3/16/21 - Providing for Substantial Grants to Act 47 Municipalities

VIDEO: : During a Senate Community, Economic, and Recreational Development Committee meeting, Senator Wayne Langerholc speaks in support of Senate Bill 154.

The legislation will increase the amount of available grants to distressed municipalities under Act 47 through an existing funding source.

On June 9 of 1936, the General Assembly and the Governor enacted Act 4 which levied a tax on alcoholic beverages to aid the City of Johnstown which had just suffered the St. Patrick’s Day Flood of 1936. This tax, originally a temporary levy of 10%, became known as the “Johnstown Flood Tax.”

As we have come to know, temporary taxes are rarely temporary. The 10% tax was increased to 15% in 1963, and again to 18% in 1968. The Johnstown Flood Tax still exists today; however, it is not dedicated to assist distressed municipalities but rather goes into the General Fund. Currently, the Department Community Economic Development awards grants and loans to Act 47 municipalities, but this year’s budget allocated just under $2 million to those programs.

Under the legislation, 1/18, or roughly 5.6%, of the Johnstown Flood Tax will be dedicated to help distressed municipalities under Act 47. According to the Department of Revenue, it would be about $20.6 million using 2017-2018 revenue numbers. The revenue collected for this program will be collected by the Treasury and will be dedicated to the Commonwealth Financing Authority to award grants to municipalities under Act 47.