It was an obscure sign of the concern mounting over the threat the coronavirus pandemic poses to the future of boroughs, cities and townships. For the first time, “voluntary disincorporation,” the idea of allowing municipalities to shed their political boundaries, was on the agenda of the leadership arm of the Congress of Neighboring Communities, an 11-year-old network of 35 Allegheny County governments that explores ways of working together to solve shared problems.
No action was required and none was taken on the idea, which would give a municipality and its residents the option to dissolve into the county if they feel it would improve public services and their quality of life. But the fact it was on the table at all is noteworthy.
While municipal officials have increasingly embraced cooperation and collaboration to address common issues, consolidation of political boundaries in any way has largely remained anathema. Even in a region with more local governments per capita than any other metropolitan area in America with 1 million or more people.
Allegheny County alone holds 130 cities, boroughs and townships, some with fewer than 500 people living within their borders. Only Chicago’s Cook County has more.
It’s a condition that gives residents intimate access to their elected officials, but at a steep price. It fragments leadership, complicating response to regional issues. And nearly one-third of Allegheny County’s municipalities are married to tax bases with severely limited prospects for growth. They struggle to pay for public safety, road maintenance and other basic services with little hope of even modestly improving their financial standing.
The viral recession only darkens the outlook. Its depth and length is uncertain. But the swift downturn is already taking another bite out of local tax revenues. With no clear end in sight, municipalities large and small are sensing danger.
“One can argue that necessity is the mother of invention,” said David Miller, a University of Pittsburgh Graduate School of Public and International Affairs professor and founder of the Congress of Neighboring Communities (CONNECT). “These municipalities are not going to sit idly by and watch their resources drain away.
“Perhaps we’re in a position where new and innovative approaches that were unthinkable years ago are now necessary.”
A region in pieces
Southwestern Pennsylvania has long wrestled with the downside of having such a high number of disparate municipalities, particularly after the catastrophic decline of its industrial base in the 1980s robbed many small cities and boroughs of much of their tax revenue.
Allowing municipalities to disincorporate was an idea born from a particularly dire consequence of the region’s fragmented nature.
A large swath of Allegheny County municipalities are in financial trouble. University of Pittsburgh researchers identified 34 as financially stressed. Using a different measure of stress, the Pennsylvania Economy League placed 56 in its most-financially-at-risk category.
For this beleaguered group, taxes tend to be high, making them less attractive to businesses and people looking for a new place to live. And the municipal revenues those high tax levels bring are low, further limiting municipal aspirations.
Property taxes, the chief source of municipal income, largely depend on property values. And the difference between healthy and barely functioning municipalities is vast.
In Rankin, a borough of 2,000 people, annual property tax revenues produce $17.5 million. Marshall Township with 6,900 people nets nearly $1.4 billion, according to 2018 data University of Pittsburgh researchers used to assess the financial conditions of local municipalities. In East Pittsburgh, a borough of 1,800 people, property tax brings in less than $465,000 a year. Edgeworth has a similar population but nets nearly $1.5 million.
The result is a widening quality of life gap. Some municipalities pay full-time police officers upwards of $100,000 a year; others rely on part-timers patrolling the streets for $10–$15 an hour. Balancing small budgets stretched to the limit often involves reducing or eliminating core services.
For those buckling under the strain, the options are limited. They can’t go out of business. Pennsylvania doesn’t allow them to give up their incorporated municipality status unless the state agrees to rescue them under the Act 47 distressed municipality program.
Given the choice, few, if any, would likely decide to disincorporate unless conditions were grave enough that turning to Allegheny County and its broader resources was seen as more beneficial to their residents than sticking it out on their own. But a task force convened by the University of Pittsburgh Institute of Politics concluded they should at least have the option to do so and recommended state law be changed to allow for voluntary disincorporation in the county.
Municipal officials would have to sign off on disincorporating their borough, city or town. But residents would have the final say in a referendum vote. The bipartisan task force was chaired by former county executives James Roddey and Dan Onorato and its recommendation is endorsed by current Allegheny County Executive Rich Fitzgerald.
“It’s one tool in the toolbox for communities where the citizens decide they might be better off as more of a neighborhood than a political subdivision,” Fitzgerald said. “Some municipalities have avoided Act 47 by not keeping up with infrastructure maintenance, but that catches up to everybody.”
