Altoona City Council will decide today whether to accept or reject the Act 47 recovery plan, a year after it first broached the idea of entering the state's distressed municipalities program.
Adoption will mean higher taxes, workforce adjustments and a balanced budget.
Rejection would mean an alternate plan and potential trouble, which could include state refusal to approve, problems enacting additional taxes in time to make ends meet for 2013 and if worse comes to worst, the city's delivery into state receivership.
"I have confidence in council, that they will support [the consultant's version]," Mayor Bill Schirf said. "In my opinion, it's a workable plan."
Not everyone will be happy, but the plan shows the way to solvency, culminating in a projected $2 million surplus for 2016 compared to a $10 million deficit, if the city does nothing, Schirf said.
Councilman Mike Haire is not so cheerful.
He overcame misgivings to be part of the unanimous vote to enter the Act 47 program, but said he regrets that now and won't vote to approve today.
Rather, it gives the city a temporary reprieve, lifting the cap on earned income taxes for as long as it lasts, which is insufficient help, he said.
Unfortunately, it doesn't also "give us the political fortitude to do the hard things," he said.
There is a conflict between a provision in the city's tentative budget calling for 18 managers to receive their customary raises to match nonuniformed worker contract raises for 2013 and a manager wage freeze in the recovery plan, he said.
The plan doesn't call for an overall freeze until 2014, when the three union contracts expire.
The inconsistency between the budget, which council is slated to approve today, and the recovery plan could lead the Department of Community and Economic Development to reject the recovery plan even if the city approves it, Haire said.
Moreover, the wage freeze itself is unrealistic, he said.
"I can't foresee the unions taking 0 percent raises for the next three years," he said.
Another problem is the threat of the loss of sovereignty if the city doesn't approve the plan today, Haire said.
Act 47 consultant team leader John Espenshade laid out the consequences of rejection in a recent letter to council members and City Manager Joe Weakland.
Not only must council approve the plan tonight, but City Manager Joe Weakland must also issue an order directing its implementation, Espenshade wrote.
Otherwise, Weakland must produce an alternate plan, council must approve it, and the DCED Secretary must endorse it as capable of overcoming the city's financial distress, Espenshade said.
Failing that, the governor can declare a "fiscal emergency" in Altoona, create an emergency action plan and petition Commonwealth Court to appoint a receiver, who can consider the original coordinator's plan or some alternate plan, then petition the same court for approval.
Council and the manager would then need to execute the state's plan, Espenshade said.
Council will probably approve the consultant's current plan tonight, Weakland conceded.
If it doesn't, forcing Weakland to produce an alternate plan, the DCED secretary would reject it, Weakland predicted.
A DCED official told him so, he said.
"No matter how good it is," Weakland said.
The current plan is better than the original, but 52 criticisms among 110 relayed by city staff remain "unaddressed," Weakland said.
The faulty provisions were in the plan in the first place because the consultant refused to let city staff check it out before the first draft went public, Weakland said.
That refusal was proper, because it was the team's plan to compose without influence from the city, Espenshade has said.
Adopting an alternative plan now would push the city into 2013, which would mean complications collecting the additional earned income tax that Act 47 allows, Weakland said.
That is a problem, although maybe not as much of a problem as city officials thought at first.
Originally, they believed that would mean starting 2013 at one rate, then continuing at a second rate, thus inundating the Blair County Tax Collection Bureau with clerical problems, Weakland said.
City solicitor Larry Clapper discovered case law that may allow Altoona to levy such additional tax retroactive to the beginning of 2013 - although it would still mean withholding difficulties for employers, Weakland said.
Council doesn't need to worry about retroactive collection of taxes or losing sovereignty if it just approves the document today, Scott Campanaro, president of the nonuniformed workers union, said.
"It's a working document," he said. "If council adopts it, we'll just start working it."
Councilman Dave Butterbaugh is likewise hopeful.
"It currently appears to be a no-win situation," he said. "But over time and over the next year, we'll be able to work things out."
Haire remains doubtful.
According to Schirf, "DCED will work with us and amend the plan as we go, but they do not have to," Haire said. "They keep telling us, 'trust us,' but I need more proof."
Workers in all departments are worried, Butterbaugh said.
"Skittish," he said. "I feel for them," he said.
Firefighters are among the most skittish.
"It's an all-out, unproved war on workers' rights, benefits and pensions," said President Bryson Peterman of Local 299, International Association of Fire Fighters, citing the failure of any third class city to exit the state's distress program.
Rejecting the plan and doing nothing isn't feasible, because it would mean laying off about 50 workers, Butterbaugh said.
"That would be disastrous," he said.
Haire doesn't necessarily think it would be a bad idea to lay those workers off temporarily, then recall them when the city enacted necessary financial reforms.
But adopting the plan will give the city financial "breathing room," Campanaro said.
The city needs to take advantage of that breathing room and unlike Johnstown, which has been in Act 47 for many years, "start doing the hard things" that will mean long-term stability, he said.
Mirror Staff Writer William Kibler is at 949-7038.