Melfi's financial plan shows $271K surplus

The city has been in fiscal emergency since 2001.
GIRARD -- The city may balance its budget and show a surplus of more than $200,000 if all aspects of a financial plan drafted by Mayor James Melfi come to fruition.
Melfi is required to submit an annually updated financial recovery plan to a state Fiscal Oversight Commission, the body overseeing city finances since the city was placed in fiscal emergency in August 2001. The plan must now be approved by city council and the commission.
Melfi said some of the "hard decisions" to create savings made in the last several years are beginning to bear fruit, such as moving to the Regional Income Tax Agency for city tax collection. He said the city saw an increase of $500,000 in collected taxes in 2005, the first year with RITA. The city, Melfi said, also saved an additional $100,000 by eliminating its income tax collection department.
The city has also eliminated, through layoffs and attrition, about 30 full-time and part-time jobs since going into fiscal emergency -- a move Melfi said saves the city $2 million annually.
Overall deficit
Still, the city began 2006 with an overall deficit of $941,474. Melfi said that if his financial plan is "executed to perfection," the deficit should be covered and the city should be left with a surplus of $271,000 by year's end.
According to Melfi, if all goes according to plan, the oversight commission could recommend that the city be removed from fiscal emergency by the end of the year. The mayor would have to submit a plan detailing how the city will remain in the black before that could happen.
Part of Melfi's plan includes early collection of funds that would have been given to the city by the state over the next few years. The city, Melfi said, gets about $250,000 from the state annually and will try to collect half the annual amount for each of the next five years by Dec. 31. The total collected this year would be more than $700,000.
Melfi said the city should begin to see revenue generated in 2006 from five to seven gas well drillings on city property as another part of the recovery plan. The wells, he said, should generate $125,000 for each of the next three years and $50,000 annually beyond that.
Other aspects of the recovery plan include interest from the Lakes/Dam Fund of $135,000, then $5,000 per year thereafter; renewal of the fire levy passed in 2004; inheritance tax applied to the general fund; and a second harvesting of timber in 2009, which would generate $50,000 that year.
The plan also includes several cost-saving strategies such as reducing workers' compensation expenditures and finding cheaper health insurance for city employees.
Changes possible
Melfi said he is hopeful that the plan is followed as closely as possible, but said he realizes some aspects may be changed as the year moves on. He said where one area of the plan falls short, revenue in another area should make up for it.
As an example, Melfi said, the plan calls for about $270,000 to be collected in income tax during 2006. That amount, he said, is conservative. Any additional collections will go toward making up for shortfalls elsewhere in the plan.
"What this plan does is lay out a strategy," he said. "A plan is just that, a plan -- some things happen and some things don't."
One area of the plan Melfi hopes will stay in line are departmental budgets -- including Girard Municipal Court. In 2005, the court ordered the city to issue an additional $250,000 above its initial appropriation to cover court expenses. Melfi said the additional money granted was a heavy hit to the city's bottom line.
Even if all goes according to Melfi's plan and all departments keep within their respective budgets, the city will still need to be careful in future spending, the mayor said. The plan does not include any provisions for additional hiring in the city.
The city will also negotiate new contracts with police and firefighters this year. City employees took a three-year pay freeze starting in 2004 and, for the first time, contributed to health care premiums. The plan, Melfi said, does take into account possible pay raises for employees in upcoming negotiations.

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