Testimony of the York County Chamber of Commerce before the House Majority Policy Committee Hearing on Economic Development in Third Class Cities
(York, PA, January 14, 2009) Good Morning Chairman Sturla, Representative DePasquale and members of the House Majority Policy Committee. I am Tom Donley, President of the York County Chamber of Commerce. With 1700 members who employ more than 60,000 people, the Chamber is the most powerful pro-business pro-jobs network in the York Region.
Pennsylvania has 53 cities of the Third Class, with population of about 1.3 million people. About 1 in 10 Pennsylvanians live in one of these cities, many of which serve as the economic hub of their regions and sub regions all across Pennsylvania.
The regional population of Allentown, Bethlehem, Easton, Lancaster, Reading and York alone is 1,959,000. I estimate that the population of the MSA’s of all 53 of these cities is about 5 million people. This is not a special interest group, this is Pennsylvania.
The voice of those affected by the fiscal health and economic development of these cities should be strong, united and irresistible. Right now it is not. I don’t know why, because over the decades there have been many worthwhile public and private hearings, alliances, benchmarking, association committees, conferences, bills introduced, and legislation passed, over the years. The past matters only to the extent that we learn or don’t learn from it.
Right now it is not. Asking why not is an important question, but my simple answer is that with Pennsylvania’s crazy quilt of municipalities and codes, the cities of the third class represent only one agenda item among many. And with a high concentration of representatives in or near Philadelphia and Pittsburgh, and others spread across rural and outer ring suburbs, the cities and metro areas often take a back seat.
It is a sign of the times that Pennsylvania’s cities are getting more and more attention. They are essential to our economic future and quality of life. Your hearing allows the voice to grow and with your leadership and participation by many others, we can turn into a chorus that must be heard and served.
For the record, I have lived in just about every type of Pennsylvania municipality. I was born in the borough of Emmaus. My parents moved us to Allentown when I was eight because of the excellence of the school district. I have lived in Philadelphia and for 15 years in the City of York. Now that my children are grown, my wife and I have downsized and moved to a condo in Spring Garden Township. We have a cottage in a village in the Poconos, so I feel like I know something about Pennsylvania’s municipalities.
There is something distinct, special and important about Cities of the Third Class. Along with being the core infrastructure of our regional economies, they are very livable for all ages and income levels, and our focus on policy change and city advocacy must tap into the passion that millions of Pennsylvanians and visitors have for our cities and their countless assets.
I have one question regarding the classification “City of the Third Class.” At the extreme, is the smallest, Parker City, with 799 people, similar enough to Allentown with 106,632 for them to be in the same category?
To me, your first focus should be the cities across the Commonwealth that are the next level down from our two world class large cities, Philadelphia and Pittsburgh. These are Pennsylvania’s regional cities with metro populations of at least 50,000.
When I think of the great cities of the third class, I think of Allentown, Bethlehem, Easton … Scranton should be among them but has the 2A designation.
Altoona, Chester, Erie, Harrisburg, Lancaster, Reading, Wilkes-Barre, Williamsport and York and yes, Hazleton, Johnstown, Lebanon, McKeesport, New Castle, Pottsville, Sharon, and Washington probably fit.
I am glad you asked for our Chamber’s point of view. Pennsylvania’s government has incentivized and funded more specialized organizations, such as EDCs, CVBs and Main Street organizations, different instruments in the orchestra. But the Commonwealth hasn’t used its carrots and sticks to motivate those organizations to work efficiently and effectively with the Chambers. This isn’t to say that there isn’t good collaboration.
But if we had the necessary economic and political support for our cities and metro regions to be strong, we wouldn’t be having this hearing today. So, I submit that we can do better and I will go back to my economic and community development partners in York to continue this discussion.
Since it was formed by 12 merchants on center square in York in 1898, the Chamber has been committed to downtown York. Others have left. We have stayed.
Through the 20th Century and into the 21st Century, Chambers of Commerce across the Commonwealth represent the business side of their community’s development.
Our members in the City and Metro York and across York County are interested in growing a better York. Many private and public organizations have worked just as long and hard as The Chamber has and we are rightfully proud of our great city. And yet, despite all this effort, our downtown and city economy and fiscal health of our City and City School District are precarious.
As I mentioned earlier, Cities of the Third Class really form the vital foundation for Pennsylvania of infrastructure, commerce, innovation and community with all of its opportunities and challenges. They also provide the location for many regional and professional jobs that have higher income than that of the city residents.
But as important as our third class cities are, almost all are struggling with structural deficits. The problems of our cities definitely affect adjoining municipalities in their metro region. As David Rusk, urban expert and author of Cities Without Suburbs has said to us many times, “Today’s winners are tomorrow’s losers”. As cities fall below a certain tipping point, it becomes impossible for them to grow themselves out of their decay.
Research by the Pennsylvania Economy League suggests that many Pennsylvania policies have contributed to third class cities’ systemic problems. I will briefly catalog eleven policy issues for your agenda.
