Town faces financial turmoil

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Wilkins officials were besieged by a rancorous crowd Monday night at a special meeting to start a process of dealing with the township's pending tax appeal, which could cost Wilkins more than $2 million.

Township officials, who announced last week that ProCare Pharmacy Direct Inc. had presented them with an appeal of mercantile taxes it paid Wilkins to the tune of $2,025,528, said they called the emergency public meeting to start a process of streamlining their finances, given the township's potential tax predicament.

"The reason we are here tonight is to see how we're going to make it through the next few years without the kind of money we have been getting from ProCare," township Manager Rebecca Bradley told an audience of more than 60 people.

The township's immediate action, which was unanimously approved by the board of commissioners, included the cancellation of this year's road paving projects and the suspension of decisions on moving forward with Wilkins' annual summer celebration.

The $500,000 road paving contracts were canceled and the annual summer festival, which costs about $30,000, was tabled because the township is considering its options on the tax appeal, including an assessment of whether it has a tax appeal problem at all, township solicitor Gary J. Matta said.

"We're not certain at this point that there is a major tax consequence, but the board is putting on hold any plans of spending money," Mr. Matta said. He cautioned them not to jump to conclusions about the township's financial health before further assessment of ProCare's appeal.

Also on the special meeting agenda was the commissioners' approval to hire special counsel, if needed, to handle parts of the tax appeal. In addition, the commissioners voted to put a $1,012,318 tax payment Wilkins recently received from ProCare into an escrow account as long as the tax appeal is pending.

But there was quite a bit of commotion at the meeting, during which people were given five minutes to address the board.

Some jeered, others yelled at commissioners out of turn and at least one person stormed out of the meeting as Wilkins officials were pummeled with question after question about when they knew about the tax problem, whose responsibility it was to know about it, what they did -- if anything -- about it and their plans on what Wilkins will do if ProCare prevails in its appeal.

John Gibbons, a neighbor of Ms. Bradley and township Assistant Manager Paul Vargo's, with whom he had a public neighborhood dispute last year, raised questions of competence within township management. He said the township officials' failure to act on the ProCare issue when they knew about it three years ago had led Wilkins to the "brink of financial chaos."

But Mr. Matta, the township solicitor, who answered most of the questions put before the board on the tax appeal issue, said it would be premature and inappropriate for people to lay the blame at the feet of the current township manager or board of commissioners.

"This issue has been known by the board since 1997. It was reviewed by the Pennsylvania Municipal Services and their legal counsel and, since then, ProCare felt that it was appropriate to pay the taxes they were paying and never questioned their payments, until now," Mr. Matta said.

He said the township reviewed its books and talked to ProCare a number of times between 1997 and 2004.

"No one was aware that this was coming. No one ever pressed the issue because the people paying the tax never saw a problem with it," Mr. Matta said.

"To say that anyone is to blame here, then ProCare itself is to blame," the township solicitor said, noting that ProCare sent Wilkins more than a million dollars in tax payment four days after it had appealed its mercantile taxes.

That alone, the solicitor told the audience, should raise questions of validity about ProCare's tax appeal.

"This is an issue of interstate commerce. At this point, it would be premature to say anything about this case without a determination of the case," Mr. Matta said.

A public meeting has been scheduled for 1 p.m. May 17, when ProCare will present its appeal to the board of commissioners.

Todd Forney, a partner at a Philadelphia-based PricewaterhouseCoopers firm representing ProCare, a subsidiary of CVS/Caremark Corp., said the company approached his firm to look into its tax payments in Wilkins about two months ago.

"We took a look and realized that [ProCare] had incorrectly overpaid their taxes and are seeking a refund," he said. Asked why the company had just realized its error, Mr. Forney said ProCare is part of a huge corporation that files tax forms in numerous municipalities around the country.

"What happened here is that the company inadvertently paid taxes on all of its income, even on business conducted outside Pennsylvania, and now they want their money back," he said.

And if ProCare is successful in getting its money back, what is the township prepared to do? Chris Patterson, of Wilkins, demanded to know Monday night.

"Where was the communication with ProCare? And what kind of tax increase can we expect if this appeal is successful," Mr. Patterson demanded. He said Allegheny County already has one of the oldest populations in the country, and higher taxes do not bode well for small communities such as Wilkins.

Board Chairman Frank Greco countered that township officials had no intention to raise taxes, which they have struggled to keep as low as possible over the past eight years.

But Mr. Patterson did not relent. He shot back with a remark that summed up the residents' fear of impeding financial disaster.

"[ProCare] just hired a gun," he said. "You better be prepared to take a bullet."

Karamagi Rujumba can be reached at or 412-263-1719.


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