Jeannette officials weigh next step
The city of Jeannette “is a sinking ship” and council will have to decide quickly whether to file for municipal bankruptcy or seek protection through the state, city officials say.
Councilman Bill Bedont said Jeannette already is $500,000 in the red for 2013 and the budget will have to be revised. Council in December approved a balanced budget. It also approved a balanced budget for 2012, which ended with a $250,000 deficit.
The city's failure to pay $350,000 in police pension contributions last year, along with a court-ordered settlement of more than $235,000 stemming from a civil suit, has put Jeannette “in a pretty bad spot.” The payment is accruing interest, which adds to the total the city must pay to the Pennsylvania Employees Retirement Commission. The city's obligation for this year is $546,000.
To try to stop the bleeding, council is going to stop paying on-call firefighters and may institute “rolling” layoffs of city employees. Overtime, Bedont said, will be curtailed and council members will have to approve any overtime for workers within the departments they oversee.
“We're currently discussing the ramifications ... before implementing any changes,” Bedont said. “We need to make the changes sooner rather than later. Even bankruptcy is being discussed.”
Third-class cities can file for Chapter 9 bankruptcy provided the municipality meets certain requirements. By filing, the city can buy time to reorganize its finances and negotiate with creditors. Under Act 47, the Financially Distressed Municipalities Act, Jeannette would be overseen by a state-appointed receiver who would manage the city's finances. They could be under state oversight for years. The city has been in pre-Act 47 status since 2011.
“Yes, we're looking into these items,” Mayor Robert Carter added. “We are actively researching these things. We know we have no money. It's no surprise we don't have any money. I need citizens to understand. We've already been a sinking ship. Our job is to patch up the holes and get this thing floating.”
The city must find the money to pay businessman Frank Trigona nearly $77,000 in damages and $158,000 in legal fees for council's failure to issue occupancy and health permits to Trigona's rental properties because he was delinquent in his city taxes.
One way the city could generate the revenue would be to adopt a dedicated real estate tax that would be used to pay Trigona and his attorney.
Carter denied that solution is on the table.
“Council never, ever discussed that,” he said.
Carter, Councilman Mark Clark and City Clerk Mike Minyon Jr. served together on council and voted to deny Trigona the permits and then voted to appeal the decision when Trigona won, which caused the city's insurance company to stop paying Jeannette's legal defense.
Carter said news coverage of the city's financial plight has overshadowed positive developments in the city.
“We've been getting beaten up in the papers because of our finances,” he complained. “Good things are happening.”
He pointed to progress in cleaning up the site for the former Jeannette Glass factory. and the possible demolition of the condemned Monsour Medical Center. Councilman Mark Levander said the city has been discussing with Excela Health the razing of the former Jeannette District Memorial Hospital. The closing of both facilities hurt the city's finances because of the loss of tax revenue.
“We're just trying to do our best to move the city forward,” Carter said.
Richard Gazarik is a staff writer for Trib Total Media.