Wednesday, June 24, 2009

Tax Picture Gloomy In Tough Economy

"The stew is going bad, because of all sorts of ingredients that aren't working together," said Mt. Lebanon resident and taxpayer William Lewis.

The state shortfalls and projected increases in taxes across the board may end up driving Lewis, a 30-year resident of Mt. Lebanon, out of Allegheny County.

"We are facing a 40-50 percent increase in school taxes to pay for the $115+million high school, quadrupling of PSERS (state retirement fund) fees for schools ($5 million minimum), and underfunded municipal pension funds. There's underfunded retiree medical coverage for schools, more fees to pay for EPA sewer repairs, and the municipality is so strapped they have to borrow money to pay for street repair," Lewis said.

Mt. Lebanon parking authority can't keep up with debt payments, Allegheny County may have to reassess all properties. Now we are told the state withholding tax is going up. The average citizen cannot see any increase in services, yet all these costs keep going up and up. We were told casino revenue would lead to 'substantial reduction' in school taxes. I got a $191 reduction on a $6,000 school tax bill. That casino money was a bust," Lewis said.

Two state officials, however, say they support reductions in state spending before increasing taxes--Rep. Matt Smith (D-Mt. Lebanon) and Sen. John Pippy (R-Moon).


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Anonymous Chris Musuneggi said...

Please let Mr. Lewis know that the Parking authority has no problem meeting its debt obligations, and I would hope he would get his facts straight before making accusations.

June 24, 2009 8:52 PM  
Anonymous David Huston said...
The widely respected Municipal Finance Officers of America recommends that the ratio of debt service to operating budget be 10% or less. This is considered a best practice allocation of resources. Mt. Lebanon, a well-to-do suburb south of Pittsburgh has a ratio of about 5%. Obviously, municipalities with low debt service percentages enjoy very good credit ratings, and pay lower interest rates on their borrowed funds than do those with high debt service percentages.
To operate the Authority in a fiscally responsible manner consistent with applicable accounting procedures, governing regulations, and contractual obligations.
March 24, 2007 11:52 PM
Anonymous said...
Did you know the Parking Authority did not earn enough to pay debt service on their bonds last year. Each parking dollar was paid for with about 12 cents of your taxes.

03-MAY-2007 meeting minutes:,%202007.htm
Mr. Sahar noted that a draft 2008 Operating Budget had been sent to the Board. The Board would be asked to receive the budget at the June meeting. That draft budget projects the Authority reaching a net income necessary to meet the 110% debt service ratio during fiscal 2008. The budget also includes a 3% increase in wages in order to give the employees their first increase in three years.

03-JUL-2008 meeting minutes:,%202008.htm
Mr. Sahar noted the proposed schedule included at general 3% wage increase for all Authority employees. The schedule also included a new part time position of Liaison.

05-MAR-2009 meeting minutes:
Rich Sahar:
Given the current usage and rate structure we may not, in the future be able to meet the debt service coverage ratio from operations. We are making our debt service payments however we need to look at ways to increase revenues.

June 25, 2009 9:55 AM  
Anonymous Chris Musuneggi said...

Mr. Huston If you beleive there is a problem with the Parking Authority I suggest you or anyone else, attend the next meeting (July 9th). See for yourself that while things are not perfect, the road work on washington road has hurt revenues, the Authority is doing much better now then it was 2 or 3 years ago. And I beleive that things will continue to improve.

June 25, 2009 11:57 AM  
Anonymous Bill Lewis said...

Really, Mr. Musuneggi ?

I was misquoted in the Almanac article. I suggest you contact Bob Williams for actual statement was based on the minutes of a recent Parking Authority Board meeting in which the Executive Director was quoted as saying that the Authority may not be able to meet the "debt service coverage ratio". Not meeting this ratio represents a technical breach of the bond indenture which, had not the bond issue been guaranteed by the Municipality, could result in.....well, you are fully aware of the potential and very negative consequences,aren't you ?

And blaming the financial condition on the Washington Road work is a cover for the real underlying reason isn't it ? The Authority, in spite of multiple Board approvals over at least two years, had failed to actually implement proposed increases in parking and lease permit fees and parking fines.

Add to that the grossly excessive $2.5 million cost of the Academy Ave. surface parking lot...averaging about $28,000/space which necessitated the borrowing of $800,000 from Mt. Lebanon.... didn't help either, did it ? A $1 million cost over-run from original project cost estimates reviewed and approved by the Municipal Engineer. Because of this excessive cost, the lot will never pay for itself, will it ?

No Mr. Musuneggi, we have the facts right. When the Authority failed to meet the debt service ratio requirement 2 or 3 years ago, the Municipality was notified by an observant resident, and the Municipality, as guarantor of the bonds, failed or refused to investigate or even respond to the citizen. After repeated public protests, the Municipality had the Authority Solicitor render an opinion....and guess what, the Solicitor with the assistance of the Executive Director crafted a definition of the method of determining debt service coverage ratio that differed from that in the indenture and concluded that everything was hunky-dory or okey-dokey....and the Municipality bought it. Of course they did !

Yes indeed, the Parking Authority is no better than the Municipality when it comes to capital projects, expenditures, debt and debt financing. In fact it's worse.

June 26, 2009 9:45 PM  
Anonymous Chris Musuneggi said...

Mr. Lewis, Your quote says that the Parking Authority can not make its debt payments. That is untrue. They Authority has not missesd a payment as far back as I can find information (about 30 years). So maybe your quote was cut, (you should complain to Mr. Williams) but people need to know that the payments have been made on time.

As for the road work, I was simply pointing out that it has hurt. Not that it is the cause for all things wrong.

Just so you know, both the fines and the parking rates have been increased to help revenue.