1. Are the laws that allow municipalities to change their structures or financial commitments working? I
refer to municipal merger laws, home rule and Act 47.
These laws make it very difficult to expand city boundaries, change governance or renegotiate union contracts when the city is at the point of no return. If the state doesn’t give cities and regions the tools to renew themselves, those problems will crash onto the state and statewide taxpayers.
2. Should state laws including Act 511 so restrict the amount and type of taxes cities of the third class may
charge, forcing reliance on the real estate tax as their main source of revenue.
Unlike Philadelphia and Pittsburgh, Pennsylvania law prohibits York from levying a wage, sales, parking, earnings and net profits or per drink tax.
With the lack of growth in most city property values, the property tax base simply does not generate enough revenue to cover the cost of providing police and fire services. The Pennsylvania Economy League Structuring Healthy Communities Report published 3/31/2009 comparing Easton, Bethlehem, Reading, Lancaster and York charts this shortfall.
3. Public safety is one service that cities simply must provide. The police and fire services are provided to
a regional population, including employees and tax exempt organizations. But the services are paid for
by taxes developed only within the city borders. The problem of providing for public safety is
compounded by the fact that expenditures for public safety are usually much higher in the city than in
the surrounding county. Is the $52 cap on the Municipal Services Tax too inflexible?
Although The Chamber does not want to see a flurry of new taxes and tax increases, we believe the cities must have reasonable taxation options.
4. Act 111 arbitration awards for police and fire personnel do not regard the city’s financial situation.
5. Municipal, state and teacher’s pensions in general are defined benefit plans, while the rest of the
economy uses defined contribution plans. State law must mandate or incentivize this change.
6. State mandated municipal obligations require millions from cities that have experienced decreases in
pension fund balance. The state must alleviate this.
7. Pension reform should consolidate plans across the state and provide better returns on larger economies
of scale and they can’t consolidate to the richest plans.
8. The state must provide greater incentives for joint purchasing of health care and other big ticket items,
and for consolidating municipal functions, particularly police and fire services.
9. In York, the City health department should be expanded into a proposed York County Health
Department. In this case, it is the County and not the State that is balking at providing some modest
start up costs. Once again federal, state and county laws, attitudes and economic hardships continue to
delay city revitalization.
10.Cities, by their nature, have less open, non-polluted space to develop than adjoining townships and
nearby green fields. Pennsylvania’s “all in each one” municipal zoning law and limited resources for
regional planning hurt cities of the third class.
11.And the biggest topic of all, creating policies driving public education reform allowing metro school
districts, our biggest public expense, to continuously improve as our major economic and workforce
development asset.
The Chamber further recognizes the challenges that our city schools face with the high poverty level, as recognized by free and reduced cost lunches in the city. It is also our understanding that the wealthiest city elementary school is poorer than the poorest county elementary school. This fact alone illustrates the financial challenges the York City School District faces.
Although financial support is not the biggest policy change needed, the decline of Pennsylvania’s share of local school district funding in the past 35 years, is a big indicator that the state hasn’t been up to the leadership needed. From 1965 to 1983 the General Assembly required the state to pay for at least half of the total cost of public education. The state’s contribution reached its peak of 55% in 1974.
Since 1985, state support has decreased significantly. In 1992 the state funding formula was frozen. Today the General Assembly contributes only around 35% of public education funding.
Although this year a one time contribution from the American Recovery and Renewal Act of 2009 is providing a big boost to the budget, the economic stress on the School District of the City of York will only get worse in the upcoming years as a result of the large increase in state employee/teacher pension obligations and shortfall in funding.
Since 2004, The York County Chamber has been a tireless advocate for equitable changes to the school funding formula.
Let me conclude with some thoughts on organizing a greater public/private focus to renew our cities as rising and shining lights in Pennsylvania.
1. Form a Senate-House caucus looking at cities of the third class. And this is true throughout the public
and private sectors. The League of Cities and Municipalities has to look out for all of its members.
2. Get the best minds involved through a state-wide process – a research conference and regional action
meetings, like Governor Casey convened at Lafayette College in 1985. The leaders of all three branches
of government need to support that.
3. Strengthen whatever association exists specifically for Cities of the Third Class.
4. Form a public/private alliance to promote the interests of Metro Cities and their regions. I am also
delighted to report that not only is past Mayor John Brenner in a key role with PLCM but John has
agreed to come on our board of directors.
5. Celebrate what Pennsylvania is doing right. We have much to celebrate and we have a bright future.
In 1986 Tennessee was about to celebrate its 200th anniversary, and Governor Lamar Alexander called for a Tennessee Homecoming in every town across the State. Over the next year that generated so much pride, focus and connection with community that it fueled a political commitment to move forward and make needed changes e.g. passing of a state sales tax to fund public education.
Chairman Sturla, perhaps you and this committee and our next Governor could call for a Pennsylvania Homecoming in 2011, the 150th anniversary of the Civil War, a year in which we are celebrating Pennsylvania’s role as the keystone state in preserving our nation. Won’t we be proud when our children and grandchildren choose the city as the best community in which to raise their children.
