Dec 13, 2018 6 min read

Donora Borough Council held a special meeting Tuesday to discuss an early intervention plan to help the borough prevent financial crisis.

The plan was presented to the board by Deborah J. Grass of Grass Roots Solutions, a Pittsburgh company that provides municipal support services and is a consultant on the early intervention team.

In the presentation, Grass said the borough had contained costs pretty well and that they’ve done a lot in terms of reducing the staff and bidding out big budget items such as pensions and health care.

“You’ve really done a pretty good job of cost containment. The problem is that it’s difficult to generate enough revenue,” Grass said.

She said the revenue issue is a result of Donora seeing a steady decline in assessed values, which have contributed to flat real estate tax collections over the last several years. She said the Act 511 taxes, which include business and earned income taxes, have been relatively flat, as well.

Grass said that during the financial-condition assessment, her company reviewed five years of the borough’s revenue history. She said for those five years, the total revenue was about $2.2 million per year and increased at a rate of less than 1 percent per year, even with tax increases. She said revenue decreased by 0.8 percent per year from 2013 through 2018.

She said the median value of an unoccupied unit in the borough is $57,000, compared to county, state and national averages that are twice as high as Donora’s. Donora also has a median household income of $36,150, which is low compared to Washington County’s median household income of $57,534.

She said other factors that affect revenue generation include Donora’s older population, with 20 percent of residents over the age of 65. The borough also has 38.5 percent of its housing units occupied by renters and has a housing vacancy rate of 22.7 percent, compared to the national average of 10.9 percent. That also affects revenue generation. Grass said this is an issue that will be addressed during the community development piece of the project, because it is a significant problem for the borough.

During their financial trend analysis, Grass Roots Solutions found that there is no imminent crisis. She said the borough had a small reserve this year and is projecting a small reserve next year that will go to the fund balance, but it is important to keep in mind that expenditures are increasing as revenue decreases.

“If things stay exactly the same, no tax increases, no rate increases, the expenditures move in the direction that we’ve talked about, by 2021 and 2022 we would expect to see some deficiencies again,” Grass said.

Grass said the third step in this portion of the plan will be to make short-term recommendations for the current fiscal year, such as increasing the fee for mechanical devices, increasing the real estate tax and stepping up delinquent tax collection. “We don’t want to just solve the problems for today, we want to solve them long-term,” Grass said.

She said in the second half of the study, they will make long-term recommendations for operations and prioritizing. A draft of Step 4, the management and operational review, will be presented to the board by Jan. 31.

“There’s some things I think we’re going to dig deeper. What I really want to get into is grants for street equipment and police equipment for next year. The more grant money we can get, the better we will be in those areas,” said Finance Chairman Edward Parquette.

“I think the Early Intervention Program is really, really good, and what they’ve done, they’ve found that we made tremendous cuts last year, and we also increased taxes, and it was a bitter pill to swallow, but it was necessary. It made us have a little bit of a surplus, and that’s something we haven’t been able to say,” Councilman John Cogner said.

Cogner said last year the borough had a $31,000 surplus, but in the three years before that, it was living off reserves. He said officials saw that the reserves were being depleted, and that’s why they decided to utilize the Early Intervention Program, which is provided through the state Department of Community and Economic Development.

In other business, council voted 7-0 to approve the residential refuse hauling rates for 2019. The rates for 2019 will be $150 at discount, $250 at face, and $300 with penalty, plus court costs and fees. This is a reduction from the previous rates of $200 at discount, $250 at face and $300 with penalty.

“It’s not a secret that there was a fee added into garbage bills for years. It was put in by the previous council years ago, and the budget, from what I understood, depended on those fees, so now if you drop this rate, will this have an adverse effect on our budget?” Councilwoman Cindy Brice asked.

Brice said the early intervention plan includes the previous year’s fee, so she was concerned it could affect the budget.

“This year, we’re going to have excess funds. I created a category today with reserve in 2018. We’re going to put $200,000 from this year that we should have left to cover the budget next year,” said Borough Administrator John Bedner.

Cogner said they should also have enough left to cover the salary of the sanitation clerk, the postage and the mailings, and will also have enough to cover the borough’s share of paying the code-enforcement officer they eventually hire.

“We should be OK, but we may see that we may have to adjust the rates next year,” Cogner said.

Cogner said it appears council will not pass the budget until the very end of the year. He said council wanted to use the early intervention report as a starting point, but because they didn’t receive it until around Thanksgiving, it caused some delay with the budget.

“We’ve been working on this a lot this past month to try and maintain operations but be as fair to the taxpayers as possible, especially given the increase last year. Hopefully, the cut in the trash bill helped to make it up to the people a little bit,” Parquette said.

Parquette said the budget will be available to the public on Thursday and will be advertised for 10 business days.