The city of New Castle has been declared financially distressed under state Act 47.

New Castle officials said they were notified Friday that Dennis Yablonsky, the state's community and economic development secretary, issued the order after reviewing the city's finances and testimony from a December public hearing.

New Castle, about 45 miles northwest of Pittsburgh, "has operated with a deficit since 2000 and failed to meet its minimum obligation to fund pension plans for city employees in 2005 and 2006," Mr. Yablonsky said.

He said he will, by Feb. 5, appoint a recovery coordinator, who will have 90 days to develop a fiscal recovery plan.

"The path to fiscal solvency will require a long-term commitment to fiscal discipline," he said.

Mayor Wayne Alexander said he supports Mr. Yablonsky's decision and will work with the state to resolve the city's budget crisis.

Mr. Alexander said essential services, such as police and fire protection and public works, will continue at the same level.

City officials considered Act 47 a foregone conclusion last week when New Castle could not get a five-year loan to erase a $2.9 million budget shortfall.