Report: Seniors will affect spending
MONESSEN – The city of Monessen is projected to return to deficit spending in three years in a municipality that has an above average aging population and expenses that likely won’t match revenues at the end of the decade.
While the city is heading in the right direction, it’s going to need to make changes by possibly increasing taxes and doing a better job of collecting them to avoid becoming a financially distressed municipality, said Deborah Grass, a consultant who has been working with Monessen for much of the year under the state’s Early Intervention Program.
“I am going to be cautiously optimistic,” Grass of Grass Roots Solutions in Pittsburgh said during a special council meeting Wednesday when she presented her initial findings.
Monessen ended 2015 with a $308,769 deficit and laid off some employees at the start of the following year under a spending freeze that led council to ask the state Department of Community and Economic Development for intervention. By not filling some vacant positions and making sweeping cuts across all departments, Monessen ended last year with a $145,674 surplus, according to the Grass Roots report.
Monessen revenues are at risk of declining because 26 percent of his population is 65 years old or older, when the average is 15 percent, Grass said.
“That’s unusually high,” she said.
By the end of 2020, the city’s deficit is expected to reach $25,539 and climb to $78,219 a year later.
“This is what is going to happen if you don’t make some changes,” Grass said.
She recommended council consider retaining a private collector of delinquent taxes, enact a special levy to shore up the distressed police pension fund and eliminate post retirement health care benefits for new hires. She also recommended a flat tax on businesses and raising service fees.
“You want to get the collections up,” Grass said.
She also said the city needs to continue to budget “realistically and conservatively” and develop written financial management procedures. The city also should hire a finance director, the report shows.
Grass said she will work with the city over the next few months to prioritize and implement her recommendations.