Clarks Summit heading expecting $50,000 deficit by year's end
Published: November 12, 2009
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share thisClarks Summit is facing a deficit of about $50,000 by the end of the year, thanks to lagging tax revenues and higher than expected legal expenses.
It is the first time in more than five years the borough will not finish the year under budget. The problem has left officials concerned about next year's budget, too, especially in light of the unresolved $2.3 million jury verdict in the Grandview Street case.
According to estimates provided by borough treasurer Christine Tsaklas, legal expenses for the year will come in about $119,000 over budget.
That is, in part, caused by the ongoing litigation over the 2003 closure of Grandview Street. Over the last 20 months, the borough has spent $200,000 to take the case to trial.
But officials are also blaming a $63,000 shortfall in earned income tax revenue and a $36,000 shortfall in real estate transfer tax revenue.
"We didn't get in the earned income tax (revenue) we thought we'd get," said councilwoman Kathy Drake, who is the borough's finance chairwoman. "It's a bad economy. We planned for that, but I guess we didn't plan enough."
Clarks Summit collected $1.76 million in earned- income tax revenues in 2008 and $715,000 in 2007. This year, the borough expected to receive about $810,000 in earned income taxes. By the end of the year, however, it expects to collect about $747,000.
Budgeted expenses for paving projects, wages, fuel costs and salt and cinders have come in under budget, saving the borough about $168,000, according to estimates from Mrs. Tsaklas.
The borough will use money from the general fund to cover the $50,000 shortfall, borough manager Virginia Kehoe said.
"There will not be unpaid bills," she said. "Over the last few years, we've been able to build up a reserve and some of that money will be used to cover this."
The shortfall is only adding to Clarks Summit's expected money woes. Although a draft of the 2010 budget is expected to be made public later this month, Ms. Kehoe said it is likely that council will amend that budget early next year when they have a better idea of how they will proceed with the Grandview case.
A jury awarded landowner Peter Amato $2.3 million in damages for the closure of Grandview Street, which was to be the only road accessing a 101-acre housing development in South Abington Twp. Mr. Amato said he and developer Michael Noto were forced to make costly improvements to other roads leading into the development.
With fees, interest and penalties, the borough could end up paying more than $4 million. Ms. Drake and other council members said they hope to reach a settlement with Mr. Amato and Mr. Noto that would avoid a multi-million dollar payout.
The borough will likely be forced to take out a loan to cover the cost of a settlement, Mrs. Drake said.
"We don't have that kind of money," she said. "We're either going to have to raise taxes, which we don't want to do, or add a debt service fee to the tax bills."
Contact the writer: enissley@timesshamrock.com
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