Times Observer photo by Josh Cotton Warren City Council heard from the Pennsylvania Economy League last week about the city’s Early Intervention Program report, which includes a fiscal analysis of the last five years as well as projections for the next five.

It’s not a crystal ball but it will definitely provide some guidance.

The final report won’t be ready until the end of the year but the City of Warren has received some insight into their fiscal forecast through the state’s Early Intervention Program.

Representatives from the Pennsylvania Economy League met with Warren City Council last week to review the demographic and financial elements of the plan.

Gerald Cross, executive director of the Central Division of the Pennsylvania Economy League, told council to think of the document as “more of a forward thinking plan.

“The state has left the boroughs and cities behind,” he said. “We worry as an organization about the state’s ability to continue local government structure the way it is.”

Cross told council that the city has been provided in draft form the final report, which he said will be completed by the end of the year.

“We’re hoping to revise the numbers based on 2018 (financials. Your) budget performance is better than anticipated.”

He said last Wednesday’s discussion was the “most important part for elected officials” as it was a look at the “fiscal condition of the city over the next five years.”

Lynne Shedlock, the organization’s communications director/research associate, told council that they examine the demographics and financial history of the city. The financial history looks back five years.

“Then based on the financial history and demographics… we then project revenues and expenditures out for five years,” she explained, noting that the final plan also include an “operation review of your city departments.

“There’s a lot of information, a lot of recommendations,” she said.

Unsurprisingly, the city’s population has decreased 28 percent from 1970 to 2016, according to a presentation prepared for the meeting.

However, Shedlock said that the working age population has held at 60 percent of total population.

Occupied housing units, she said, have declined and “vacant units have crept up a little bit. (It is) probably not something that is alarming now (but you) want to watch this trend.”

Cross noted that is a trend they see in most of the communities they study.

“That’s not uncommon,” he said. “The good news is you have a high owner occupied” rate.

While the city’s median household value is below – yet closer – to the county’s rate than other cities they study, it was noted that housing value here is below the state overage.

That presents tax valuation challenges – the firm concluded there is “some weakness” in the city’s tax base.

On the finance side, “revenues are not keeping up,” Cross said.

He said it’s not uncommon to see revenues grow at one-third the rate of expenditures.

He circled back to the tax base issue.

“You’ve had growth of market value,” he said. “In Warren County, the state has said market value in the city has increased since 2001…. Wealth in property has been growing.”

But he cited a “gap between that and what the county is saying is assessed valuation. Real estate tax revenue over the last 15 years effectively grew at one percent. That’s the boat you’re in. That’s a function of assessment law.”

He cited the age of the county’s reassessment – last undertaken in 1989. “You’re stuck with that base year.” Without new construction and renovations that trigger reassessment “you’re squeezed.”

He said a reassessment is needed but “the county commissioners get yelled at and lose their position…. I can’t blame the commissioners. It’s expensive. People get mad. People get voted out of office. (I’m) not condemning the county commissioners. You’re fighting the system. It’s a battle.

“This is the irony,” he said to city council. “You’re the employment center. It’s almost your population. There are almost 7,000 people employed here… (which) tells you the economic value of the city to the surrounding area. It tells me the city is at least a vibrant employment center.”

And while the real estate tax and the earned income tax are the city’s two means of taxation, Cross said “there is a threshold where people will leave your town” because of tax rates. “People tend to accept higher earned income tax to a point. You don’t need to be raising taxes now to begin with.”

He outlined other potential revenue sources the city could consider – a fire service tax, local services tax and a deed transfer and mortgages fee.

“You are effectively in home rule doing what you should be doing” from a tax perspective, Cross said, though he said the city will have to rebalance taxes in coming years. “The good news is you have very little debt.”

Parking was part of the analysis, as well.

Shedlock noted that the city’s general fund did cover expenses for the parking system debt.

“The parking system was unable to support it’s own debt service,” she said. “We have a whole chapter on parking.”

“The trouble with parking, cities built garages,” Cross said. “The garages always, in my experience, become negative, become largely deferred capital expense. (I’ve) see that in every city with the garages.”

Shedlock said that “what we found was that the parking system rate structure is not adequate. (The) facilities are in need of repair.”

“You’re subsidizing something that should carry its own weight,” Cross said. Parking “should be an asset.”

“Assets will hopefully be at least revenue neutral,” Shedlock added. “The city should make sure it recoups (its) cost for its services.”

Looking to the city’s five year future financial projection, Cross said the analysis is “the worst case scenario if nothing changes. Small changes now have big impacts five to ten years down the road which is really the (period) we’re looking at.”

Mayor Maurice Cashman questioned the projections given that they do not include future wage increases for the fire department.

Cross said projections were not included because the city is currently in arbitration with the firefighter’s union over a new collective bargaining agreement.

“(We were) instructed by the city to keep wages flat,” Cross said.

Cashman said the document is useless without increases.

City Manager Nancy Freenock noted that including increases in the projection could be used against the city in arbitration.

“Then you know what,” Cashman said, “the document isn’t any good.”

Cross suggested that including numbers could poison the arbitration.

“I wouldn’t characterize it as worthless. I would characterize it as cautious,” Cross said. “My fear is to do no harm with these reports.”

Cross told council that the plan is the first phase of the Early Intervention Program.

With the plan in place, the city will be able to go to the state and solicit grant funding for the projects outlined in the report.

Ed Fosnaught, local government specialist with the state Department of Community and Economic Development, said that the “beauty of this program are the following phases.”

He said that if the city follows through and applies for funding for phase two, “you’re going to get your money back… and more just in grants” as well as “ideas and solutions that save the city money.

“We’re in much better shape,” Cashman said, “but have to look down the road and make sure we don’t go in the ditch.”