Less than two years after exiting Act 47, Reading’s financial footing is secure, representatives of PFM Advisors said.
“So the underlying message here tonight is: You’re strong,” Gordon Mann, director of the firm’s Philadelphia office, told City Council. “Your financial performance, really, for years, has been very strong.”
The firm helped guide the city through nearly 13 years under the state program for financially distressed cities and was retained after the city exited Act 47 in July 2022.
Mann and Lauren Sukovich, a senior consultant for PFM, presented an update on the city’s developing five-year plan for financial management at City Council’s committee of the whole meeting Monday.
The presentation focused on the city’s baseline financial projection and ongoing management and goals.
The baseline provides a snapshot of the city’s current finances and is used to guide decision-making, with an emphasis on long-term sustainability over short-term gains.
Mann commended the city on its strong financial performance, and noted the consistent surpluses and healthy fund balances.
He cautioned against aiming for excessively high surpluses, Instead, Mann noted, reserves should be used for priority projects, filling personnel vacancies and other identified goals.
“The purpose of city government is not to run up a big surplus,” he said. “It’s great to have reserves; it’s great to build those surpluses, and then, to use them. You’re not a bank. You’re not a private company. Your goal isn’t to push your bottom line as high as you can get it.”
Sukovich said the baseline is being used to develop a five-year strategic management plan for the city.
The plan encompasses more than financial management strategies, she said, it also prioritizes long-term goals to leverage the city’s now-strong financial situation for creative and aspirational initiatives, such as developing the downtown.
Multiyear financial planning helps prioritize longer term spending, she said, by taking into account how the decisions made today will impact the city’s financial stability in the future.
“The city is in a really strong financial position now,” Sukovich said, “and has the opportunity to do something really creative and aspirational.”
Post-pandemic, the city has seen strong growth in earned income tax and deed transfer tax revenue, she said, cautioning against assuming continued high growth indefinitely.
The strategic plan assumes changes in those tax revenues, Sukovich said, and is not predictive. Rather, it is a diagnostic tool that can be used by the city to guide future financial decisions, she noted.
Sukovich said expenditure drivers, such as increases in employee compensation and health insurance costs, also need to be considered.
Other factors include an anticipated drop in the city’s debt service, starting in 2028, she noted.
Mann said small, but manageable, deficits in the budget are predicted for the coming years.
These and the factors discussed by Sukovich should not be alarming, he said, noting the projected deficits are smaller than the actual deficits seen in previous years.
“You have a track record of success; you have a track record of doing this well,” he said, crediting the leadership of Jamar Kelly, city financial and deputy managing director, and other city leaders, who guided the city’s financial planning over the past few years.
Mann encouraged council and the city’s leadership team to leverage the current financial stability to pursue meaningful projects that will leave a lasting impact on the community.
“You have an opportunity to be creative and aspirational,” he said. “You have the opportunity to do something different because you’ve made the right decisions over the years.”
Source: Berkshire mont
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