Arnold strives for long-term solvency

Liz Hayes
| Sunday, Sept. 22, 2013, 12:01 a.m.

Officials in financially strapped Arnold have a lot of numbers in their heads, but there is one they are trying to avoid: 47.

The stigma of Act 47, the state's Financially Stressed Municipalities Act, looms over Arnold's leaders as they plan the budget for next year and beyond.

“That's the last thing you want to do,” said Mayor Larry Milito. “You can't get out of it. They keep you hostage in it.

“There's no structure that says, after 5 years, if you seem like you're in the black and moving in a positive direction, we'll release you to take care of your city yourself,” he said. “That's the bad rap of getting into Act 47.”

And Act 47 has become a seemingly unending nightmare for numerous cities similar to Arnold — former industrial hubs whose main employer or two closed — including Clairton, Duquesne, Aliquippa and Johnstown. Clairton has spent 25 years in the program.

Luckily, Milito said, Arnold hasn't reached the point where council could enter Act 47, not that it wants that to happen.

Criteria for the program include operating at a deficit for at least three years, defaulting on a loan, missing payroll for a month, failing to forward payroll taxes for Social Security benefits, failing to make pension contributions, reaching the maximum levy on real estate taxes while experiencing a substantive decrease inmunicipal services, and declaring Chapter 9 bankruptcy.

The only stipulation Arnold has clearly met was maxing out the city's property tax rate. In December, council hiked taxes by 25 percent to 43.5 mills. Usually the state caps third-class cities at 25 mills, but Arnold's millage is structured so that the excess is used for debt service, not the general fund. New Kensington's taxes also exceed the limit, although only by about 2 mills.

Arnold began the year with a $400,000 deficit to its $4.5 million budget as it waited for the arrival of the last quarter of 2012's sewage and garbage fees after the city restructured how the money was collected.

Council this year worked out an 18-month repayment schedule on its $750,000 tax-anticipation loan that was supposed to be paid off last December.

Council hasn't had to resort to laying off employees, although it hasn't replaced a police officer who resigned this spring, and there are unfilled positions in the public works department.

Milito said council will be carefully considering staffing needs and budget constraints as it heads into upcoming negotiations with the police and public works unions.

Council hopes the state Department of Community and Economic Development's Early Intervention Program can help officials restructure the city's finances and move toward long-term solvency.

Council wants to work with financial consultants Delta Development Group for the next five years, but Councilman Dave Horvat said even that will depend on whether the DCED will help cover the company's $65,000 fee.

Milito said even the cuts and changes that city officials have managed to make will go only so far. More dramatic moves — reducing employees, consolidating services, even merging with neighboring communities — probably will be in the city's long-term future.

“It needs to be regionalized, and it needs to be done sooner than later,” said Milito, although he acknowledged no formal talks on merging have occurred. “There should be one government running these cities (Arnold and New Kensington). I'm willing to give up the reins over here so there's only one mayor.”

He pointed to a declining population in Arnold and much of the Alle-Kiski Valley that no longer can support the same level of municipal services that were present in the cities' heydays.

“My god! We've only got 5,000 people here now,” Milito said.

Recent Census counts present more grim numbers for Arnold, believed to be the smallest third-class city in the state. The population has dropped by about 1,000 people in the past 20 years. About a quarter of the residents live below the federal poverty line. Forty-five percent of residents are renters. And nearly 20 percent of the available housing units are vacant.

Milito pointed out another concern — lack of community involvement.

“It's a matter of people wanting to invest themselves and their time in this community,” he said. “For too many years, people closed their doors, closed their eyes, closed their ears. It's time for the people to come out of their houses and do something.”

He offered this year's primary election as an example. Two sitting councilmen — Ron Hopkins and James Duncan — are not running for re-election. The other two councilmen, Horvat and Anthony “Butch” Sgalio, who were appointed within the past two years, are running to retain their seats. With a total of four council seats up for grabs, only one newcomer, Karen Biricocchi, appeared on the ballot.

But there are glimmers of hope for the city. Council meetings usually are filled with concerned residents, including Biricocchi, who earlier this month asked if she could help the police department look for grants for more drug enforcement in the city.

A fundraiser by the New Ken/Arnold Social in the Park raised enough money for the city to hire monitors for Roosevelt Park, allowing council to open it throughout the summer. Volunteers and organizations such as Kids Kardio, run by Valley High graduate Mycaiah Clemons, offer programs for children, including the recent Back to School Bash sponsored by Gerry Douglas and others.

Federal Community Development Block Grant money continues to flow into the city, allowing officials to pay for the demolition of blighted houses and road work such as the recent repaving of Drey Street.

And new businesses have cropped up, from L&L Roofing's two-year-old facility in the city's Third Avenue redevelopment zone to newer restaurants Ice Cream Heaven, operating in the former Dairy Queen on Freeport Road, and Bamboo Republic, a Chinese fusion restaurant that opened this month in the former Ladles storefront on Fifth Avenue.

Finally, there is the hope that the proposed Alle-Kiski commuter train will become a reality and run through the city, bringing people, businesses and development to Arnold's downtown.

“We're getting there,” Milito said. “We're trying to move forward in a direction where we're pulling away from Act 47.”

Liz Hayes is a staff writer for Trib Total Media. She can be reached at 724-226-4680 or

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