Bipartisan legislation to allow Allegheny County municipalities to disincorporate if they choose unanimously passed in the state Senate two years ago, but was never brought to a vote in the House, denying it the chance to become law.
The bolder notion of merging the City of Pittsburgh and Allegheny County has made even less political progress. It emerged as a hot topic of public debate following the collapse of steel, when gloom settled over the region, and municipalities whose fates were most closely tied to the mills were declaring distress and asking the state to intervene in their recovery under Act 47.
It’s unclear whether merging Pittsburgh and Allegheny County would improve economic development, according to RAND Corporation researchers. But they did suggest the region would gain unified leadership, more focused policy and better coordination, which could have a “generally positive effect” on economic development.
Ten years after the City of Louisville merged with Jefferson County, Ky., taxes hadn’t risen, but the metro city hadn’t realized significant cost savings, studies suggest. Taxes were lower after Toronto consolidated with six surrounding municipalities, particularly business taxes. Disparities in services also appear to have been narrowed. But over the years, any cost savings realized by the metro city has been small, a University of Toronto case study found.
Eliminating duplication can save money. On the other hand, mergers must deal with differences in service levels and wage scales across the consolidating municipalities, and bringing employee salaries and benefits in line with each other tends to drive costs up, merger studies suggest.
One result of city-county mergers is that the city’s population balloons overnight, catapulting it up national rankings. In a Pittsburgh-Allegheny County merger, the city would trade its 67th ranking for a spot among the 10 largest America cities without having to add a single person.
It might be a mathematical sleight of hand, but such status carries weight among companies that consider population when compiling their A list of places to locate operations and jobs, said Dennis Unkovic, a veteran international corporate attorney with the Pittsburgh firm, Meyer, Unkovic & Scott. “I know businesses. I know where they want to be. I know how they decide where they want to go. We used to be on the list. We’re not anymore, and it’s not because we’re not a good city. It’s our size.
“Being four times bigger would be an enormous change in how we are perceived. And perception is the essence of what it is to be seen as a bigger, more powerful city.”
Pulling off a merger that many have tried but few have succeeded could elevate perceptions in other ways, said Bill Schenck, vice chairman of TriState Capital Bank and former Pennsylvania Secretary of Banking. “The simple fact that the people in the region agreed to do it would be a major statement of our will to make difficult changes that can have a positive impact on people who live here.”
City-county consolidation has been studied and debated in the region for nearly four decades. It has yet to win the considerable political and public support it needs to succeed, including the blessing of officials in the municipalities that would be merged.
Patchwork of fixes
The strongest headwinds against unifying municipalities include characteristics that people like about having so many boroughs, cities and townships. Government is closer. Access to their elected officials is easier. And they know them as neighbors.
“Something being small provides is that regular people can serve. And they do. The decision makers for your community are people who live in your community,” said An Lewis, executive director of Steel Rivers Council of Governments in Allegheny County’s Monongahela River valley. “They don’t have the budget or the political clout of the mayor and council of Pittsburgh, but they have the same legal power to control land use, allocate money, make official decisions.”
“I’ve always found that people like smaller communities,” said James Turner, an adjunct professor at the University of Pittsburgh who has been a City of Pittsburgh official and director of the Pennsylvania Economy League. “The question is, can you have smaller communities and still deal with key issues on a regional basis and compete in a world that’s more competitive than it ever has been?”
Many of the thorniest problems communities face don’t recognize political boundaries. Over the years, working together in some way to address them has become more common; effectively, consolidation has been occurring on a functional level whether or not people recognize it.
Nonprofit councils of government (COGs) have pitched in, making economies of scale work to benefit their member municipalities through shared services and equipment, and helping them tackle complex problems they don’t have the resources to effectively address on their own.
Two of them, Steel Rivers and Turtle Creek Valley, created a land bank to acquire vacant tax delinquent properties and return them to market as assets rather than eyesores at a scale that might make a dent in the problem that costs their 41 municipalities $255 million a year in municipal services, lost tax revenue and lower property values.
The Turtle Creek Valley COG also is helping five of its smaller member boroughs explore whether forming a regional public safety department is an affordable way to improve policing in their neighborhoods.
Through CONNECT, member municipalities coordinate their response to the opioid crisis that affects them all.
