May 9, 2016 4 min read

Two Monessen officials spoke publicly Monday about the results of a 2015 audit, saying using money earmarked for one year’s expenses to pay the previous year’s costs contributed to the city’s deteriorating financial position.

“You can’t keep telling the public, ‘We did a great job, we balanced our books, everything’s in the black,’ when you took the money that was intended to get us through this year to pay off what you couldn’t meet last year,” said Councilman Ron Chiaravalle.

Chiaravalle and Mayor Lou Mavrakis were the only elected officials in council chambers for a special meeting the city scheduled so an audit of the city’s finances, which revealed the city’s spending outpaced its revenue by more than $760,000, could be discussed.

Pittsburgh firm Maher Dussel conducted the audit, which was made public last month.

The audit shows a gap between revenue and expenses in the city’s general fund of $416,828 last year. Spending also exceeded revenue in the fund used to pay for debt service, the fund from building rentals and the city’s pension fund, bringing the total deficit last year to $767,825.

The former steel town of about 7,500 receives assistance under the state’s early intervention program overseen by the Department of Community and Economic Development.

Because a quorum of council did not attend Monday, city solicitor Gary Matta said officials could not formally call the meeting to order.

Mavrakis and Chiaravalle instead held an informal discussion of the city’s fiscal position with reporters and several residents in attendance.

Chiaravalle said the city authorized checks totaling $277,000 last year but didn’t release those funds until Jan. 2 to make payments on the checks and other bills.

He said the city paid those expenses with most of the proceeds from a $500,000 tax anticipation note the city took out to cover costs this year until it collected real estate taxes.

“When you use 2016 money – revenue – to pay off debts that were incurred in 2015, what are you going to do to fill that void?” he said.

City Clerk Holly Minno and Councilwoman Lucille D’Alfonso, who oversees the city’s accounts and finance department, were not at the meeting and could not be reached later in the day.

Minno was not at work Monday.

Publicly available audits from previous years show the city sliding further into the red as a credit rating agency raised the alarm over its fiscal position.

The city had a negative general fund balance of $199,483 at the end of 2014, compared to a positive balance of $27,265 a year earlier.

Moody’s Investors Service downgraded the city’s credit rating in 2014, citing a “constrained financial position with almost no liquidity and inflexibility due to earmarked funds” and warned “further depletion of the General Fund balance” could prompt another downgrade.

The gap between the city’s incoming revenue and its spending continued to increase.

The most recent audit shows a negative balance of $616,311 for the city’s general fund.

Audit documents put total payment of two bonds the city issued in 2010 and 2012 at $11.7 million from this year through 2040.

Mavrakis said the city has used garbage fees to cover expenses during the same year the fees are collected, instead of spending that money the following year as intended.

He also said the city-owned municipal complex – which contains city offices along with rent-paying tenants – is a drain on the city’s finances and has advocated for selling it and relocating city hall to the public library building. Council voted down a proposal to sell the building last year.

Mavrakis said the building’s heating and cooling systems alone need at least $1.4 million in repairs and the complex generated about $68,000 less than was projected last year.

“When you lose two-thirds of your tax base, common sense tells you that you’ve got to cut proportionately, not continue living the same life that you did when you had 23,000 people,” Mavrakis said.

Along with D’Alfonso, council members John Nestor and Patricia Bukowski did not attend the special meeting.

Council is expected to discuss the audit during a public work session scheduled for 6:30 p.m. May 16.