The City of Jeannette for three years has paid more than it needed to in pension contributions for police, firefighters and city workers to make up for past administrations that took advantage of a state law that allows municipalities to defray a portion of their contributions, according to a councilman.
Bill Bedont told council that next year the city will budget the full amount for pensions “because we keep digging ourselves a bigger hole” by spreading out payments.
Jeannette will pay $630,000 this year in pension contributions for city workers, Bedont said.
In 2009, the state passed a law allowing municipalities to defray 25 percent of their contributions to the Pennsylvania Employees Retirement Commission. The city took advantage when it was hard-pressed to make the payments, meet payroll and satisfy other financial obligations.
If Jeannette had been up to date on its payments, the city wouldn't have had to pay more in contributions toward its Minimum Municipal Obligation. In 2013, the city will have to pay $536,000 in pension contributions instead of the $200,000 that would be owed if officials had not taken advantage of the law.
“We keep rolling it over, rolling it over, rolling it over. We'll never catch up,” Bedont said. “This is unneeded and uncalled for. I'm dumbfounded.
“We could be paying $250,000 (this year). Instead we're paying $630,000. You'll see that in next year's budget we'll be paying the full amount.”
Jeannette's pension fund has $9.1 million in assets but more than $14.5 million in liabilities, according to the retirement commission, which rates the fund as “moderately distressed.”
Bedont said he expects Jeannette to finish 2012 with a clean financial slate.
“We should come out with a balanced budget at the end of the year,” he said.
The city has struggled to pay its bills for several years. Bedont said he developed a “game plan to get to the end of the year to continue paying bills and payroll and keep the lights on” despite some major, unresolved financial hurdles.
Bedont said he submitted to the city's auditors “a game plan to get us to the end of the year.”
“I take it that no news is good news,” he said, noting that he hasn't heard from the accountants.
In addition to pension contributions, the city still must repay a $350,000 tax-anticipation loan it needs to get through the first several months of 2013 until tax revenue begins to flow in, he said.
He said the city received an estimated $400,000 in earned-income taxes from Centax, its former tax collection agency, and is still owed between $150,000 and $200,000 in earned- income and business privilege taxes. He added that the city has received $600,000 of the $745,000 in tax revenue budgeted for this year.
“We are getting our revenue in,” he said.
Bedont said he is preparing the 2013 budget along a five-year plan to right the city's finances.
“I know that's an optimistic thing to do,” he said. “In looking at 2013, my plan was to finish the year even and next year recoup some money and reinvest it in the city. The only way to do that is having some forward thinking.”
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at rgazarik@tribweb.com.
