Jeannette to end year $250K in red
The City of Jeannette, facing its own “fiscal cliff,” hoped to end 2012 with a balanced budget. Instead, it will finish the year with a $250,000 deficit.
Council adopted a 2013 budget on Thursday that will be reopened in January to make some “minor adjustments,” Councilman Bill Bedont said. The $5.1 million plan will keep taxes at 32.62 mills.
“We've come a long way this year and we have a long way to go,” he said. “I was really hoping to end up even this year, but we took a couple of hits.”
Voting in favor of the budget in addition to Bedont, were Mayor Robert Carter and councilmen Mark Clark and Mark Levander. Councilman James Benson did not attend the meeting and submitted his resignation, effective in January. He cited an increased workload at Elliott Federal Credit Union, where he is manager. The budget deficit was triggered by the city's inability to make the full $414,000 contribution to its police pension fund known as a Minimum Municipal Obligation. Every municipality in Pennsylvania is required to make an annual payment to the State Employees Retirement System to pay for the pensions of police, fire and other government employees.
The city was able to repay a $350,000 tax-anticipation loan due this month and has a commitment from a bank for another loan in January to cover city expenses and payroll during the first few months of 2013 until tax revenue starts coming in.
“2012 did not go as planned,” Bedont said. “We brought in more revenue than we planned, but we spent more than we planned.”
He said the city faced some “unbudgeted” and “unforeseen” bills and lost some revenue from business-privilege taxes when the city switched its tax collection agency from Centax to Berkheimer Associates. Jeannette also had to pay higher premiums for health insurance, unemployment insurance and workers compensation, he said.
“There are some big chunks,” Bedont said.
“We will have some belt-tightening, more so than this year, next year,” said Carter.
The mayor said the city will have to reduce overtime and cut spending. It also hasn't reached contracts with its city, clerical, police, firefighters and street workers unions. The city has asked employees to take a wage freeze in the first year of all the contracts, and Carter said the responses have been positive.
Asked if layoffs are possible inasmuch as council has been reluctant to make cuts in payroll in the past, Carter said: “That we won't know until the first of next year when the numbers are in.”
Jeannette has been in pre-Act 47 status with the state. Act 47 allows the state to declare a city a financially distressed municipality subject to state control. Pittsburgh has been under Act 47 for a number of years and has been trying to extricate itself from that status.
Bankruptcy, while a possibility, is unlikely, said city officials.
City attorney Scott Avolio said he has researched the legal issues surrounding municipal bankruptcy.
“I have looked into it,” he said. “It's important for council to have knowledge of options. In this financial climate, I don't see it being advisable.”
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at firstname.lastname@example.org.