One in a series explaining key terms and concepts of Pennsylvania government.

 The plan usually offers financial projections and recommendations to restore and maintain financial stability.

It defines "recovery" specific to the municipality; in other words, the standards that, when met, allow it to petition to Pennsylvania Department of Community and Economic Development to exit Act 47.

Here are some typical recovery plan steps:

  • Sales of non-essential municipal assets

  • Debt restructuring

  • New or higher fines and fees to generate revenue

  • Savings through layoffs, departmental reorganizations or technology solutions

DCED has to OK the plan. So does the municipality's governing body and top official.

If local leaders don't like the state's plan, they can propose their own, but the state has to approve it.

If a stalemate exists, the state might withhold grants and other aid, so long as that doesn't risk a fiscal emergency4 and pension default.

The state also might institute a receivership.


 

Footnote

4.  Fiscal emergency: insolvency or an inability to provide vital services exists or appears likely within six months. Governor must declare.

Did this article answer all your questions about Pennsylvania’s distressed communities law? If not, you can reach Emily Previti via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or through social media @emily_previti. Have a topic on which you'd like us to do an Explainer?  Let us know in the comment section below, or on Twitter @PaCrossroads.