A couple of weeks ago, City Councilman Bruce Kelley challenged his colleagues to prepare for Monday's work session on whether the city should enter the state's Distressed Municipalities Program by examining measures recommended in the recovery plans of Johnstown, New Castle, Reading and Chester - cities he chose because of their similarity to Altoona.
Generally, the plans call for decreasing expenditures and increasing revenues in a myriad of ways to avoid insolvency. They frown on continued use of one-time, stop-gap fixes like asset sales and borrowing to cover operational deficits.
Instead, they seek to ensure stability through long-term solutions - cooperating with other municipalities on services, enacting higher property and earned income taxes and revokinge tax-exempt privileges from ineligible organizations, among them.
Highlights of those plans follow.
Johnstown
The city adopted its original distress plan in 1993.
Eckert Seamans Cherin & Mellott drafted the fourth recovery plan, which Johnstown adopted in 2007.
The fourth plan:
n Eliminated minimum manning for the Fire Department, giving the city the right to determine the number and location of fire stations and the right to set staffing levels at those stations.
n Made seniority the deciding factor for layoffs only if the senior employee's qualifications were equal.
n Allowed no filling of employment vacancies without approval by the distressed coordinator, unless required by union contract.
The plan also called for the city to:
n Negotiate labor contracts so the average hourly increase is no higher than inflation or 3 percent, whichever is less.
n Discuss intermunicipal cooperation for police and fire services.
n Discuss joint purchases, grant applications and defense against tax appeals with the school district.
n Adopt a pay plan to attract quality professionals for management.
n Review tax exemptions for eligibility.
n Push for increased payments in lieu of taxes.
n Organize churches and other groups to provide volunteers to help the elderly.
n Conduct efficiency, quality and customer-satisfaction studies for employees.
n Demolish or rehab blighted properties, including those in Section 8.
The Fifth Plan, adopted 2010, calls for reductions in staffing through attrition.
Reading
Public Financial Management drafted a recovery plan that Reading adopted in 2010.
After staving off insolvency with short-term fixes like borrowing, asset sales and one-time payments from authorities, the city ran an operational deficit of $11.1 million in 2009.
The bottom line has been growing worse annually.
The decline has been rapid, after an operating surplus of $8.6 million just three years earlier.
Reading has high tax rates, its residents are among the least wealthy in its region and the city has had little "structural" revenue growth, because property value and earnings are stagnant.
By 2010, public confidence had eroded. There was poor management, tension between administrators and council, and difficult labor-management relations, according to the plan.
"Failure to act now will soon lead to catastrophic results," the executive summary states. "The depth and immediacy of the crisis cannot be overstated."
If followed, the plan will change the way government operates, holding it accountable, the plan stated.
It recommends that the city:
n enact a 10 percent increase in property taxes.
n enact increases in earned income tax.;
n ask for an additional $9.45 million in total contributions from the water and parking authorities.
The plan also called for the city to:
n freeze wages and benefits for three years.
n increase employee contributions to health benefits.
n reduce overtime pay.
n restructure the fire department to reduce costs without reducing service.
n establish regular performance reviews.
n work with outside municipalities for regional police, firefighting and recreation services.
n let the county and other agencies take over tax collection.
"This Plan represents an opportunity to make the hard decisions now so that the City cannot only survive, but also grow," the Reading plan states.
New Castle
Public Financial Management and Eckert Seamans drafted a recovery plan that New Castle adopted in 2007.
The city was borrowing to finance operating costs with its tax anticipation notes, accruing deeper deficits every year and failing to keep up with pension funding.
Revenue growth in New Castle was sluggish.
"The City must change course or fail completely," the plan stated.
But the crisis created opportunity - "to re-think, re-structure and revitalize the government and the City as a whole," the plan stated.
The plan calls for the city to:
n consider a change from the mayor-council to the council-manager form of government, to provide more professional management.
n transition to a fire department that includes pay-per-call members.
n explore the possibility of outsourcing street, vehicle and park maintenance.
n collect additional fees, such as for use of city playing fields by leagues.
It urged the city to explore managed competition, privatization, hiring of part-time help and the use of alternative types of compensation in providing necessary services.
"While the initiatives included in the Recovery Plan are dramatic, drastic and far-reaching, they respond to a situation that is commensurately dire," the plan states.
Chester
Chester adopted its initial recovery plan in 1996. Fairmount Capital Advisors drafted one that the city adopted in 2006.
The city had an operating deficit for nine of 10 years prior to the 2006 plan, reading $4.5 million in 2004.
By 2000, median household income was $25,000, compared to $40,000 for the state and $50,000 for Delaware County.
Twenty-seven percent of residents were living in poverty.
Without corrective action, the plan projected a negative $36 million fund balance by the end of 2010.
The plan recommends that the city:
n cap annual wage, salary and health care cost growth at 3 percent or inflation, whichever is lower.
n cap the employment supported by the general fund at the 2005 level, with exceptions.
n manage overtime.
n use some gaming revenues from Harrah's Chester Casino for capital investment.
"Despite formidable challenges, the City possesses the potential to overcome its financial hurdles," the plan states.
Mirror Staff Writer William Kibler is at 949-7038.
