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City’s finances not so robust

New manager says Altoona ‘not out of the financial woods’

At a City Council meeting in mid-2017, then-Manager Marla Marcinko discussed Altoona’s unassigned reserve of $10.7 million — more than a third of the entire budget — and suggested ways to spend it down to the recommended 5 or 10 percent.

It was a heady moment, an extension of the optimism of Altoona’s emergence from the state’s Act 47 distressed municipalities program the year before, and Marcinko considered Altoona could now afford discretionary treats like new decorative lighting, aesthetically pleasing crosswalks and a wayfinding system for residents who’d endured a couple of decades of municipal austerity.

But this week, after discussion of a capital borrowing proposal, new City Manager Ken Decker argued the city isn’t nearly as well-off financially as officials thought then.

The city may be out of Act 47, but it’s “not out of the financial woods,” Decker told council.

“The city is not where it should be as a financially viable entity,” he said.

On an annual basis, expenses exceed revenue, the tax base is shrinking, there’s more debt than is healthy, borrowing is costly because of a poor credit rating, there’s significant unfunded liability in the pension plans and the three union contracts expire at the end of next year, promising that expenses will grow, Decker said.

The proposed borrowing of $7.5 million this year for street resurfacing, curbs and sidewalks, traffic signal and streetlight upgrades, storm sewer improvements, parks and recreation enhancements, building improvements and new Information Technology equipment, is itself a problem, according to Decker.

At least some of the items have life expectancies shorter than the anticipated term of the loan, which goes against best municipal practices, Decker said.

That includes IT equipment, he said.

Yet such purchases are necessary — “not fluff,” said IT Director Victor Curfman.

The proposed borrowing “is probably the only way forward” for now, but the city needs to develop a better borrowing policy “sooner rather than later,” Decker said.

Otherwise, in two years, it will be looking to borrow again, he said.

The solution is to cut expenses or raise revenues or both, and to fold recurring expenses into the regular budget, according to Decker.

Interim Manager Peter Marshall used excess in the reserve fund to fold the recurring costs of vehicles into the regular budget, creating a vehicle reserve fund, as well as a fund to provide match money so the city can respond quickly to grant opportunities and a contingency fund.

That has reduced the unassigned fund balance to about $4.1 million, about 12 percent of the total budget.

That may be more than the recommended percentage discussed a couple years ago, but still “it ain’t much,” Decker said.

“(Yet) the wheels aren’t falling off,” said Mayor Matt Pacifico.

Maybe not, but “the things we can control, we should,” to become more financially robust, Decker said.

City Council members seemed to accept the new manager’s analysis.

Decker is aiming for a higher level of stability than the city was seeking when it entered Act 47, and needed “to figure out how to turn the lights on,” Kelley said.

“There’s still a lot more to go,” Kelley said.

It seems that getting out of Act 47 was not the end of fiscal pressure, but the beginning of a new push toward real stability, according to Councilman Dave Butterbaugh.

In a decade, if council makes the right decisions, including hard ones, and manages its resources intelligently, Altoona could become one of the financially strongest poor cities in the state, Decker said.

Despite his warnings, Decker acknowledged the value of Act 47.

“The hardest part is the steps you’ve already taken,” he said.

Mirror Staff Writer William Kibler is at 949-7038.

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