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NEW REPORT OFFERS DAMNING LOOK AT CITY FINANCES; PUBLIC HEARING SET
CHESTER >> An independent analysis of the city’s financial woes recommends “extreme measures” including reducing emergency services, implementing new taxes and bringing in professional accountants to fix a growing budget deficit by 2018.
The state-appointed firm Econsult Solutions Inc. has proposed the amended recovery plan to help the struggling city recover from a projected $16.2 million cumulative deficit for 2016, which could grow to $37.3 million by 2020.
A representative from Econsult could not be reached Friday. Mayor Thaddeus Kirkland and Deputy Mayor Nafis Nichols, who also serves as director of Accounts, Finance and Human Resources, did not return calls for comment.
The report notes that Chester remains one of the state’s poorest cities despite making some economic gains made over the past eight years. The city’s financial issues came to a head in 2006 when Chester was forced to take a deficit-funded loan just to meet payroll and deliver basic services, according to the report.
But things began to turn around with increased development on the city’s waterfront, beginning with the opening of Harrah’s Philadelphia Casino and Racetrack in 2008. That was soon followed by Major League Soccer’s Philadelphia Union coming to PPL Park in 2010 (now Talon Energy Park) and other investment vehicles like Keystone Opportunity Zones, which offer tax breaks for new or relocating businesses.
But the report indicates those successes have been slow to have any positive impact on the city’s budget as personnel costs, particularly in the areas of police and fire services, have continued to climb.
Chester has been a “financially distressed municipality” since 1995 under the state’s Municipalities Financial Recovery Act, also known as Act 47 of 1987. The act was amended in 2014 to limit a municipality’s distressed status to just five years after the effective date of its most recent recovery plan or amended plan. For Chester, that was May 2013, which means the city must exit Act 47 by May 2018.
“As a result, the city must take immediate steps to eliminate its budget deficit and address its funding deficit,” the report says. “Extreme measures must be taken, and no department of the city will be able to avoid making difficult decisions.”
The report notes personnel costs and benefits have grown rapidly in recent years, and Chester has been unable to keep up with its annual required pension payments or health insurance premiums. If not brought to heel, Econsult says the growing costs will cripple the city’s future finances.
The report recommends increasing the age and years of service requirements for eligibility in some post-employment benefits, adjusting police and firefighter pension fund calculations, and eliminating or restructuring other fringe benefits.
The plan also calls for eliminating specialty assignments and minimum supervisory staffing requirements within the police force, and reorganizing from the current fourplatoon structure to three platoons working 10-hour shifts. The department currently has a complement of 106 uniformed officers, but reverting to the former three-platoon structure would cut the force by approximately 10 positions, the report says.
Econsult additionally recommends reducing fire services down from two companies to one, doing away with minimum manning supervisory requirements in that department and cutting all non-uniform ranks by 10-percent. There are currently 70 positions in the fire department. The plan calls for eliminating 20 firefighters, one battalion chief and two captains, as well as reining in overtime pay.
The report includes plans to raise resident earned income taxes and introduce an amusement tax for 2017. Econsult also recommends that Chester lobby Harrisburg to change the distribution percentages of gambling revenues for Act 47 municipalities, which currently provide about 20 percent of the city’s revenues.
The recovery plan additionally indicates the city needs to centralize financial management oversight by hiring a full-time chief financial officer and contracting with a certified public accountant to serve as deputy CFO. Those positions could be funded by a state Department of Community and Economic Development grant for two years, the report says.
Econsult claims if the changes are implemented, Chester could be operating with a surplus within a year and fix its cumulative deficit by 2020. The company will hold an open meeting on the Plan at 7 p.m. Tuesday in the council meeting room at City Hall to take comments from the public on the plan.