[February 09, 2010] McMahon paints dark fiscal picture: Mayor tells City Council Reading is reeling from global recession, defends Act 47 status Tweet Feb 09, 2010 (Reading Eagle - McClatchy-Tribune Information Services via COMTEX) -- Adding detail to the written State of the City report he gave at the end of January, Mayor Tom McMahon told City Council on Monday that 2009 was perhaps the most difficult year that Reading has seen since the Great Depression. "It comes on the heels of a global recession that has affected every family, business, government agency and school district," he said. "Cities like Reading, already struggling before the recession, are reeling from the impact. "Cutting services that people have grown to expect, and cutting jobs where they have never been cut before, ... all of this has added to the pain." The city laid off 27 employees, including 11 police offi cers, to balance the 2010 budget. It also raised taxes, eliminated funding for BARTA, which the county picked up, and cut funding to the Reading Public Library and Berks Community Television. "Over the past 263 years as a city, Reading has weathered storms before and survived," McMahon said. "And we will again." The city started 2009 with a $3 million surplus left over from previous years, but ended 2009 with a $5.5 million defi cit. In November the city also entered the state's protection program for distressed municipalities, called Act 47. "It was not an easy decision, but I was convinced, and still am, that it was the right thing to do," McMahon said of Act 47. "There are those who worried that entering into Act 47 might carry a certain perceived stigma, but you can be assured that without it, the stigma of municipal bankruptcy would be far worse. And we were absolutely on the path to that undesirable outcome." An outside, state-paid team is creating a recovery plan for the city to enact. McMahon said although Act 47 status has certain advantages, they only give the city breathing room to avoid bankruptcy while it waits for much-needed reform of state laws that tie the hands of Pennsylvania cities. Quoting George Cornelius, the secretary of the state Department of Community and Economic Development who approved Reading's Act 47 status, McMahon said that without those reforms the financial numbers simply cannot be made to work. He said requirements that cities give generous tax exemptions to nonprofi t groups cut tax revenues by a third; required pension benefits keep escalating; and the required labor negotiating process is tilted against municipalities. Quoting Cornelius again, McMahon said, "Financial distress is almost assured for all our midsized and large cities." McMahon called for a 10-point strategy that would augment the Act 47 team's separate recovery plan. Despite what he called the dark statistics, he said the city and its residents can take control of Reading's future. "The operative word is collaboration; we need to come together as a wider community," he said. "Old animosities and hurts need to be set aside to allow real progress to happen." In response, council members emphasized the need for accountability in the recovery process. "Even in difficult times, there are a lot of things we need to do better," Councilman Jeffrey S. Waltman Sr. said. "We need to work on communication and accountability," agreed Councilwoman Marcia Goodman-Hinnershitz. "This is a culmination of a lot of issues at the national and state levels that we knew would hit us at some point," she said. "Regardless of what the down trends are, there are people committed to the city, and we need to lead them in the right direction." Contact Don Spatz: 610-371-5027 or [email protected]. To see more of the Reading Eagle, or to subscribe, go to http://www.readingeagle.com. Copyright (c) 2010, Reading Eagle, Pa. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]