Loan approval sought
MONESSEN - A Westmoreland County judge will decide today whether city council can pursue a quarter-million dollar loan to pay bills.
City solicitor Mark Shire said he will appear before Westmoreland County Common Pleas Judge Gary P. Caruso to seek approval for the loan under the state's Local Government Unit Debt Act. City Administrator Rosalie Nicksich and police Chief Mark Gibson are expected to attend.
Shire said the city needs court approval before acquiring a loan because it is seeking money to pay "unfunded debt" - expenses already factored into this year's budget.
If the petition is approved, the city must then obtain approval from the state Department of Community and Economic Development.
Shire said that to receive court permission, he must prove it was not reasonable for the city to foresee the unfunded debt obligations and that paying the debt by curtailing services could be dangerous to public health and safety.
Under the debt act, the city must prove that it's not feasible for the city to levy additional taxes in the current fiscal year.
Shire said the two main problems are paying city employees and the annual police pension contribution, which is due Dec. 31.
Mayor Anthony Petaccia said that if the loan isn't approved, there will be no money to pay those obligations and others, including utility bills.
"I think we may have enough for one more payroll, but money is tight," Petaccia said.
He is hopeful garbage collections fees will begin to trickle in to help.
Nicksich said daily revenues are flowing in, but added that unexpected costs caused problems this year. She said salt costs exceeded the budgeted amount, and a new order had to be placed for this winter.
"If we don't get the loan, council will have to decide what to do," she said.
In May, Petaccia proposed layoffs to help eliminate a $65,000 deficit from 2007 and to cover rising health insurance and fuel costs.
The city was hit with an unexpected 72 percent insurance premium hike, which cost an extra $80,000 this year. The mayor's motion to lay off two employees was tabled in June.
The city has been debating whether to furlough employees. But at this point, layoffs won't save enough money to solve the immediate problems, Petaccia said.
The mayor said council is working on next year's budget. A tentative budget will be proposed and advertised next month.
If council decides to raise taxes, it will have to seek court permission to exceed the 25-mill state limit.
The city received court permission to raise the millage rate to 30 for the 2006 budget. The city dropped the tax rate back to 25 mills in 2007.
On Monday, council will meet with Gov. Ed Rendell's local government services department in an effort to seek financial guidance. Councilman John Harhai arranged the meeting.