A nonprofit, 3 Rivers Wet Weather, guided 83 municipalities to form a regional sewage network and fix an overtaxed system that routinely discharges into local streams and rivers, risking public health and $275 million in federal fines for clean water violations. It was a major triumph for such a fragmented region, but took 20 years to stitch together with so many disparate parties involved.
Many services residents today take for granted are products of consolidation in their own way.
The 911 emergency system, which coordinates first responders throughout the region, replaced an inefficient patchwork of hundreds of local police and fire dispatch centers.
The Allegheny Regional Asset District, created with bipartisan support 27 years ago, uses proceeds of a 1 percent sales tax to sustain libraries, parks, museums and other amenities throughout the county.
Still, a rising number of southwestern Pennsylvania communities are suffering from conditions that no amount of smart management or service-sharing agreements have been able to fix.
Early this year, the Wilkinsburg Community Development Corporation moved into a three-story 19th century building it had renovated in the heart of the borough. Wilkinsburg has tried hard to erase the look of despair it has worn for decades. With the splendor of its arched windows and detailed brick restored, the historic Lohr Building stands as a symbol of renewal.
It is also an example of why recovery in Wilkinsburg is painfully slow and fragile.
Government and foundation grants helped the nonprofit finance the project. But local economics discourage private investors from doing such things. The cost of renovating the Lohr Building exceeded $2.5 million. When it opened its doors, its assessed value was only $900,000.
Across Braddock Avenue is the City of Pittsburgh’s bedroom neighborhood of Point Breeze. A few miles farther, the city’s East Liberty and Garfield neighborhoods enjoy a renaissance that has attracted businesses and rising home values. The prospects of Larimer, another nearby city neighborhood, have been lifted by the Bakery Square shopping and office development, home to Google Pittsburgh.
Borough government and the Wilkinsburg Community Development Corporation have nudged Wilkinsburg’s recovery forward. Some $6.5 million was spent restoring its historic train station, which had been vacant for 50 years. Storefronts were improved. Wilkinsburg merged its fire department with Pittsburgh and signed a contract with the city to handle its garbage collection.
But the renaissance experienced in nearby city neighborhoods hasn’t crossed the border into Wilkinsburg.
From 2014 to 2017, local anti-blight efforts succeeded in returning 52 vacant properties to the market and tax rolls, said Tracey Evans, executive director of the Wilkinsburg CDC. It would’ve been a more satisfying victory had 250 other properties not gone vacant over that time.
“We have a lot of dedicated people and energy. We’re all working to make things better. But it’s going to take more than good will,” Evans said. “The underlying infrastructure—taxes, services—is very complex and deteriorating, and that’s hard to overcome.”
Property taxes in Wilkinsburg are among the highest in Allegheny County—nearly twice as high as the City of Pittsburgh and close to three times as high as several of its other neighbors. But the borough is anything but swimming in cash. Unable to afford repairs to its high school, the school district struck a deal four years ago to transfer its students to the Pittsburgh Public Schools.
The municipal property taxes the CVS pharmacy in Wilkinsburg pays are 118 percent greater than what the company pays on its similar-sized pharmacy less than three miles away in the City of Pittsburgh.
“The further consequences of that is, as a bank and lender, when you appraise a commercial property to determine its value for a mortgage, you typically do it on the basis of its income stream,” said Schenck, the former state banking secretary. “To the extent its income stream is reduced by the amount of taxes it pays, its value goes down from an appraisal point of view. And it can be significant.”
Such disadvantages are stifling. And the more places that are laboring under such conditions, the less attractive a region becomes, said Richard Stafford, Heinz College Distinguished Service Professor of Public Policy at Carnegie Mellon University, who served in former Pennsylvania Gov. Richard Thornburgh’s administration. “When businesses locate, one of the questions is, do people want to work in the place where I just built my business? The quality of the place is important. The No. 2 thing is, what does it cost to be there?”
The hardship of living in places where strapped budgets imperil the quality of life weighs heavily on Allegheny County’s African American residents. They make up 12.9 percent of the overall county population. But they account for a much higher share in nine of the 10 most financially stressed municipalities, including six where one- third or more of residents are black.
Few places in the country have endured greater demographic and economic upheaval than in southwestern Pennsylvania’s once-mighty industrial river valleys.
