Tomorrow night, City Council will consider an ordinance to initiate home rule proceedings, kicking off what could be a years-long process to write a new charter for the city.
The ordinance will be read into the record for the first time at council’s Sept. 11 legislative session. From there, it will likely go into administrative committee.
If it passes, Harrisburg residents will be asked to vote on whether or not the city should form a Government Study Commission – an elected body of citizens that will study forms of local government and decide whether or not a home rule charter is advisable for the city.
The members of the commission would also draft Harrisburg’s home rule charter and put it up for another referendum vote.
In Pennsylvania, a municipality may pursue home rule to gain autonomy from the state charter, which prescribes tax rates and government structures for cities, boroughs and townships. A home rule municipality can convene its own government structure or authorize tax limits beyond what is allowed under state code.
Mayor Eric Papenfuse told TheBurg in July that he wanted to explore home rule as a way to ease Harrisburg’s exit from Act 47, a state oversight program for financially distressed municipalities.
A home rule charter would allow Harrisburg to keep its earned income tax (EIT) at its current 2 percent rate. The state tax code only allows Harrisburg to assess a 1 percent EIT, but Act 47 law allowed City Council to double the rate in 2012.
But home rule charters must be passed by the municipality’s residents in a referendum vote, and Papenfuse isn’t optimistic that it would get enough support in Harrisburg.
“It’s not a foregone conclusion that it would be successful,” Papenfuse said on Monday. “Home rule is something I’ve supported for Harrisburg for a long time, though I know it would be very difficult to achieve.”
Papenfuse still hopes that the city will be allowed to exit Act 47 this year, pending the passage of a bill by the PA General Assembly. That bill would allow Harrisburg to keep its current EIT and local services tax (LST) indefinitely.
The taxes generate a combined $12 million in annual revenue for Harrisburg. Both would revert to their pre-Act 47 levels if the city exited the program under the current state tax code.
That prospect has forced city officials in recent months to devise strategies to avoid a gigantic revenue loss and budget cuts when the city is forced to leave Act 47 in 2021. The city has been lobbying the state legislature for special taxing privileges since January, when it retained the services of local lobbying firm Maverick Strategies.
A measure to preserve Harrisburg’s taxing power blew up in June, after House Speaker Mike Turzai prevented the measure from coming up for a vote.
If the legislature fails to act on Harrisburg’s behalf again this fall, the city will adopt a three-year Act 47 exit plan.
The details of that plan are still subject to revision by the state Department of Community and Economic Development, but the latest draft calls for substantial property tax increases in 2021 to offset EIT and LST reductions.
Papenfuse hasn’t given up on the possibility of passing a heftier commuter tax as part of the city’s Act 47 exit plan. He and his counterparts on City Council have repeatedly said they will oppose a plan that increases taxes on Harrisburg residents.
The mayor expects that home rule proceedings could take at least three years, giving the city “just barely enough time” to complete it before exiting Act 47. But even if the city does pass its own unique charter, it would still have to find new sources of revenue.
A home rule charter would not allow Harrisburg to keep its current LST rate, since such charters only apply to residents of the home rule municipalities. The LST is paid by every employee in the city of Harrisburg, including commuters.
That tax brings in $6 million a year, according to Harrisburg finance director Bruce Weber. About $4 million goes to the city and the remainder to the Harrisburg School District.
There are currently 71 home rule municipalities in Pennsylvania, the closest being Carlisle in Cumberland County. Harrisburg would be the first home rule municipality in Dauphin County if its charter passes.
Have questions about Harrisburg’s Act 47 status? Check out TheBurg’s guide to Act 47.