City uses trust fund to avoid tax hike

$8.8 million preliminary budget includes $1.5 million infusion from reserves

By Kathleen Brady Shea, Managing Editor, The Times

Longtime Coatesville resident Ron Suber questions City Council about its dire financial straits.

Coatesville City Council approved an $8.8 million preliminary budget Monday night, but not before amending it to eliminate a tax hike.

“I do not want to see a millage increase,” said Councilman Joe Hamrick. “I am totally against that. I want that stricken from the books.”

He was not alone. Five City Council members voted unanimously to dip into the city’s dwindling trust fund to make up the difference: about $1.5 million. Councilman Ed Simpson and Jarrell Brazzle were absent.

Council got its first look at a proposed $8.6 million budget earlier this month. City Manager Kirby Hudson and Finance Director John Marcarelli provided an overview on Nov. 5 that represented a 1.8 percent increase in spending.

The earlier proposal included a tax increase of 5.5 mills that would have also eliminated the annual $295 solid-waste fee. As a result, the average 2012 residential real-estate tax bill of $569.30 would have risen to $901.87; however, it would have been partially offset by the deletion of the solid-waste fee, bringing the net increase to $37.57 for the average resident.

Marcarelli suggested that by folding the solid-waste fee into the real-estate tax, the city would likely improve the collection rate and receive income earlier in the year, but council members rejected that change.

Some figures were adjusted, most of them upward, from the proposed to the preliminary submission. For example, the proposed budget included $100,000 in legal fees, well below the more than half-million spent this year. Some council members had questioned that figure since several lawsuits remain unresolved. The preliminary budget hiked that number to $300,000.

The proposed trust-fund withdrawal represents a change in the city’s budgeting strategy. In past years, the fund has been tapped after revenues came up short, not when a gap was anticipated. About $2.2 million was transferred from the reserve in October. The fund, which started at $39 million after the city sold its water and sewer company in 2000, is down to about $9 million.

Longtime resident Ron Suber asked why the city always seemed to be hemorrhaging money, and he questioned why the FBI hadn’t been contacted to investigate possible corruption. Council President David C. Collins said he believed that the FBI had declined to get involved. He said the results of a long-awaited forensic audit are expected at the end of the month.

“This council is very focused on bringing costs in line,” Collins told Suber. “I can assure you, you have all of our full attention.”

Suber, the community activities coordinator for the American African Youth Leadership Foundation, also decried the lack of activities for the city’s youth. He said he believed the nonprofit could run the community center better than the city has, if given the opportunity. Councilwoman C. Arvilla Hunt suggested that Suber meet with Hudson for further discussion.

After the meeting, Collins said the council is committed to keeping costs in check, but he said spending cuts had been exhausted. He said the city is paying for the sins of the past when it lived well beyond its means. He said capital improvements were not addressed and legal fees have skyrocketed.

“We wanted some assurance that accounting procedures were being done correctly,” Collins said. “We’ve now been given those assurances.”