In their heyday, mills needed people, streets, transportation, homes for workers, water, sewage, police protection. “That’s how you get Duquesne, Clairton, Aliquippa,” said Brian Jenson, executive director of the Pennsylvania Economy League of Greater Pittsburgh. “Then, the economy changes; steel is no longer king. That boundary is no longer reflective of either need or ability to pay. Now, it becomes a cage.”
More than 150,000 of the people who were living in Allegheny County’s Mon Valley for the 1960 decennial census were gone by the 2010 census—a 43 percent loss the region could ill afford. No major U.S. metropolitan region has lost more people in the last 50 years than Pittsburgh, where the population continues on a slow, but steady decline.
“When you had the steel mills, these towns were booming. There was a ton of resources in the community,” said Ryan Wooten, Rankin Borough police chief. “Thirty years later, you’re left with a shadow of a town without much tax base to provide emergency response.”
He has a full-time job, but the nine officers in his department are all part-time, earning an average wage of about $11 an hour with no benefits. They’re able to cover the day shift. The night shift is covered by the Pennsylvania State Police.
Neighboring East Pittsburgh relies entirely on state police for the safety of its 1,763 residents.
Turnover in Rankin is high. For most officers, it’s a place to gain experience under the leadership of a veteran chief and boost their chances of landing a full-time job with a larger, better-funded suburban police department, such as in Ross, Monroeville and Plum, where salaries range from $70,000 to $100,000 or more.
Finding new hires is a challenge in Rankin. Finding low-cost options is a necessity. The tiny borough relies on county detectives to investigate homicides, robberies and other major crimes, which is reflected in crime data that show Rankin officers made no major-crime arrests in 2017. And Wooten has taken a community policing approach in the hope that improving relationships with residents will help recruit them as allies in keeping their neighborhoods safe. “A simple smile,” the chief said, “costs nothing.”
A gathering storm
Municipal officials in July were still trying to get a read on how badly the coronavirus pandemic will damage their budgets.
Property tax revenue appears safe, for now. Most collected the taxes before the viral recession hit. But wage tax revenues are beginning to reveal the impact of double-digit unemployment, and closures and other restrictions on commerce are sapping business tax income and threatening their share of the countywide Regional Asset District sales tax.
Forecasts of what they can expect in the coming year offer scenarios ranging from worrisome to frightening. Researchers at Pitt’s Center for Metropolitan Studies estimate that as many as 112 cities, boroughs and townships in southwestern Pennsylvania could see revenue shortfalls of 16 percent or more, which would threaten to make them insolvent.
To put that in perspective, only 31 municipalities in Pennsylvania have faced conditions dire enough to be thrown a lifeline under the state’s Act 47 financial recovery program during the more than three decades it has been in business.
“This isn’t about municipalities making poor decisions about their spending. This is a revenue crisis. The spigot just got turned off,” said George W. Dougherty Jr., a local government expert at the University of Pittsburgh and the state-appointed Act 47 coordinator of the City of Duquesne’s recovery.
Harrisburg might be more open to giving municipalities options for staving off distress, such as allowing them to disincorporate if they think it will help. The viral recession has thrust state government into a financial crisis of its own, raising doubt about Act 47 surviving a surge of municipalities looking for a lifeline. And political leadership has changed in the state House of Representatives, where a Senate-passed bill that gave Allegheny County municipalities the option to disincorporate was blocked from being put to a vote in 2018.
“I don’t think there is any downside to it,” former county executive James Roddey said. “People in the community will have the voice that decides. I understand the argument you need small government that answers to the people. But can you afford it? If you can’t, you need alternatives or services end up suffering. People deserve better.”
Municipal officials and the associations that represent them weren’t as warm to the idea three years ago, when the University of Pittsburgh Institute of Politics task force recommended voluntary disincorporation as an option in the county.
Shortly after the recommendation was made, Dougherty recalled, he was confronted by a couple of municipal leaders who were surprised that he agreed with it. “I said, ‘Why?’ And they said, ‘It starts voluntary, then it becomes mandatory and they take our place away from us.’ That gives you an idea of the level of distrust.”
That’s why “voluntary disincorporation” listed as a topic of discussion on the April CONNECT agenda caught his eye. “The fascinating thing is that it was led by the municipalities. It wasn’t the state or the county coming in and telling them they should consider it. It was the municipalities themselves.”