Municipal Reform

The PA Chamber believes that cooperation among counties and municipalities is part of what is needed to foster more functional and effective local government. However, the financial wellbeing of many Pennsylvania municipal governments is often harmed by antiquated and unbalanced state laws and regulations, which may necessitate higher costs and inefficient spending. Ultimately, these costs are borne by Pennsylvania residents and businesses, many of whom now live and operate in financially distressed communities. The PA Chamber supports efforts and legislation to help ease the financial burden municipalities face.

Within Pennsylvania’s borders are a diverse collection of communities where employers set up shop, residents raise families and tourists come to visit. The success of our Commonwealth is directly tied to the strength of its communities and public policy should help communities thrive.

The Commonwealth is comprised of over 5,000 local government units. While keeping government “close to the people” is certainly an important principle, Pennsylvania’s labyrinthine system of local governments can inhibit economic competitiveness as too many small governments with limited resources and inconsistent or conflicting policies can inadvertently discourage development and job growth.

Moreover, the financial wellbeing of many Pennsylvania municipalities is often harmed by antiquated and unbalanced state laws and regulations, which may necessitate higher costs and inefficient spending. Ultimately, this burden falls on Pennsylvania residents and businesses, many of whom now live and operate in financially distressed communities. The PA Chamber supports efforts and legislation to help local governments improve and sustain their financial condition.

Municipal sustainability can be effectuated by:

  • Improving delivery and administration of municipal services: Eliminate legal barriers and provide assistance to local governments to deliver services in ways that make practical and financial sense; allow and encourage municipalities to enter into transparent public-private partnerships that benefit taxpayers; provide tools for local governments to establish clear processes and streamlined permitting to help both the Commonwealth attract business and current Pennsylvania employers compete with those in other states.
  • Encouraging municipal cooperation and consolidation: Streamline procedures and provide incentives for local governments to consolidate; encourage municipalities to collaborate on delivery of services and policies related to land use, permitting, zoning or any process through which businesses must go to locate or expand.
  • Public Pension Reform: Post-employment benefits, including outmoded retirement plans, are increasingly unsustainable, which can financially strain local governments and may lead to instability for future beneficiaries. In order to mitigate rising costs in the near term and address unfunded liabilities, the PA Chamber supports allowing local governments to transition employee retirement plans to a defined contribution retirement plan, which mitigate the risk assumed by taxpayers and are more sustainable. Moreover, as most local retirement plans serve a small number of employees, consolidation could serve to modernize the existing system and create economies of scale that save both taxpayers and plan participants significant money. Whether or not municipalities are able to adjust post-employment benefits in order to evolve with the times, they should emphasize transparency to taxpayers, including administration costs, assumed rates of return and true financial health.
  • Reforming binding arbitration: Current state law provides for binding arbitration in the event of a contract dispute between police or fire fighters and their municipal employers; and, in exchange, these uniformed public employees are prohibited from going on strike. While binding arbitration can be useful to resolve disputes, the current system does not sufficiently protect the interests of the municipality or the public as adverse decisions rendered through binding arbitration have become more frequent and a significant cause of escalating costs. Especially problematic are those decisions imposing unfunded future benefit obligations without full public disclosure of the long-term costs. The PA Chamber supports reforms to correct these opportunities for abuse and make binding arbitration more balanced while ensuring that police and fire fighter rights remain protected.