Shapiro Administration Announces End of Johnstown’s Distressed Municipality Status Under Act 47 After More Than 30 Years

Johnstown, PA – Department of Community and Economic Development (DCED) Acting Secretary Rick Siger today announced the approval of Johnstown’s exit from distressed municipality status under the Act 47 program. Sec. Siger was joined by Lieutenant Governor Austin Davis, Johnstown Mayor Frank Janakovic, and other officials in the Cambria County city this morning to commemorate the occasion.

The Shapiro Administration, focused on boosting Pennsylvania’s economy, knows the importance of strengthening our communities to make the Commonwealth a better place to live, work, and prosper.

“I grew up in McKeesport, a steel town in western PA that’s similar to Johnstown in so many ways — including sometimes feeling a bit left behind by state and federal leaders,” said Lt. Gov. Austin Davis. “Governor Josh Shapiro and I believe that government can and should be a force for good in our lives, and we will never leave Pennsylvania communities behind. Today is the start of a new, bright chapter in Johnstown’s story. The Shapiro-Davis Administration has big plans for Pennsylvania, and I’m excited to see Johnstown flourish in the years to come.”

Acting Secretary Siger signed a formal determination letter finding that termination of the city’s distressed status was appropriate under Section 255.1 of Act 47. The decision was made due to the city’s ability to effectively utilize the tools offered through the program to significantly improve its financial position and management infrastructure since entering Act 47.

“Congratulations to the local officials, community leaders, and key private sector and non-profit partners who have worked hard to put Johnstown on stable financial footing for the future,” said Acting Secretary Siger. “Johnstown has a very bright future ahead, and the Commonwealth is excited to partner with local leaders to realize their vision. This moment has been more than 30 years in the making, and it is truly a day for celebration.”

Johnstown was designated as distressed on August 20, 1992, under the Municipalities Financial Recovery Program, known as Act 47 of 1987, as amended on July 26, 1988. The determination was made because the city had experienced multiple years of large and increasing deficits, diminishing municipal services, and the prospect of not paying obligations to creditors and employees. Deborah Grass of Grass Root Solutions was subsequently appointed the Act 47 Coordinator for the city.

“As the city’s Act 47 Coordinators, we are pleased and proud to be part of the team that worked towards Johnstown’s financial recovery,” said Deborah Grass, Owner, Grass Roots Solutions. “This exit from Act 47 would not have been possible without the hard work and dedication of the entire team: the mayor, council and the city leadership along with the DCED representatives from the Governor’s Center for Local Government Services who worked cooperatively with our Act 47 team.”

Johnstown made significant strides to improve its management practices and fiscal situation. Operational deficits have been eliminated and the city has generated an excess of revenues over expenditures for the last six years resulting in an unrestricted reserve fund of $6.9 million. Johnstown’s debt is manageable, and able to be included in the annual budget. The city has also confirmed that there are no claims and/or judgements that would materially impact the city’s financial condition currently or in future years. And finally, financial projections (2022-2026) show annual revenues to be slightly in excess of the annual expenditures, despite the immediate losses expected after the enhanced local services tax ends on the date of the Act 47 exit.

“The community has been working towards this moment for a very long time,” said Johnstown Mayor Frank Janakovic. “I’d like to thank all of the current and former council members, staff and elected officials who helped the city achieve this milestone. The Act 47 team deserves a tremendous amount of credit too. The city of Johnstown has a lot of momentum. Getting out of Act 47 only serves to reinforce that this is a great place to live, work and invest.”

Johnstown is the 21st municipality to recover from distressed status under act 47. Prior to Johnstown, Mahanoy City, Schuylkill County, was the most recent community to recover, exiting Act 47 status on February 23, 2023. For a full list of the municipalities who have recovered from distressed status under the program, please click on the Act 47 Financial Distress page of the DCED website.

The Municipalities Financial Recovery Act, Act 47 of 1987, was enacted to provide a broad-based program of fiscal management oversight, technical assistance, planning, and financial aid to municipalities experiencing severe fiscal distress.

Governor Shapiro and his Administration are committed to strengthening communities and growing Pennsylvania’s economy so that it works for everyone. For more information about his commitment to workers, businesses, and our economy, visit the Governor’s website.

For more information about Act 47 or the Department of Community and Economic Development, visit DCED website, and be sure to stay up-to-date with all of our agency news on Facebook, Twitter, and LinkedIn.

MEDIA CONTACT:
Kirstin Alvanitakis, Office of the Lt. Gov., kirstinalv@pa.gov
Penny Ickes, DCED, dcedpress@pa.gov