The Tribune Democrat, Johnstown, PA

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June 29, 2013

City ends 2012 in the black

— Johnstown finished 2012 financially in the black.

The city wound up $212,518 to the positive, according to a recent audit conducted by Wessel & Co.

In comparison, the municipality’s government overspent its budget projection by $1.8 million in 2008. There were then deficits of $117,618, $395,217 and $55,883 in 2009-11, respectively.

“It’s a dramatic turnaround,” said Deputy Mayor Frank Janakovic. “Words can’t even describe it really. We had an inkling that we were going to be in the black, but you never know until you get the audit.”

Last year’s $23.5 million budget was designed by City Manager Kristen Denne and Finance Director Carlos Gunby, with help from City Council and department heads.

“We’ve made significant strides in modernizing the operations here – updating software, updating the modules, training the staff in financial procedures ­– and really are trying to come in accordance with all Governmental Accounting Standards Board recommendations,” said Denne. “We are bringing our system into the new era, so to speak.”

She continued: “We’ve had a myriad of different things that have been implemented from health care, lighting upgrades, reduction in staff. It’s been really a holistic view across the board.”

Joel Valentine, a Wessel shareholder who assisted with the audit, complimented city officials on their ability to strictly adhere to a budget. “It’s really a relief to the taxpayers that they’re a competent management team,” Valentine said.

Ending a year in the black should help the city when attempting to improve its bond rating and acquiring money for projects, while working toward the ultimate goal of leaving Pennsylvania’s Act 47 program for distressed municipalities.

“When you’re having deficits in excess of six figures, it is very hard to go to underwriters and let them know that you are financially responsible,” Denne said.

For the immediate future, though, Johnstown will need to remain in Act 47 because participating in the program enables the city to collect revenue from the so-called commuter tax on nonresidents and residents.

Without commuter-tax funds, Johnstown likely would have ended 2012 in the red.

“They’re not going to let you come out of (Act) 47 status until you can balance your books,” Denne said.

Even with 2012 ending in the black, the city still has a principal and existing debt of a little more than $12 million, according to Valentine.

Johnstown plans to continue paying down the debt and addressing other long-term financial issues, such as its pension plan, next year.

“I am optimistic about our 2012 performance and the progress we have made,” said Gunby. “I am proceeding to our forthcoming 2014 budget sessions with caution as we have several years of expense volatility ahead of us.

“Additionally, while the overall general fund deficit has decreased by roughly $500,000, further expense reduction and revenue generation is an absolute must to balance the fund to build the fund balances needed to support the level of services needed to advance our city.”

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