The Authority employees are working hard to improve and I think that they should be given credit for the work they have done.

I dont know how things were 2 or 3 years ago, I can only tell you that things are improving and that if you or anyone else has a concern, instead of writing about it on a blog, show up to a meeting and lets talk about it. I have been on the board for a year now and not one person from the community has ever attended a meeting to express concern. Maybe you have in the past, but I was not there to hear your complaint. We can't make things better if we dont get input from the community.

June 29, 2009 11:24 AM  
Blogger Bill Matthews said...

April 7, 2005 - I attended the MLPA board meeting and according to the minutes: commented on the Authority’s debt coverage ratio, the bond convenant, revenue producing projects, the strength of the financials to support the bonds, a formal proforma, and other capital projects of the Authority.

Turns out ...

In FY 2005 the MLPA missed the DCR and coincidentily failed to report the DCR as it had customarily done in its annual finanacial statements for FY '04, FY '03 and FY '02.

In FY 2006 the MLPA missed the DCR by its own calculation (1.01) but said "after considering current reserves the Authority exceeds the minimum ratio of 1.10." The only thing is that in calculating and reporting the DCR - there is no provision to check and report how much cash is in the bank to cover debt.

In FY 2007 the MLPA missed the DCR by my calculation and made it by their calculation. HOWEVER, the MLPA was not using the DCR definition contained in it's bond indenture - they were using something else.

Finally in FY 2008, the MLPA made its DCR and used the right definition and did not consider cash in the bank and properly disclosed it.

It should not have taken three years to get something as simple as calculating a DCR right.

The MLPA is the most poorly run government related entity here in the bubble.

June 29, 2009 5:16 PM  
Blogger Bill Matthews said...

Here is a link to the 1999 - 2008 MLPA Debt Coverage Ratio as reported (and not) by the MLPA and also as calculated by me (WRM).

Again ... in FY '05 the MLPA failed to report when it missed the DCR and then in FY '06 and FY '07 the MLPA failed to include in the calculation the Principal and Interest on it's $800,000 loan from the Municipality.

Finally in FY '08 all was right with the world after Commissioner Raja got involved.

Each year this chart has been updated and shared with the Municipality and the Auditors. And it still took three years for the MLPA to get the calculation right.

It is important to note that without "one-time" items the Authority just marginally makes the DCR @113.84% in FY '08. Without increasing revenues or decreasing expenses, the Authority may not be in a sustainable position.

June 29, 2009 8:24 PM  
Blogger Bob Williams said...

I'm not exactly sure how an article about the economy in general turned into a debate over the viability of the Mt. Lebanon Parking Authority specific.
For those of you who did not see the actual article but just the one quote posted here, this is the lead:
"From the Federal government to the local level, the combination of a sluggish economy combined with increases in taxes and fees to maintain the status quo could eventually drive some residents from their homes."
The driver for the article was Gov. Rendell's proposed state property tax increase. In and of itself, the 1/2 percent is insignificant. One may wonder, however, at what point do the financial scales tip against the people who have lived in Mt. Lebanon for decades or more? At what point does the combination of multi-jurisdictional "scope creep" taxation begin to push people out of their homes?
That was the question I asked Mr. Lewis. Why did I ask Mr. Lewis? Because he is one of a embarassingly small number of Mt. Lebanon residents who regularly attend public meetings and question elected officials. There are 30,000 residents in Mt. Lebanon. But sadly, only a handful show interest in its government by attending meetings. Most who do are either elected officials, or appointed volunteers.
So, when I asked the question, Mr. Lewis identified over a dozen tax scenarios that taken together
could drive him from his home. It's important to note these are tax "possibilities," i.e., the school district has not increased taxes for the high school, but might. The municipality could increase taxes to make up the huge shortfalls in library RAD money subsidy and state reimbursement--but it may not. And yes, one of the items he mentioned was the MLPA debt service coverage ratio. While far from definite or even likely, it is possible that falling MLPA revenues in this terrible economy could create problems down the road. Surely Mr. Sahar knows whether MLPA revenues are increasing or decreasing.
In fairness to Mr. Lewis, the extrapolation of the debt service coverage ratio was unfair on my part and it should have been explained in greater detail. For this I take the blame.
However, what saddens me is that you have a resident who may be forced from his home due to tax burdens, and no one notices or seems to be concerned. That in my mind is the story. And it is not a singular event.
Regarding the MLPA, others who have posted here seem to be following the finances in great detail.
At municipal meetings, Mr. Egler consistently asks commissioners to disband or eliminate the MLPA and bring operations under the municipal wing. He says it will save at least $500,000 a year.
Mr. Egler asks this question fairly regularly, yet none of the commissioners thus far has answered it. And I have been in attendance.
If MLPA revenues are dropping, has Egler's suggestion been weighed? If so, what are the findings? I don't have enough data to say with any certainty one way or the other. But Mt. Lebanon officials should say if it is feasible or not, and why.
Governments are desperate for revenue. If an idea pops up which is backed by a study, is it cost prohibitive to give it a once-over?

June 30, 2009 11:00 PM  
Anonymous Bill Lewis said...

Thought folks might want to be aware of the sad fact that Bob Williams is no longer a Reporter for The Almanac....a victim of the economy, the decline of print media in general and personnel reductions in the overall print enterprises of the Washington, PA based Observer - Reporter Corp., parent company of The Almanac.

Bob's former duties will be assumed by a reporter from the Observer-Reporter and stringers reporting for The Almanac.

Bob created a lot of *sunshine* for the public in area governance matters over 17 years of coverage, both municipal and school district, with fair and balanced research and reporting. I'm not at all confident he will be replaceable in kind.

July 02, 2009 9:17 PM  

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