Lancaster city Mayor Danene Sorace joined other city leaders from across Pennsylvania last week “to plead for direct aid from the federal government to help them withstand large budget shortfalls due to lost revenue from the economic impact of the coronavirus pandemic,” LNP | LancasterOnline’s Gillian McGoldrick reported. City leaders stressed that if their situations don’t improve soon, they will have to make significant cuts in the areas of public safety and quality of life services.
Lancaster city is “one emergency away from financial catastrophe,” Sorace said last week.
To a lesser extent, that was the case before the pandemic, too.
This is another situation in which the fallout of the COVID-19 pandemic has exacerbated an existing structural problem in Pennsylvania. The truth is that most cities were not in great financial shape even before the virus hit.
Sorace wrote on this topic in an op-ed for LNP | LancasterOnline in January, before 2020 turned upside down. Discussing the city budget then, she noted that, of the available taxes to fund the city, the only one Lancaster controls is the property tax. The others — earned income tax, the local services tax and the real estate transfer tax — are fixed by state law.
Throughout her time as mayor, Sorace — and this editorial board — have been pressing state legislators to give more flexible tax tools to cities. (Part of that also involves the long-overdue need for property tax reform.)
“We need solutions that create a new, equitable and sustainable fiscal structure that will allow cities like Lancaster to keep thriving,” Sorace wrote in January.
We have urged the Lancaster County delegation in Harrisburg to make substantive changes that could help the city. One example: Giving all cities flexibility to raise the local services tax and earned income tax would potentially bolster Lancaster’s annual revenues by up to $13 million.
“Why not give all cities that taxing discretion, rather than wait until they reach a state of financial distress?” we wrote in January.
This isn’t about putting unnecessary new burdens on taxpayers. It’s about ensuring that Pennsylvania’s cities — the vibrant job- and revenue-producing hearts of so many counties — aren’t constantly on the brink of financial disaster.
That disaster has come in 2020.
As it navigates the ongoing economic fallout of COVID-19, Lancaster city has turned to its rainy day fund, “but Sorace said it will not last through another emergency and the upcoming recession for which the country is bracing,” LNP | LancasterOnline’s McGoldrick reported last week.
The city already furloughed 12% of its staff in April, with the Public Works department hit hardest. There are few remaining options other than cutting police officers and firefighters. Such cuts would be awful news for those first responders and a setback for public safety at a time when we can ill afford it.
The situation is dire across the state. Pittsburgh is expecting a 20% budget shortfall and city officials are considering cutting 400 jobs, including police and firefighters, McGoldrick noted. And “Altoona might need to reenter the state’s Act 47 distressed municipality program if it doesn’t get direct federal aid to offset its projected $1 million revenue shortfall due to COVID-19,” the Altoona Mirror reported.
Last week’s joint plea by for direct federal aid was organized by the Pennsylvania Municipal League. City officials statewide hope such relief is part of the next COVID-19 stimulus, which is currently stalled by a rancorous negotiations impasse and the fact that Congress is — bafflingly — on vacation until next month.
We agree that the next stimulus must help undergird the finances of cities across America in this unprecedented crisis. There can be no strong recovery if our metropolitan centers are bankrupt and staffed by skeleton crews.
But we think Republican U.S. Sen. Pat Toomey also made a good point earlier this month when he noted that some funds from the first COVID-19 relief package Congress passed in late March remain unspent. “According to a July 23 report, only 26.7% of the $5 billion sent to (Pennsylvania) to cover any costs associated with COVID-19 responses had been spent,” McGoldrick reported.
“Every dollar that was spent through the CARES Act was either borrowed or printed,” Toomey said in the statement. “Before Congress spends even more money it doesn’t actually have, states and counties should allocate their existing allotments so we can thoughtfully determine what needs remain.”
Lancaster County directly received $95 million in federal coronavirus relief funds, from which Lancaster city has received $339,714, county Commissioner Josh Parsons said. This seems like a rather paltry amount, given that the city is where the county’s largest hospital, many essential nonprofits and the Lancaster County Government Center are located. Those entities rely on the services the city is scrambling to keep going.
Additionally, the city has received about $2 million in community development block grants and emergency solutions grants, which Mayor Sorace said went “directly right back out the door.”
So Lancaster city, teetering on the precipice of more job and service cuts, remains at the mercy of other government entities that are sitting on unspent funds.
We’d like to see the situation with those funds resolved. We also believe the next round of necessary federal relief should — for the sake of efficiency in a time of emergency — go directly to Lancaster and cities like it across Pennsylvania. And the sooner the better. It’s time for Congress — and Lancaster County Congressman Lloyd Smucker — to get back to work.