Pa. communities often turn to merger or consolidation to ease financial strains
By Richard Gazarik
Published: Monday, Feb. 11, 2013, 12:11 a.m.
Two years ago, Fallston Borough in Beaver County spent nearly half its $108,000 budget to repair one road.
Officials in the municipality of 266 residents began talking about a merger with neighboring Patterson Township, which provided police protection for Fallston under a shared-services agreement. Officials in both communities thought a merger made good financial sense.
Mayor Livio Pagani did not. He vetoed council's decision to proceed.
“The borough's not broke,” said Pagani, 71, the mayor for 29 years. “We have no financial problems.”
Council overrode his veto, and if voters in the municipalities approve a referendum in May, Fallston would become part of the township next year.
The merger would be the first in Pennsylvania since 2008.
Leaders in communities — from tiny boroughs such as Fallston to cities such as Harrisburg — are struggling with a cycle of shrinking populations and revenue with few options other than tax increases to fund employee pension funds and fire, police and other services.
Pennsylvania is a state of big numbers — 67 counties containing 56 cities, 961 boroughs, 1,549 townships, 20,015 municipal authorities and one incorporated town, according to the state Department of Economic and Community Development.
Four of every 10 state residents, 4.6 million of its 12.7 million population, live in financially distressed municipalities, according to the Allegheny Conference on Economic Development.
Yet only 12 municipal mergers or consolidations took place since 1991, state records show. Voters rejected 16 mergers.
Brian Jensen, senior vice president of the Pennsylvania Economy League, sees no better days ahead.
“It's really bad for a lot of cities, and it's only going to get worse,” he said.
A hard sell
Consolidations, which create a new municipality, and mergers are a hard sell, said Michael Foreman, director of Local Government Services for the Department of Community and Economic Development in Pittsburgh.
“This is a dilemma we're dealing with statewide,” he said.
One problem is finding an attractive match, he said, because most municipalities aren't willing to accept a poorer neighbor.
Officials in Hempfield, for example, say the township, a much larger and wealthier community than Jeannette, isn't likely to absorb the financially-distressed city.
“I can speak for myself and for the board,” said Doug Weimer, chairman of Hempfield's supervisors. “We won't be initiating any discussions with Jeannette.”
Robert Strauss, professor of economics and public policy at Carnegie Mellon University, said municipalities considering mergers must be willing to accept each other's debts — and that's often a deal-breaker.
“It's an oil-water issue,” he said.
Strauss said residents of Mt. Lebanon, which has a low municipal debt-per-capita ratio, likely wouldn't consider merging with the City of Pittsburgh, which has a high ratio.
“It's just not going to happen,” he said. “The problem is getting the voters to decide over debt.”
Coal Center, a town just off the Mon-Fayette Expressway in Washington County with five streets and 126 residents, had a budget of $20,000 in 2005. Yet its voters rejected a proposal to merge with California Borough.
Although California voters overwhelmingly approved the merger, Coal Center residents rejected it by nine votes, 47 to 38. The only entity retaining the Coal Center name would have been the post office, officials said, and residents were reluctant to lose their local identity.
That year, Burgettstown voters approved a proposed merger with surrounding Smith Township. But township voters narrowly rejected it and told officials they didn't know enough about the potential economic impact.
When voters approve
The last merger was in 2008 when Donegal took in West Alexander, a one-street borough on the western edge of Washington County.
West Alexander faced a problem common to the 500 municipalities in the nine-county Western Pennsylvania region: how to boost tax revenue amid a population decline.
Times were good in 1985 when its historic district was listed on the National Register of Historic Places. During that renaissance, visitors browsed antique and gift shops in a commercial center of restored 19th-century homes.
Five years later, fire destroyed three businesses and damaged two others. The town never completely recovered.
It began discussing a merger with the township and officials agreed to put it to voters.
“We put it out (to referendum) and it passed,” said David Ealy, chairman of the Donegal Board of Supervisors. “West Alexander was having a hard time making ends meet.”
West Alexander's 320 residents were paying 16 mills in property taxes. The borough was saddled with $3.2 million in debt after building a sewage treatment plant to serve 129 homes. Board seats went vacant for a lack of volunteers.
After the merger, West Alexander's millage rate dropped to 9 mills and the township took over the treatment plant debt.
“We were going to assume the debt anyhow,” because the plant also serves the township, Ealy said.
The main obstacle to mergers is turf, said Greensburg manager Sue Trout, who served on a Pennsylvania League of Municipalities and Cities task force in 2010 that recommended solutions for troubled communities. Trout helped to make recommendations to the 2010 report, “Core Communities in Crisis.”
Trout has witnessed it firsthand with the city, which borders Southwest Greensburg and South Greensburg boroughs. Each has a mayor, council and police and street departments.
“I don't see a merger happening. I see us sharing services,” Trout said. “Quite frankly, there are too many egos involved.”
Trout said officials fear the loss of community identity.
That's the case in Beaver County, said Pagani, Fallston's mayor.
“People in this municipality call me and say, ‘You're giving away our town,' ” he said. “I say, ‘Don't bark at me. I'm not giving it away. Council is giving it away.' ”
State Sen. John Wozniak, D-Johnstown, said weak leadership hurts cities and boroughs. Political considerations often outweigh financial ones, he said, and elected officials often refuse to make difficult decisions, such as employee furloughs.
“There's no question about it. If you want to save cities, you have to make some hard choices. You can't keep electing the same people and expect different results,” he said.
Mergers or consolidations would reduce the number of municipalities and stabilize distressed communities, said Wozniak, who created a Third Class City Caucus among lawmakers whose districts include financially-troubled communities. The lawmakers will propose legislation such as pension reform and pledge to support each other's measures.
“You've got to rebuild the tax base. If you don't, it's a slow death spiral,” he said.
There is no state law that allows a municipality to dissolve, Wozniak said. He plans to propose legislation to allow troubled cities and boroughs to disincorporate, forcing mergers without voters' consent.
“There's far too many local governments,” he said. “We can create government but we can't uncreate government.”
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at email@example.com.
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