Last resort becoming reality for Shamokin

Written by Emily Previti | Jun 5, 2014 6:09 AM

(Shamokin) ---- After a five minute drive through this Coal Region city, the state officials' advice seemed redundant.

Vacant stores proliferate. 

So do homes that, while usually charming, show their age with softening porches and weathered shingles.

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Photo by Emily Previti

State officials have recommended a distress designation for Shamokin, so it's likely the 7,500 person Northumberland County city will be the 28th municipality to attempt financial recovery through the Commonwealth's Act 47 program.

And there's the story behind the two chain drug stores on adjacent properties downtown: the Rite Aid store went up in 2004 after the corporation tore down the Victorian Hotel - and practically no one protested, despite the building's spot on the National Register of Historic Places.

But designating Shamokin a distressed community hinges on less visible, very specific signs of strife pertaining strictly to municipal finance.

That was the assessment of the state Department of Community & Economic Development's Local Government Center, which presented its findings during a public hearing Wednesday night.

If DCED Secretary C. Alan Walker agrees, the decree will qualify Shamokin for a badly-needed loan and the Commonwealth's Act 47 recovery process, which leverages state resources to help distressed local governments fix their finances and improve operations.

Just eight of 27 communities have succeeded - at least to a degree that satisfies the state enough to end oversight.

Shamokin's mayor conceded previously that Act 47 is a last resort.

The situation there, however, appeared just that dire after several banks refused to lend the city any money to take care of some of the delinquent bills totaling more than $800,000 - or 30 percent of the municipal budget.

Clerk Robert Slaby also figured out that the city would run out of money by the end of August due to its $300,000 structural deficit.

"This is a financial mess, in this city," said Slaby, previously mayor of nearby Kulpmont.

It's not yet clear how, exactly, the state's recovery process for distressed municipalities will help the Northumberland County city, aside from affording access to a one-point-two million dollar emergency loan.

But that seems to be enough for now.

Slaby, who spent nearly three decades in banking and finance, came out of retirement two months ago to take his job.

DCED had recommended him to the city after predecessor "walked off" last winter, as Slaby puts it.

Also last winter, the city tried to buy more salt, but was turned down due to its delinquent account, Slaby says.

Faced with a succession of snowtorms, Shamokin turned to nearby municipalities. Fortunately, the city's neighbors had enough to sell, Slaby says. 

Mayor Bill Millbrand says the city also can jointly petition the court with DCED to waive millage increase limits, which would generate up to $240,000 in additional annual property tax revenue.

Millbrand was among the elected officials who, along with local union representatives, made up most of the audience at a public hearing Wednesday night.

DCED Secretary C. Alan Walker has one month to sign off on distress designation.

Once that happens, the loan should quickly follow.

But the city's Act 47 plan will take more time.

Compiled by city officials with guidance by its Act 47 coordinator, it will set goals for Shamokin to meet to achieve  long-term financial stability and eligibility to leave the program.

 Shamokin tried to head off entry into Act 47 in the first place through DCED's early intervention program. 
Six other municipalities are attempting the same.

The department says none of those communities appear on the verge of pursuing full Act 47 status. 

West Hazleton revealed its exit plan Tuesday after working to stabilize its finances for more than a decade. 
Nanticoke and Westfall Township will do the same during the upcoming week.

If they get DCED approval, that will bring the total number of recovered Act 47 communities to eleven. 
And leave another 16 still trying - some after more than two decades some for longer.

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