NEWS INFORMATION FROM |
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THE OFFICE OF MAYOR STEPHEN R. REED |
FOR IMMEDIATE USE |
STATEMENT OF MAYOR REED ON CITY BUDGET CRISIS“For each of the past eighteen years, the City of Harrisburg received the Certificate for Achievement of Excellence in Financial Reporting. It is the highest award in the nation for financial reporting and accounting. “For each of the past sixteen years, the City has received the Distinguished Budget Presentation Award. This is the highest award in the United States for budgeting. “There are 2,566 municipalities in Pennsylvania. Only three have received both of the nation’s top fiscal awards. “These recognitions are not conveyed automatically. The City has to adhere to standards that are higher than those customarily used in handling government accounting and budgeting. An independent panel comprised of Certified Public Accountants and other fiscal experts review the city’s financial materials before awarding these recognitions through the Government Finance Officers’ Association, which serves the United States and Canada. “Separately, the city is annually audited by an outside accounting firm and those have been clean audits. “Maintaining high standards---and subjecting ourselves to the rigorous requirements of the national recognition programs---may not make for any headlines, but it is the professional manner in which we have continuously conducted this City’s fiscal affairs. “ The City has only one budget. For statutory and other legal reasons, it is divided into seven funds---the State Liquid Fuels Tax, Debt Service, Water, Sanitation, Incinerator, Sewer and General Funds. Together, they make-up this one budget. “These funds are all inter-related because the City has a single citywide system of handling personnel, purchasing, information technology, legal, insurance and other support functions. It is far cheaper to have a centralized support system than to have each city department doing these things separately and duplicatively. “The costs of personnel, debt repayment, utilities and energy, and the host of other normal operating expenses are legal obligations of the city. If any one of these seven funds is running a deficit, the obligations do not disappear. They remain legitimately owed. “On September 15th and multiple times since, the operating deficit in four of these funds has been repeatedly discussed and presented. The information provided each time has been accurate and comprehensive. “On October 31st, these figures were personally presented to City Council in public session. The deficit total was and is $13,842,428. “Council was presented with a clear plan to solve the issue. It was for the issuance of a $10.5 million Tax and Revenue Anticipation Note which would have eliminated most of the deficit and prevented any further layoffs---without the use of any present or future tax revenues. It was voted down. “It was made crystal clear that if Council adopted a lower amount of $7 million it would leave nearly half the deficit in place and force additional layoffs. They approved the $7 million TRAN anyway. “Last night, several Council members repeated their assertion that the deficit is only $7 million. The persistent repeating of this fiction is designed to confuse and seriously mislead the public. It does a significant disservice to our City. It follows a theme of negative advertising that a lie repeated often enough can become perceived as truth. “For reasons unknown, these several Council members focus only on the General Fund and not on the other three that have deficits. If these funds cannot cover their costs, the obligations shift to the General Fund. It is all one budget, no matter what occurs in any of the seven funds that make up that budget. “If the remaining $6.8 million deficit is left in place, it will cripple the 2007 budget because what is still owed must be carried over into next year. “This forces additional layoffs. In the next five business days, as many as 12 additional positions will be eliminated, including through layoff. “An additional round of layoff notices will be issued ion the first week of December that will take effect on January 5th. As many as 30 more positions are affected. “I am refusing to layoff police officers at this time. But make no mistake about it, if Council allows the remaining deficit to stay in place, public safety and other staff will have to be left go. There simply will not be enough money to cover their costs. “When presenting the 2007 budget, we will once again outline plans to prevent future layoffs. These plans will include the means to eliminate the deficit going into 2007 without the use of present or future taxdollars. “Meanwhile, we can report that the $7 million TRAN was closed upon today, meaning the monies become available in the next 24 hours. It took two weeks to complete this transaction because of uncertainties about whether Council would honor the commitment to repay it. On Monday evening, I spoke with a senior bank representative on the matter and the next day, the TRAN was given final approval.” |
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