Alle-Kiski river towns cope with recession

Tom Yerace

Apr. 19, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Times are tough and local government officials are bracing for them to get tougher.

Up and down the Alle-Kiski Valley, community officials are keeping close watch on the revenue coming in and an even closer watch on their spending as the country tries to climb out of a downward economic spiral.

"It's not so much that costs are rising, it's revenues," said Tom Benecki, director of the Allegheny Valley North Council of Governments. "A lot of municipalities are seeing a sharp decline in revenues."

Much of that is related to residents who have lost their jobs as their companies try to reduce operating expenses to stay viable.

The ripple effect is a reduction in the 1 percent earned income tax split between municipalities and their school districts and at least some delay in the payment of real estate taxes.

Thus far, those who were contacted said they have not had to do anything drastic.

"We haven't done much of any cutting," said Vandergrift Borough Secretary Steve DelleDonne. "We haven't reduced any services. We're still operating on the same number of people and so forth."

He said one thing the borough is not planning to do this year is street paving projects, always a costly proposition.

"Right now we are OK," said Arnold Mayor John Campbell. "Everything seems to be on budget. If a sewer problem crops up or there's a cave-in on a street, then yeah, we might have a problem. I don't think anybody has much wiggle room.

"We're taking the approach that everything is going to work out, but we are going to have to wait and see," Campbell said.

"In our budget talks and meetings, we've tried to put a little cushion on some things, not a big one, but just enough to keep us above water," said Springdale Councilman Mike Ziencik.

He said one was the allocation for fuel for borough vehicles since the price of oil has been so volatile over the past year. A little extra was included to the capital improvement budget, too.

There have been no cutbacks, he said.

Leechburg Council President Tony Defilippi said the borough's budget is holding steady for now. He said cutting services "will be the last thing" council resorts to.

"You just have to watch what you spend," he said.

A familiar scenario

For many local officials, this economic crisis is like watching a rerun of a horror movie they've seen over the past 20 to 30 years when major local industries and businesses folded, moved out or down-sized, resulting in millions of dollars in lost tax revenue.

"I'm not sure it's different," New Kensington City Clerk Dennis Scarpiniti said of the current situation. "The only thing is that if people don't have the money, they don't pay their taxes, they don't pay their garbage bill and you don't see the revenue."

New Kensington has suffered from a steady decline in its downtown business district over the past 30 years, resulting in a loss of business tax revenue.

"We have that problem every year," Scarpiniti said. "Look at New Kensington: we used to have five car dealers; we have one now."

Scarpiniti said city officials employ due diligence in trying to get the most they can out of a tax dollar. For example, he said the city usually hires about a dozen summer workers, but this year that has been reduced to six. He said the city is turning to a Westmoreland County agency, the Workforce Investment Board, which will allow the city to hire additional summer help, which the agency will pay for.

"We're trying to maintain the same services that we have always have but we understand we don't have the money coming in like we used to," he said. "You learn to work around that."

Co-op buying used more

One way to do that is dealing in economies of scale by buying commodities in bulk with other municipalities. It's a big membership feature for councils of government, and Benecki said there's more interest in it than ever.

He said while many municipalities maintain relationships with local suppliers, "a lot of them now are saying, 'It's nice to shop locally, but now maybe we should be looking at the best price.'"

It's tough to beat the prices the COG can deliver. Rock salt is an example. Benecki said last year under the state's piggyback purchasing plan, it was $78 a ton and municipalities had to pick it up. COG members were having it delivered for $45 per ton.

Still, revenue is the dark cloud on the horizon and finding new sources is never easy.

DelleDonne said Vandergrift's budget was aided by revenue from gas wells the borough drilled. But most municipalities aren't as fortunate.

If there is a major drop in revenue, the only option open to many municipalities is raising property taxes, something local officials religiously try to avoid. Of those contacted, only Leechburg had a tax increase last year and that was just one mill.

"We're a pretty tight ship," said Apollo Council President John Ameno. "We've scaled back just through time. We have tried to not raise taxes, which we have not done in seven years. And that is pretty hard in these times."

Looking to the state, feds

At the same time, all of the municipalities are pursuing grants more aggressively than ever to help stretch their revenues. Many are hoping to get a share of the federal stimulus money. Campbell said Arnold is biting the bullet and spending money to hire a grant writer with the goal of landing more state and federal money.

It's the same elsewhere.

"Right now the only thing I see them focusing on are these grant programs," Benecki said of his COG's 16 member communities. "I have never seen so many applications come in so quickly."

Ameno said the renovation of the Apollo Plaza is being done through a PennDOT Hometown Streets program. He said they have applied for a grant to do a sanitary sewer project and will do the same for a stormwater sewer project.

"They are saying that now is the time to do those projects because there is money now to do them," Ameno said. "We're testing those waters."

Improve town, improve tax revenue

There is yet another, long-term approach to the problem: shore up the tax base that's there and work to expand it as the economy improves in the future.

Arnold, New Kensington and Apollo all hope to do that with deteriorated properties that have been demolished to make way for new development.

"We're doing right now what we think we have to do," Scarpiniti said. "We're demolishing old structures, hoping to bring some new business in and provide some jobs.

"When you have people working, they spend money."

Tom Yerace can be reached at tyerace@tribweb.com or 724-226-4675.

Newstex ID: KRTB-0310-34246070