Franklin Borough Ends Distressed Municipality Status

Department of Community and Economic Development (DCED) Acting Secretary Rick Siger announced that Franklin Borough’s status as a distressed municipality under Act 47 is terminated. Franklin is the 19th municipality to exit the program.

“This announcement is a great reflection of the persistence, hard work, and determination of Franklin Borough’s community, businesses, and partners to get this done,” said Acting Sec. Siger. “This has been a long road for Franklin Borough, as it’s been nearly 35 years since they were first designated a financially distressed municipality. This is truly a great day for Franklin Borough.”

A formal determination letter was signed by DCED, 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 Borough’s ability to effectively utilize the tools offered by the Act 47 program to significantly improve its financial position and management infrastructure since entering the program.

“We’re very pleased, and excited, to be exiting the Act 47 program,” said William Gustkey, Sr., Franklin Borough Council President. “I’d like to thank the local community, the borough residents, for their help and patience in reaching this milestone. We feel the borough has an extremely bright future ahead.”

Franklin Borough was designated as distressed on November 28, 1988, under the Municipalities Financial Recovery Program, known as Act 47 of 1987, as amended on July 26, 1988. The reason for the initial distress determination was a financial crisis that can be traced back to the 1977 Johnstown flood. It evolved over the ensuing years, culminating in 1988 from the collapse of the steel industry in Franklin and Johnstown, with the closing of Bethlehem Steel Corporation facilities.

Franklin Borough has made significant strides to improve its management practices and fiscal situation, resulting in the borough having an excess of revenues over expenditures the past four years, from 2018-2021; the borough’s current debt being supported by sufficient revenues; no current claims or judgments that would jeopardize the borough’s financial condition; and current revenues sufficient to cover operating expenditures.

Prior to Franklin Borough, Reading, Berks County, was the most recent community to recover, exiting Act 47 status on July 14, 2022. For a full list of the 19 municipalities who have recovered from distressed status under the program, please click on the Act 47 Financial Distress page of the DCED website.