JOHNSTOWN — Johnstown officials have a proposed budget for next year, but there’s a giant hole in it.
The document, introduced during meetings Wednesday, projects $13.4 million in general-fund spending and just less than $12.2 million in revenues.
That leaves a gap of more than $1.2 million that somehow must be bridged before the 2010 spending plan is adopted on or before Dec. 31.
“It’s going to be very difficult,” Councilman Jack Williams said. “Because I think there’s going to be resistance to making the necessary expenditure reductions.”
Johnstown has an interim city manager and a newly hired finance director, both of whom have been on the job for less than a month.
So it was Williams who prepared next year’s budget.
At this point, the plan includes no layoffs and no property-tax increase.
But by presenting a budget with such a large revenue deficit, Williams is issuing a challenge to fellow council members who have resisted his calls for layoffs to reduce the city’s expenses.
“What you have is a document that is not balanced,” Williams told council Wednesday. “I don’t think that should be a surprise to anybody.”
It remains to be seen how council members and City Hall administrators may address such a large deficit: Cutting $1.2 million would mean eliminating about 9 percent of all general-fund expenditures, which would inevitably lead to job losses.
Absent any cuts, Williams says it would take a property-tax increase of 9.66 mills – about a 23 percent jump – to balance the proposed city budget.
And he said he will not support a tax hike unless “we’ve exhausted all expenditure reductions.”
Also, some unknowns remain. City officials are not yet sure exactly how much their health-insurance costs will jump next year, and contract negotiations with the police and sewage-plant workers are not yet complete.
There was not much discussion concerning the 2010 budget at Wednesday’s meetings, but council scheduled several sessions over the next few weeks to begin poring over details.
Other financial matters were discussed Wednesday:
n Officials appear to be moving closer to an agreement with a company that would buy the city’s delinquent property taxes. Public Asset Management Inc. would pay the city a lump sum – estimated Wednesday at $703,000 – in exchange for the right to collect on those back taxes through Cambria County Tax Claim Bureau.
The big up-front payment could erase Johns-town’s budget deficit for this year – a deficit that, if left unaddressed, means that the city may not be able to make payroll by year’s end.
But some remain concerned that the deal could have long-term, negative implications by cutting off a steady stream of delinquent-tax revenue that now flows from the Tax Claim Bureau to the city.
n Council approved a proposal to refinance $5.9 million in debt associated with the construction of the city’s newest parking garage on Vine Street.
The city will save “at least $130,000” in debt payments next year because of the refinancing, city Solicitor Nick Banda said.
n Council also heard a proposal from First Credit Resources Inc. of Frankstown Road.
David Kennedy, First Credit’s chief executive officer, said the company could take over collections of Johnstown’s delinquent garbage bills – a problem that has long plagued the city.
“Our fee is paid by the person who’s past-due,” Kennedy said. “So it would cost the city nothing.”
Council took no action but asked Kennedy to submit a written proposal.
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City's proposed budget includes $1.2 million deficit
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