Despite having to pay out millions of dollars for two major lawsuits and seeing various sources of state funding dry up, Easton officials say the city remains financially stable.
Mayor Sal Panto during a Friday afternoon press conference released the city‘s 2011 financial audit, which showed Easton finished that fiscal year with a surplus of $112,467. Panto said the city was able to accomplish this without having to raise real estate taxes, a practice he anticipates will continue for six straight years when he unveils the proposed 2013 municipal budget to City Council on Monday night, Oct. 1.
"The $112,000 surplus shows sound financial management by the staff at every level of city government,” Panto said, noting that “you don’t want to have a huge surplus because it means overtaxing of residents.”
The audit, conducted by the Easton-based accounting firm Palmer and Company, showed the city achieved a surplus for the fifth straight year and is ahead of schedule in achieving by 2016 minimum fund balances of $3 million to cover employee health care costs and $1.5 million for liability/casualty costs.
During 2011, the city’s long-term debt of $39 million was reduced by $650,000, or 1.5 percent from the prior year, according to the audit report.
The city during 2011 issued $7.7 million in general obligation bonds, locked in at historically low rates, which in part is providing money two pay out two major lawsuits involving the police department. Officials said the city is scheduled to make about $2 million in loan payments during 2013 and 2014 toward these lawsuits.
The city has also had to contend with picking up a larger portion of the tab for different services the state has cut funding toward, including the Main Street and Weed & Seed programs.
Panto said in a national economic climate where many cities are struggling to stay financially afloat, Easton has actually improved its financial picture over the last several years by reaching an "A-" bond rating for 2011. He credited sound financial practices, which have included: the city refinancing debt at historically low levels; increasing total assets by 13 percent between 2010 and 2011; and the city negotiating financially sound contracts with the police and firefighter unions.
City Administrator Glenn Steckman said he is pleased Easton has been able to continue financially operating in the black without having “to resort to staff layoffs to get the job done.”
Going forward, Panto said the city’s greatest financial challenge will be the funding of employee pensions. Of the city’s $39 million in long-term debt, $22 million consists of pension obligations.
“This is the biggest anchor hanging over our head,” Panto said.
Panto is calling on the state government to provide relief. He and other mayors around the state have been lobbying the Pennsylvania Legislature to approve a bill that would allow cities to offer new employees a “hybrid 401K” pension plan. Panto said city officials around the state are also calling on the Legislature to combine the more than 10,000 pension funds around the state into a single fund.
Panto said it is has become especially important for the city hold the municipal end of the property tax bill steady, saying the Easton Area Board of Education will most likely approve a significant school tax increase due to the governor “decimating public education funding.”