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HAZLETON — The city is seemingly on the fast track to being deemed financially distressed by the state after a hearing Wednesday by the Department of Community and Economic Development.
The move was initiated by Mayor Jeff Cusat to provide the city with some relief from financial woes that have dogged it for nearly a decade.
After a review of city audits and discussions with city leaders, DCED government policy specialist Jim Rose officially recommended the city enter into Act 47 status as a distressed city.
Rose indicated Hazleton met two of the program’s criteria: a deficit over a three-year period and expenditures exceeding revenues for three years or more.
The recommendation will now be reviewed by DCED Secretary Dennis Davin, who is more than likely to agree with Rose’s recommendation.
“We’re going to try to move this along quickly,” said Rose.
Although many have cited access to interest-free loans and the ability to raise the earned income tax as possible benefits to the city, Rose said the appointment of a consultant to review the city’s finances, including spending, was a key to the success of the program.
“We might suggest to the city administrator that expenses need to be properly tracked, for example, as part of a comprehensive plan for recovery,” Rose said.
The hearing served to highlight the ongoing animosity between city council members and Mayor Cusat.
Councilwoman Jean Mope said an intense audit was necessary to determine how money has been spent leading up to Cusat’s decision to apply for state assistance.
Mope requested clarification as to spending within city departments, more specifically, the salaries of department heads.
“We reduced the salaries of department heads in the 2017 budget,” Mope said. “But because those salaries are not line items, we don’t know if the salaries were actually reduced or if they were raised.”
Mope also questioned spending from the general fund, which she said was poorly tracked.
“Spending in this city is like rearranging deck chairs on the Titanic,” she said. “We don’t know where the money is going.”
Councilwoman Grace Cuozzo questioned the necessity of seeking the protections of Act 47 status, citing the failure of Cusat to sell delinquent taxes during 2017, as directed by council, which would net about $500,000.
Cuozzo alleged the mayor had been considering entrance into Act 47 from the beginning of the year, without a good faith effort to follow the terms of the budget passed by council, citing communication between the city’s attorney and DCED in January.
“This action is premature and should not be done in haste,” she said.
When challenged by former councilman John Keegan regarding a letter to the editor that she wrote earlier this year in which she expounded upon the benefits of Act 47, Cuozzo said after further research she had changed her mind.
Even if the city was granted entrance into the financial recovery program, Cuozzo said the mayor should show constraint in regard to borrowing, even at zero interest.
“We shouldn’t borrow more money then necessary,” she said. “It seems like the mayor has consistently requested about $850,000 and I don’t see the need for that big of a loan.”
Rose has been an integral part of other municipalities utilizing Act 47 benefits to get their financial feet under them and then successfully leaving the program financially sound. Among those success stories are Plymouth Township, Nanticoke and West Hazleton.
More recently, he said Wilkes-Barre has entered into the state’s Early Intervention Program, which provides grant money for the hiring of a consultant to prepare a strategic financial plan.
