Finance

State oversight board repeals rejection of Harrisburg’s 5-year monetary plan – PennLive

A board created by state legislators to oversee Harrisburg’s finances rescinded their rejection of the city’s five-year financial plan Wednesday.

The board, known as the Intergovernmental Cooperation Authority, plans to notify the Commonwealth that the city is no longer “out of compliance,” a situation that could have resulted in the state withholding funds from the city.

Board members said they planned to review revisions that the city made to the financial plan and provide additional feedback so the document could eventually be approved.

The board also allowed the city to seat Dan Connelly, a new ex-officio board member to replace a vacancy for the city’s finance director position on the board. Connelly works for Marathon Capital and has been assisting the city while they search for a new finance director.

The move toward cordial relations Wednesday night between the city and the authority represented the first public show of cooperation since December when city officials and board members basically stopped communicating.

It would be hard to overstate how bad things had gotten between city leaders and the board after board members refused to allow the mayor to designate a new city representative to sit in on their board meetings in place of the vacant finance director position. That helped fuel a breakdown in communication that left board members with questions and concerns about the city’s financial projections that they couldn’t get answered.

The board rejected the city’s five-year financial plan and city officials responded that they considered the document “approved” because it contained balanced budgets.

Mayor Eric Papenfuse believed the board overstepped its authority by rejecting the plan since there was no budget imbalance and the 2021 budget was approved by the state’s Act 47 recovery coordinator. Board members pushed back that one of their primary purposes is to assess whether the city is using reasonable and appropriate assumptions in their financial projections and they couldn’t get enough detailed information from the city to do so.

The dispute culminated in dueling letters-to-the-editor earlier this month where Board Member Ralph Vartan called for a review of the city’s neighborhood services fund and City Solicitor Neil Grover retorted that Vartan’s opinions were “ill-conceived, self-important, self-serving diatribes, lacking actual substance.”

City officials “came back to the table to restart negotiations,” Board Chairperson Audry Carter said Wednesday night, resulting in an updated financial plan being presented to board members Feb. 19. The updated plan addressed many of their prior concerns.

That “sign of good faith,” prompted board members to rescind their disapproval from December and move forward, Carter said in the 4 p.m. videoconference meeting.

“We have changed course,” she said. “The city is now in compliance.”

Board members asked questions about the updated financial documents submitted by the city and Vartan honed in on an annual fund transfer that had been moving $700,000 per year from the neighborhood services fund to the general fund in recent years. That transfer was zeroed out in budgets going forward.

Papenfuse previously has said that transferring money into the general fund to prop it up was a vestige of previous city-budgeting techniques that he wanted to get away from. But Vartan said some money should continue to be transferred to the general fund every year to cover overhead costs of neighborhood services work being done by employees who are paid from the general fund.

Board members also discussed with Connelly how the city plans to improve its trash fee collection rate, which now sits at 85 percent for current and delinquent accounts. The city would like to improve that to 93 percent by 2023, which is closer to the 95 percent rate that most municipalities use as a goal.

Board members set a special meeting for March 5 to go over the updated financial report in more detail and prepare responses.

The board was created by the General Assembly in late 2018 when legislators agreed to allow the city to keep its expanded taxing authority even after it exits Act 47.

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