spokesman Michael Gerber said. It’s a resource for any city that wants to improve its financial position, he said.
“We are nowhere near Act 47,” Sorace emphasized.
The consultant will be asked to conduct a thorough review of city finances and operations, develop five-year fiscal forecasts, and recommend possible ways to save on expenses and bring in additional income. It will study whether adopting a Home Rule Charter would help.
The report would most likely be finished early next year, Sorace said.
The previous study was conducted in 2007, and was also partly funded through EIP. It made more than 180 recommendations, almost all of which have been implemented, Sorace said.
Cost savings will likely be harder to achieve this time around, she said: The “low-hanging fruit” has mostly been picked.
Nevertheless, an outside analysis will help to make sure the city is doing all it can, she said.
Concurrently, the city plans to push for reform of the state's rules for local governments — a perennial issue for leaders in Lancaster and throughout Pennsylvania.
State law mandates certain services while providing a limited menu of tax options. In particular, municipalities must rely heavily on property taxes, which don’t rise much once a city has been built out. In Lancaster, despite all the recent investment, the property tax base grew just 1.35% between 2006 and 2017.
Meanwhile, health insurance, pensions and other costs of government continue to rise steadily.
Sorace said she’s already reached out to state legislators. She’s also talking to the business community, whose support, she said, will be “critical” to reform.
Lancaster Chamber President Tom Baldrige said “outdated, inflexible and uncompetitive state laws and policies” create an unsustainable situation for even the best-managed municipalities.
The chamber has long supported reform and will continue to do so, he said.
Making headway on the issue is crucial to the region’s future, Sorace said.
“It’s going to take significant effort to solve this problem, and we cannot do it without help from Harrisburg,” she said.