Lansford is on the road to recovery, state officials say.

The borough is paying its bills on time, it isn't having a cash flow problem, and its general fund balance grew in 2010, said officials from the state Department of Community and Economic Development's Governor's Center for Local Government Services in a five-page report on borough operations.

But elected officials also need to learn to work together and trust employees to do their jobs in order to make the town run more smoothly, the report says.

"A lot of the focus in the report is what we've already gone forward with. There is still a lot of work that needs to be done, but I think we're finally seeing the light at the end of the tunnel. I'm very happy with the report," council President Rose Mary Cannon said Wednesday.

Borough council in June asked DCED to examine borough's police, financial and secretary/administrative operations to find out what it is doing right, and what needs improvement. The state's response arrived on Sept. 7 in a letter from executive director Fred A. Reddig.

DCED's Governor's Center for Local Government Services northeast representative Matthew P. Domines met on June 27 with secretary/treasurer Beth Seymour, Cannon, and Mayor Ron Hood.

The state's findings include that the borough:

Ÿ Is current on its bills and does not have a cash flow problem. The 2012 budget appears to be on track, and the borough should have enough money to pay its bills;

Ÿ Is not in default to any of its creditors;

Ÿ Had difficulty completing its 2011 financial audit due to incomplete 2011 financial records. An audit cannot be done until the borough "thoroughly addresses identified 2011 financial record-keeping issues," the report states;

Ÿ There appears to be a "deep political division among the borough's elected officials that may be spilling over and interfering with the day-to-day operations";

Ÿ The borough's general fund grew in 2010 by $82,611, for a positive year-end cash balance of $125,283.

The state had several recommendations to keep the borough on the right track. It should:

Ÿ Hire a qualified financial management professional (the borough has hired Kirk Summa & Co.) to complete the 2011 records;

Ÿ Build upon the financial management skills of its administrative staff;

Ÿ Consider applying for a DCED Early Intervention Program grant to pay a financial consultant to do long-term planning;

Ÿ Ask the auditor to review transfers to the general fund from other fund accounts;

Ÿ Must heed DCED's warning that its property tax rate is approaching the 30-mill limit. The rate is currently 26.97 mills. Once the limit is reached, the borough would have to ask the court for approval to increase the levy up to five additional mills;

Ÿ Prepare and provide to elected officials monthly financial reports that include a comparison of actual revenues and expenditures with budgeted revenues and expenditures;

DCED's report also advised council members to "be confident in the capabilities of their appointed employees to perform their municipal functions on a daily basis, and refrain from extraordinary interference with their employees performance of day-to-day functions.

"It is the center's experience that political divisions that spill over into the daily operations of municipal government are detrimental to a municipality's long-term fiscal health," the report states.