Latrobe told to tighten its belt
Latrobe is not in imminent danger of falling into a financial crisis, but could be in dire straits in the next three years if the city does not take steps to generate more revenue as well as cutting some costs, two financial consultants told city council on Monday.
“There is no imminent financial crisis, but things are trending negatively,” said Susan Trout, a financial consultant and Greensburg's city administrator who helped to develop an Early Intervention Program for Latrobe.
The five-year financial management plan developed by Trout and Deborah J. Grass, a principal in Delta Development Group Inc. of Marshall, projected that Latrobe will experience a shortfall of about $500,000 by 2016, without any adjustments to the city's fee structure and tax rates. That shortfall was projected by eliminating revenue and expenses that do not occur on an annual basis, the consultants said at council's agenda meeting.
The city has been able to balance the budget in recent years by dipping into its reserve fund, but that is not a long-term solution to its financial problems, Grass said.
“Essentially, your reserves are going to run low,” Grass said.
Latrobe needs to diversify its revenue base, Grass said, because it is so dependent on generating money at its garbage transfer station — 39 percent of its revenue in 2011 was derived from operating the transfer station and the payment of residential and commercial garbage bills, compared to only 25 percent from real estate taxes. The city was able to tap $1 million in revenue from the transfer station in 2012 to help balance the budget, Grass said, at a time when the collection of real estate taxes has fallen from about 92 percent to 89 percent.
If anything negatively impacts those revenue generators “you are really in trouble,” Grass said.
The future of the city's operation of its refuse transfer station on Mission Road has been a source of heated debate over the past year. Council has advertised for bids for a garbage hauler to transport the refuse to a landfill, while the city maintains ownership and operation of the transfer station, thereby giving it the right to set rates.
“We think it is really important to take a deep breath and study the transfer plan. Develop a specific business plan,” Trout said.
The consultants are scheduled to return to council on May 28 with the completion of their five-year financial management plan.
In a related matter, a trio of council members will meet with representatives of AFSCME Local 629, which represents about seven public works employees, to discuss the impact of the city's proposed new hauling contract on their jobs.
If council opts for a hauler to transport refuse to a landfill, council members said the two employees currently driving the trucks would be reassigned to the public works department.
But Councilwoman Rosie Wolford said there can be no guarantee in a year or two that the city could maintain those jobs.
Joe Napsha is a staff writer for Trib Total Media. He can be reached at 724-836-5252 or email@example.com.