ROBERT SWIFT: Capitol Matters: Authorities often act with little authority
HARRISBURG - The fiscal distress problems spreading across Pennsylvania cities are prompting state lawmakers to look more closely at how the numerous municipal authorities that oversee sewer and water systems, parking garages and other public operations are regulated.
Cities such as Harrisburg and Scranton are in financial jeopardy due in part to debt amassed by their authorities. The authorities have their own governing boards, but they have a symbiotic link to the city government that is often the guarantor of their bonds.
The most significant step taken recently to regulate municipal authorities is a state law enacted in June after quietly making its way through the Senate and House.
This law, sponsored by Senate Majority Leader Dominic Pileggi, R-9, Chester, requires that an authority can only use its money for the services or projects directly related to the mission or purpose of the authority. It gives ratepayers legal recourse to sue in county court to seek the return of money spent by the authority for other than a prime purpose.
The law sounds straightforward enough, but it goes on the books after the Harrisburg Authority for water and sewer services spent under the direction of former city mayor Stephen Reed more than $8 million on artifacts for a planned Wild West museum.
"This is a common-sense reform to ensure that authority funds are used appropriately on behalf of the ratepayers," said Mr. Pileggi. "We've seen examples across Pennsylvania where authorities have spent millions of dollars in a way that has no connection to the reason they were created and provide no benefit to taxpayers."
A more mundane example includes a water authority buying a snowplow that it doesn't need because municipal officials wanted one, said Pileggi spokesman Erik Arneson.
Over the years authorities have invested in grander projects involving hotels and golf courses too.
Gov. Tom Corbett last week cited reining in the lending practices of Delaware River Port Authority as an accomplishment of his tenure as board chairman. He said DRPA no longer issues bonds for economic development projects unrelated to transportation.
The Senate Local Government Committee will turn the spotlight later this month on the debt structure of the authority running Harrisburg's incinerator. Harrisburg is struggling under a $300 million debt tied to the four-decade-old trash incinerator. The committee will hear testimony about a forensic audit of the incinerator at an Aug. 29 hearing.
"With regard to the Harrisburg incinerator project, the laws designed to protect taxpayers from undue debt failed," said Sen. John Eichelberger, R-30, Hollidaysburg, the panel chairman.
"The issues raised by the audit have statewide implications regarding the fiscal health of our cities," said Sen. John Blake, D-22, Archbald, ranking Democrat on the panel.
House Minority Leader Frank Dermody, D-33, Allegheny County, said last week that more restrictions are needed on how authorities use higher-risk financing arrangements known as "swaps."
ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part. Email: email@example.com.