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Altoona’s solvency in jeopardy

Mayor says that without federal aid, city may need to reenter Act 47

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, Mayor Matt Pacifico said Tuesday during a news conference sponsored by the Pennsylvania Municipal League.

Altoona entered Act 47 in 2012 on the verge of insolvency and emerged in 2017 in decent fiscal health, but the coronavirus shutdown is eroding revenue from earned income, property and gross receipts taxes, according to Pacifico, who reiterated what he said during a news conference Friday sponsored by the U.S. Conference of Mayors — that without help, the city will need to cut police, firefighters and other employees.

The messages of the two news conferences were nearly identical, which “is kind of the point,” according to Pacifico: “It needs to be repeated over and over and over, so Congress hears us,” he said.

Seventy percent of Altoona’s $33 million budget is for labor, and two-thirds of that amount is for police and firefighters, with much of the remaining third for “fixed” costs like debt service and mandated requirements — so that public safety layoffs would be inevitable, the mayor said.

Members of Congress need to realize that residents of cities facing public safety cuts and damage to their ability to help with local economic development — Altoona’s Community Development Department is a likely target for cuts, also — are “their constituents as well,” said Pacifico, the league’s president.

“(Cities) are not a special interest group,” Pacifico said.

Helping them shouldn’t be a partisan issue, he added.

“Republican and Democratic mayors are feeling the same effects,” said Pacifico, a Republican.

“Get rid of the freaking aisle in Congress,” said Easton Mayor Sal Panto.

The federal government can print money and doesn’t need to balance its budget, Panto said.

That’s not the case with municipalities, he said.

Municipalities could be losing 40 percent of their revenue, said Rick Schuettler, executive director of the league, citing a National League of Cities study.

Pittsburgh is facing a $100 million shortfall in a $600 million budget, according to Mayor Bill Peduto.

Even a 10 percent personnel cut, with 400 people losing their jobs, would eliminate only a quarter of the shortfall, he said.

Economic damage to cities won’t be limited to cities, said Philadelphia City Councilman Derek Green.

Those like Altoona are not islands, but regional hubs, and people in the areas around them depend on them, Green said.

“There will not be an economic recovery if we allow cities to go bankrupt,” Peduto said.

In the spring, cities received special COVID-19 Community Development Block Grant funds, but those could be used only for COVID-related expenses.

The state and larger counties have received $5 billion in the Coronavirus Aid, Relief and Economic Security Act funding, but that is also restricted.

“These funds can be used to meet payroll expenses for public safety, public health, health care, human services and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency,” stated the office of Sen. Pat Toomey, R-Pa.

But the money can’t be used simply to make up for COVID-related budget shortfalls, said officials, including Pacifico.

Pennsylvania has about $1.3 billion of that CARES money in reserve, according to the governor’s office.

It has sent some CARES money to smaller counties, including Blair, which received $11 million.

“(But) the CARES Act money has not trickled down to us” in significant amounts, Schuettler said.

The Democratic majority in the House has approved the HEROES Bill, which would provide the direct funding for municipalities that the cities want.

“We need to do everything we can to help our states and cities and towns, large and small, to continue to function and provide services to residents,” said Sen. Bob Casey D-Pa., on Friday after the Conference of Mayors’ news conference.

The Republican majority in the Senate has taken a different approach, having proposed the HEALS Act, which would “lift restrictions on unspent funds so they can be used to fill budget holes” — the holes the conference call participants are talking about, according to Toomey’s office.

“Much of (that) funding remains unused,” said U.S. Rep. John Joyce, R-13th District.

Then, after the money that has already been allocated is made available to fulfill municipal needs, “we can thoughtfully determine what needs remain,” Toomey said in an emailed statement.

Relaxing the restrictions on the funding that has already come down to the state and the county would be “fine,” to begin with, Pacifico said.

“I would settle for that as the starting point,” he said.

The municipalities need the direct funding, Schuettler said.

The state and the counties have their own COVID-related budget problems, and aren’t likely to be willing to share, even if the restrictions are lifted, Schuettler predicted.

“If they were going to do it, I think they would have done it already,” he said.

Ideally, there should be a formula that would provide money to the municipalities straight from Washington, so they aren’t “so reliant” on state and county largesse, according to Pacifico.

Cities need resources that are “flexible, without strings,” Green said.

Mirror Staff Writer William Kibler is at 949-7038.

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