Council must pass a budget that slows ‘burn rate’ from trust fund
By Mike McGann, Editor, The Times
COATESVILLE — For a while, it looked like City Council would suck it up and do the right thing — the hard thing — that for nearly a generation its predecessors couldn’t find a way to do: begin to ween the city off the trust fund and edge toward more financially responsible operation.
Now, based on the reporting of our Kyle Carrozza, City Council is backtracking and wondering aloud whether they even have to pass a budget Monday night.
Because, you know, it’s hard.
The short form: yes, they do.
The long form: after shrinking the $40-million plus Trust Fund created when the city sold its sewers and water system to a little more than $5 million, the city can basically do what it has done for more than a decade, hit the fund and keep the status quo, or make difficult decisions Monday night, that while painful represent, the city’s best hope to avoid becoming another Act 47 casualty.
There’s no good option here. No matter what City Council decides, it’s going to hurt.
But of there’s going to be pain, let it be pain that leads to progress.
If City Council decides to hit the trust fund for about $1.5 million, not raise taxes and not cut spending, it will be like a cancer patient putting off chemotherapy because it is unpleasant (even horrible). The situation is going from bad and scary to terminal.
Here’s the truth (which I know from practice at running startups over the last decade): if the city cannot slow the “burn rate” from the trust fund from its current rate (about two more budgets after this one) to a time period where some sort of real, long-term recovery is possible (a decade or more), the state will be taking the city over in 2018, which won’t just be a disaster for the city, but for the school district and Chester County.
An Act 47 takeover will devastate the center of the county and threaten the long-term prosperity of the entire county.
So, basically, it’s now or never and it’s going to hurt. A lot. Just less than what happens in a couple of years if council keeps on keepin’ on.
Yes, taxes are already too high in the city — the highest municipal taxes in the county. That’s what happens when places like Coatesville become the economic landfill for wealthy folks in surrounding communities, as has happened in dozens of Pennsylvania’s small cities. And yeah, many of us in more prosperous areas of the county need to get over ourselves and start figuring out how we can help, or it’s going to get worse and spread (see, Philadelphia and then Delaware County).
And while the larger structural issue won’t get fixed in the short term — since the state can’t cover its own budget or run anything like responsibly itself, it’s not smart to expect much help with that — the city needs to do what it has to to survive.
And sure, had these steps been taken, say five or six years ago, when the city went into Early Intervention, they might not have been so painful, nor would about $15 million in trust fund dollars disappeared.
The path forward is hard, but it can be done.
Raise taxes, even if modestly, to help preserve essential services: $350,000. Yeah, it stinks. And yes, it will hurt redevelopment efforts. But less than becoming an Act 47 basket case.
Cut spending. This will still hurt, but less than yanking some $1.5 million from the budget. $800,000 is a good goal. If Councilman Ed Simpson is right, some $600,000 can be found by reverting the city fire service to an all-volunteer force. That’s a tough call, but it seems like there’s been a lot of internal issues blending paid and volunteer firefighters, so this may turn out to be addition by subtraction. And yes, other cuts are going to hurt. This is full-on crisis time and everyone is going to need to share the pain.
The rest will have to come from the trust fund: $350,000.
Eventually, the city will not only have to stop taking money from the trust fund, but figure out how to pay it back. But cutting the number to something below $500,000 changes the burn rate and buys time. Now, instead of bankruptcy looming in 2017 or 18, it can be pushed back until 2024 or 25. And if the borrowing from the trust fund can be slowed next year to $200,000, then that time frame runs well past 2030 — enough time for real redevelopment plans to finally take root and start generating tax revenue for the city.
It can be done. It must be done.
It’s going to require leadership — and with City Manager Kirby Hudson out the door, that’s going to be tough. And yes, the city desperately needs a new, dynamic, politically savvy leader in that job — but that’s a decision for 2015.
City Council faces a defining moment Monday night — a night that will shape the coming decades in Coatesville.
The question is this: will they step up and meet the challenge, or will this be another missed opportunity in the sad tale of the city?
