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Council looks to refinance loan, sell tax liens

| Wednesday, March 13, 2013, 9:01 p.m.

Jeannette City Council was expected to present a 2013 budget that has been “reforecasted” at last night's meeting.

The meeting ended too late for this week's edition.

At Monday night's workshop meeting, council finance chair Bill Bedont said he wanted to clear up some misconceptions about the city's financial situation.

“We're reforecasting the budget, we're not amending the budget,” Bedont said.

A formal amendment is not required in this instance, city solicitor Scott Avolio said.

“The taxes are set for the year,” Bedont said. “There will be no ‘Trigona Tax.' There will be no increase in EIT tax. Taxes must be set before the beginning of the year.

“There were no additional public budget meetings because the only meetings we held were personnel related.”Bedont said the budget issues could only be solved by increasing revenue and by lowering fixed costs. Because the largest fixed costs are personnel related, those meetings were held in private, Bedont said.

“The budget will be rebalanced by increasing revenue and decreasing costs,” Bedont said. “It will be a fluid budget this year and will be revisited throughout the year. We have a big list of things to chase down as action items. The majority of these are revenue-generating items.”

Mike Foreman, the local government specialist with the state Department of Community and Economic Development who helped the city navigate the Act 47 Early Intervention Program is continuing to work with the city to avoid Jeannette being taken over by the state.

On Monday, Foreman gave council several ideas this week that could begin to right the financial ship.

Foreman said council needs to determine if the amount the city is collecting in Earned Income Tax that is dedicated to pay the pension obligation is enough.

“My sense is the rate may not be sufficient to meet the requirement for the pension,” said Foreman. “Going forward in 2014, you need to keep an eye on what is coming in and if it is enough.”

Foreman also proposed that the city look into selling all of its liens as a way of recouping delinquent fees and taxes. He explained that in such a sale a third party would look through the city's liens to see if they're worth purchasing and then would offer the city some sort of revenue share.

For example, a collection company might offer the city 60 or 70 cents on the dollar up front and then go about collecting the delinquent fees, taking the city out of it.

Foreman told council he recommends refinancing the $2.9 million bond issue earmarked for flood control to get a lower interest rate and more favorable repayment terms.

He also recommends that the city look into refinancing its existing debts —such as the $350,000 that was due at the end of 2012 to pay the police pension fund and even the upcoming $540,000 that will be due to the pension fund at the end of 2013 — and rolling it into the bond refinance to streamline the debt.

Foreman asked council to put out a request for proposals to conduct a study on the city's staffing levels. Foreman said he will ask his department to process a grant for the city to pay for such a study. Essentially the study will look at the size of the city and the size of its workforce to determine if the city is “right-sized.”“It's sizing your organization to match your ability to pay for services with the right menu of services. It's so you have a better sense from a third party on how to structure your organization,” Foreman said.

The study could potentially be done by the end of the year and the recommendations put in place in 2014.

Council agreed Monday night to immediately begin work on the staffing study, the feasibility of a tax lien sale and to begin communication with banking institutions regarding the bond refinance.

Foreman said getting started on those three items is a good start to what will be a long process. He plans to return to council's April meeting.

“Three initiatives at this point is a good start. It's a big effort and you want to get it right. You only have one chance to get it right,” Foreman said.

Kristie Linden is an editor for Trib Total Media. She can be reached at or 724-838-5154.

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