Finger-pointing prevalent in Munhall's monetary morass

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At an April news conference, Munhall was named one of 21 “Banner Communities” for 2013 by Allegheny County Executive Rich Fitzgerald and the Allegheny League of Municipalities.

“These municipalities are being recognized as ones that implement the best practices in all aspects of their operations and that govern in an inclusive, collaborative manner,” Mr. Fitzgerald said.

About 10 months later, Munhall Mayor Raymond Bodnar rose before the start of a borough council meeting, the second in a row packed with clamorous residents, in an attempt to assure his constituents that the borough had not, in fact, gone “to hell.”

“Munhall is and will be in good shape as soon as we get over a bump or two that was caused unnecessarily by some, well, I don’t want to use the words … some slimy snakes,” Mr. Bodnar said. “They’re responsible for causing some of the financial problems.”

The borough of about 11,400 was forced to seek private financing to avoid layoffs in the town’s small police and public works departments as a result of a budget crisis that some council members and borough officials have blamed largely on former borough manager Matt Galla, who resigned in June.

Because of uncompleted audits, Munhall, which has a 2014 budget of about $6.7 million, lost about $354,000 in Regional Asset District sales tax money for the first two quarters of 2014 and the last two quarters of 2013 and was unable to secure a traditional tax-anticipation loan from a bank. The borough also faced additional pension contributions to make up for inadequate payments in prior years, including $168,000 that taxpayers paid but should have been deducted from borough police officers' salaries, council President Dan Lloyd said. Mr. Lloyd added that he is “adamant” that the officers should pay that money back, although they have thus far refused.

As a result of the lapse in payments, state Auditor General Eugene DePasquale has said he will examine the management of Munhall’s two pension funds: one for police and the other for “non-uniformed” workers such as public works employees. Mr. Lloyd said the borough is expected to contribute $535,000 to both funds this year to bring Munhall current on its obligations.

Mr. Galla, though, said council members need to look in the mirror.

“There’s seven councilmen and a mayor. Two to three of those councilmen and the mayor were intimately involved in what happened,” said Mr. Galla, who added that the audits were never done because he refused to sign off on what he considered illegitimate books. ”Your budgets are in the shape they are in because of your budget meetings.”

He described a budget approach dependent on unrealistic and inflated revenue assumptions to avoid making cuts or raising taxes as a main factor in Munhall’s fiscal problems.

Interim borough manager Harry Faulk, Munhall’s second since Mr. Galla left, said this week he is still reconciling accounts and hopes to have a request for proposals for an outside auditor ready for council to vote on in the next month.

Rick Brennan, a new councilman elected last year and the head of council’s finance committee, and Mr. Lloyd both said this week that the borough has a finalist for Mr. Galla’s permanent replacement. Mr. Lloyd said a conditional offer has been made and that when the offer has been accepted and background checks have been completed, the candidate will be named. He hopes to have the new manager on the job in the beginning of April.

Mr. Brennan, who ran for council mainly to work on recreational issues, said he was stunned by the financial disarray he found and troubled by concerns residents have since raised about trash bills and tax collections.

“I had no idea that our finances were in such turmoil. I’m sort of learning by action,” Mr. Brennan said. “We have a lot of issues right now. We need to really get our town on the right path.”

Questions about whether council’s most recent finance committee meeting, during which the committee opened bids for the tax-anticipation loan, may have violated the state’s Sunshine Act convinced Mr. Brennan to make sure that future meetings are advertised and open to the public.

“I think we are moving in the right direction, absolutely,” he said. “Just trying to be transparent and inform the people what we’re doing and moving forward.”

Mr. Galla, who said he has talked with the FBI and the Allegheny County district attorney’s office, has claimed there were incidents of “big-rigging,” workers’ compensation fraud, tax collection and billing incompetence, and other problems in the borough hall. He said he resigned because he could no longer work under “unethical, immoral and illegal conditions.”

Council members have denied his allegations and noted that reconstructed payroll accounts indicate Mr. Galla was paid $147,430 in 2011 and $147,146 in 2012, even though his salary was budgeted at $60,000. The additional payments were not authorized, council members have said.

Mr. Galla would not discuss his compensation except to say that “nobody at Munhall was paid anything that wasn’t approved by the council members in charge.”

Mike Manko, a spokesman for Allegheny County District Attorney Stephen Zappala Jr., said the office was “referred an issue that we are reviewing.”

“I wouldn’t characterize it as anything more than that at this point,” Mr. Manko said. He would not provide any information on the nature of the issue.

Because residents have been paying their tax bills early, Munhall may wind up not needing the $500,000 tax-anticipation loan it secured from Joe and Frank Leonello, of Franjo Construction in Homestead, and Christian Stein of Arch Masonry Inc., which comes with a 5.25 percent interest rate and an origination fee of $12,500.

“I’m overwhelmed that the people want to be a part of the solution,” Mr. Lloyd said. “They just want us to fix it and move forward for the betterment of the town.”

And Mr. Lloyd, a second-term council member who replaced Councilman Joe Ballas as president, is predicting a budget surplus by the end of this year and expects immediate savings from a controversial plan to eliminate the town’s emergency dispatch center and merge into the county system. After last week’s council meeting, he said he hoped residents left with a sense that officials were “on top of” the town’s problems.

Mr. Galla was skeptical of the claim of a budget surplus but optimistic about new leadership on council.

“I hope that’s the case. That would be fantastic,” Mr. Galla said.

Robert Zullo: or 412-263-3909. Twitter: @rczullo.

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