Vote on fiscal plan is set for April
By JOHN W. GOODWIN JR.
VINDICATOR TRUMBULL STAFF
GIRARD -- State fiscal oversight committee members have seen the mayor's revised plan to get the city out of fiscal emergency by year's end, but they will not vote on it until sometime in April.
The oversight committee began its work after the city was placed in fiscal emergency by the state in August 2001. The committee oversees all spending in the city as long as the fiscal emergency is in effect.
Paul Marshall, chairman, said the oversight committee would wait until city council has a chance to approve the plan before voting on it. City council is expected to address the issue Monday.
Mayor James Melfi recently unveiled a recovery plan that he said would leave the city $271,000 in the black by the end of 2006. A major part of the plan includes borrowing against money the city is expected to receive from the state over the next several years.
"The plan does offer something a little different. Under advice from the auditor's office, we are allowed to borrow forward on state money," Melfi said.
According to committee members, the city would be permitted to borrow about $730,000 at a low interest rate. Over the next eight years, they said, the city would receive half of its $250,000 in annual state funds with the other half going directly to whatever financial institution issues the loan.
Marshall said the plan to borrow against future state money works in the best interest of the city. The city would have to approve the move before any borrowing can be done.
"I have reviewed this in some detail, and I think it is a reasonably workable plan," Marshall said.
Councilman Dan Moadus, who represents council to the committee, is not happy with the plan. Moadus said borrowing to get out of fiscal emergency only prolongs the city's financial problems, and the city, he said, will miss the other half of the state money over the coming years.
"I have never been a big supporter of borrowing to get out of debt," he said. "I cannot support borrowing money to get out of this, I just can't."
The recovery plan also takes into account revenue generated in 2006 from five to seven gas well drillings on city property. The wells, Melfi's plan states, 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 city's lakes and dam fund of $5,000 per year; renewal of the fire levy passed in 2004; inheritance tax applied to the general fund; and a second harvesting of timber on city land in 2009, which would generate $50,000 that year.
The plan includes several cost-saving strategies such as reducing workers' compensation expenditures and finding cheaper health insurance for city employees.
Melfi has consistently said the Girard Municipal Court must balance its budget and live within its means for any financial recovery plan to work. The city is in litigation with the court over an order for additional funding issued by the court last year.
Moadus said he will be asking for an executive session with council and its attorney to clarify what the city's argument will be in court on that issue. He also said he will be asking council to send the court a letter asking that it explain its four special accounts, what those accounts are for and on what legal basis were they created.