New Castle council seeks loan approval

staff report

NEW CASTLE, Pa. — Council has agreed to ask Lawrence County Common Pleas Court to cover any revenue shortfall the city might have this year.

Lawmakers recently agreed to borrow between $800,000 and $1 million through an unfunded debt loan and to petition the court for approval for the loan.

The loan is a directive in the city’s recovery plan under Act 47, the Municipalities Financial Recovery Act.

Last year, the court approved an unfunded debt loan of up to $7 million to cover 2007 expenses and pay the outstanding minimum obligation in the employee pension funds.

It also paid off the outstanding amount on a $4 million tax anticipation note, which is borrowed each year to meet expenses until tax revenue is received.

The city ended up borrowing just over $5.1 million last year. The state requires the city to seek a new loan to meet any shortfall in 2008, officials said.

The city also intends to petition the court to levy a wage tax of 1.5 percent for residents and 1.4 percent for nonresidents for general fund purposes. The levy does not represent an increase, but is the same amount the city petitioned for last year. The state declared the city financially distressed under Act 47 in 2007.