The Reading City Council approved a 2015 budget and an amendment to the Act 47 Recovery Plan at Monday night’s meeting.
Council members approved the nearly $90 million budget, an increase of 6.5 percent from last year, by a vote of 5-2.
The city was charged with balancing the budget in the face of a nearly $6 million deficit and over $7.6 million in state mandated increases.
Despite this there will not be a property tax rate increase in 2015.
Mayor Vaughn Spencer’s 2015 Budget Message states, “In developing the 2015 plan, we had to make some tough decisions. One of our main objectives was to find ways to fund basic government without simply raising taxes, and we’ve succeeded.”
The state-mandated increases include increased healthcare costs, pension obligations, dam repair projects at Bushong’s, Egelman’s and Bernhart’s dams, contractual pay increases for union employees and ADA compliance mandates.
Some of the major budget plan items include:
Maintaining the existing police, fire and medical services;Leveraging City Parking Authority assets to provide immediate resources to relieve stress on the General Fund;Anticipation of a fair valuation and lease for the city-owned water system; andUsing some cash on hand but at a level that will not impair the City’s bond rating.
Based on the most recent audit, the City’s debt position is now more than $150 million, which is down $2 million from last year.
Councilwomen Marcia Goodman-Hinnershitz and Donna Reed were the negative votes.
The women argued that the budget relied too heavily on one-time revenue and does not consider future budgets, which will lead to increased instability in the future.
Reed said, "I do believe that in 5 or 6 years time we will be looking at bankruptcy if we continue down this path."
The City Council also approved an Amended Act 47 Recovery Plan.
The City of Reading entered Act 47, under which it is classified as a Financially Distressed Municipality, in 2010.
Recent amendments to Act 47 hastened the time frame in which the city is required to reduce its Earned Income Tax.
The new requirements place further stress on the city’s finances and resulted in necessary changes to the existing Recovery Plan, which is to act as a financial road map for the city from now through 2019.
The required tax reduction compounded with the increased obligations for retired employees set the city back further than anticipated.
Marcia Goodman-Hinnershitz acknowledged, “There's a lot of pain in the plan but the reality is the other option to the pain is bankruptcy for the city."
She further stated that policy changes must take place in addition to the plan in order for the city to survive.
Jeffrey Waldman showed a little more support for the plan as a work in progress.
“As you know this is a financial roadmap to sustain ourselves, not necessarily a roadmap to completely redirect our city in the direction we want it to go."
City Council President Francis Acosta strongly opposed the plan.
“I compare our path through Act 47 to a tunnel, and there's no light at the end of the tunnel at this point."
He stated that the city needs help by way of pension reform at the state level.
"I hope for better times but unless there is political will at the state level I don't see the light at the end of the tunnel," Acosta said.
The Amended Act 47 Recovery Plan can be reviewed in its entirety here.
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