The Herald, Sharon, Pa.

April 10, 2013

No easy answers in Act 47 plan

Council reviews bleak options list

By Tom Davidson
Herald Staff Writer

FARRELL — Farrell’s residents are already overtaxed, city Treasurer Melissa Cannone said during Tuesday’s hearing where city officials and residents hashed out a plan for the city’s future.

“I firmly do not believe the city property taxes should be raised,” said Cannone, who doesn’t generally speak at council meetings.

The city’s property tax rate is 24.67 mills. It also levies a 1.3 percent wage tax on residents and a 1.4 percent rate on non-residents who work in the city.

“A lot of people have to decide whether to eat or buy their medicine or pay their bills,” Cannone said.

The city also loses about $160,000 in uncollected taxes each year, based on 2012 numbers, she said.

Council members and City Manager Michael Ceci, who along with state-appointed adviser Dr. Michael Weir are working to put into place a plan to get Farrell out of the state Act 47 status the city earned 26 years ago when its economic base bottomed out.

Act 47 is the state program for distressed communities; Farrell was the first  in the state in the program and it since has been joined by Greenville and New Castle, along with a score of other Rust Belt municipalities and places like Scranton, Harrisburg and Pittsburgh that have also fallen on hard economic times.

The state mandates each community in the program have a recovery plan that lays out steps to make it fiscally solvent and “viable,” meaning it has a growing tax base that generates enough cash to balance a budget that provides vital municipal services.

The plan is subject to change, Ceci emphasized to people. He likened it to a bankruptcy recovery plan.

The 37-page document he presented to council members Tuesday paints two different pictures of the city.

One of these is bleak, forecasting no changes in the tax rates and no unnecessary increases in spending that still projects the city with a $607,000 deficit come 2017.

“Obviously that will not happen,” Weir said, noting that budgetary moves would have to be made before a deficit ballooned to that figure.

Act 47 exists as a program so municipalities won’t get to that point, he said.

The other projection paints the picture if the opposite extreme is taken and property taxes and wage taxes are increased incrementally over the next five years at the same time spending is curtailed.

It still projects a deficit, but only of about $29,000, and that would be enough for the city to be ready to exit the Act 47 program.

The projections “aren’t meant to scare you,” Ceci told council members.

But they’re supposed to get council members to answer the question: “Can Farrell become a viable community?”

“I thing each council (member) has to answer that question for themselves,” Ceci said.

Council members weren’t quick to answer the question.

Councilman Bob Burich noted the city isn’t alone in facing fiscal problems.

“We’re all together in this valley,” he said.

That’s why the ideal would be a consolidation of the communities that make up the Shenango Valley, similar to the effort that failed almost 10 years ago to do just that, Burich said.

Otherwise, “we’ve got to sit down and think about where we can save money,” Burich said.

Council wasn’t receptive to banking on any future tax increases, but did authorize Ceci to seriously consider shared services and/or consolidation efforts with neighboring municipalities.

Council will discuss the plan further when it meets next Monday.

“Regardless of where we go with a plan, it’s still just a plan. This isn’t something so set it stone there’s no going back on it,” Ceci said.

As it stands, “the chances of the stars aligning to make this plan work,” are slim, Burich said.

There are no easy answers to the city’s problems, Weir said.

“You’re stuck with stuff you can’t solve easily,” he said.

The $3 million Farrell spends each year doesn’t contain many extras.

For that money, city firefighters double as street department or public works department employees, raises are few and far between and every penny is counted by department heads.

“All these little things add up and they add up pretty quickly,” Farrell City Manager Michael Ceci said.