The holiday season can stress budgets to the breaking point. Your daughter wants a cashmere sweater; you'd love to have a plasma screen TV. But the credit cards are maxed out, the savings account has been drained, and the house is mortgaged to the hilt. The creditors are getting nervous, and you are finally facing the reality that you can no longer maintain your lifestyle. Some painful choices have to be made, the kind of choices that go beyond a little belt-tightening, the kind of choices that involve sacrifice, discipline and responsibility.
The city of Allentown is facing just such a scenario; a fiscal crisis of such proportions that extricating ourselves from it is shaping up to be a painful, drawn-out process that may take years, perhaps decades. Although the numbers shift with the winds, according to the 2005 "green book" budget, the city has a negative fund balance of at least $3.7 million. From a financial management perspective, there are many factors, but a primary cause has been an over-estimation of revenue; including, for instance, saying there's a lot of grant money coming that never arrives.
Beneath these deficits there is also a serious structural problem that was identified by the city's bond agencies last year during bond refinancing, another maneuver that mortgaged the city's future. Both Moody's and Standard & Poor's lowered the city's rating and cited concern that city expenditures are growing faster than revenues; a $2.8 million annual shortfall. To give that number some perspective; based on the assessed value of Agere's property within the city, and the 2004 city tax rate, we would need 13 new Agere plants in the city to generate enough real estate tax to compensate for our current revenue shortfall.
As Allentown City Council continues to wrestle with the mayor over a tax increase and cuts to the 2005 budget, the phrase, "too little, too late," comes to mind. In a system where City Council and the independently elected controller are supposed to provide ongoing checks and balances to the administration, it is legitimate to ask, "How did this happen?" And, "What do we do now?"
I used to have a plaque on my desk that said, "Don't bring me your problems, bring me your solutions." As we move into the 2005 municipal elections, we had better be looking for solutions. To continue on this course leaves us few options other than more taxes, more layoffs, and less service, and possibly, the declaration of Act 47, distressed city status.
One preventive solution has been offered by Bill Hansell, executive director emeritus of the International City-County Management Association, and a former business administrator for Allentown. In a Morning Call op-ed piece in July, he talked about changing the city's government from the current strong-mayor structure to a "council/manager/mayor" government.
As it is now, every four years the city's future rides on a roll of the dice we call an election. We hope we'll end up with a mayor who understands the complexities of an almost $100 million operation while creating economic development initiatives, providing visionary leadership, building a working relationship with council, and keeping a hundred thousand constituents safe and happy.
According to Hansell, a council/manager/mayor government would go a long way to preventing the current "crisis," as he called it, in Allentown. A city manager is a professional administrator with specific qualifications for the job, who can be fired if he or she is incompetent.
It will take a change to the city charter to shift from one form of government to another. I strongly recommend that council consider convening a new charter study commission to examine this and many other issues. There is, however, another more immediate option. Under the state's Third Class City Code, a mayor may create an "administrative" department, headed by a "city administrator." Yes, this position would be only a department head, and would still report to the mayor, without the autonomy or accountability of a city manager, but the creation of such a position would be a very good place to start returning credibility to the financial reporting system.
Once Allentown emerges from the painful period that lies ahead, we must, as responsible citizens, do all we can to ensure that Allentown never again falls victim to the level of incompetence that has brought us to the place we now find ourselves. History will expect nothing less from us.
Pamela D. Varkony of Allentown is a former member of City Council and partner in a management consulting firm. Her e-mail address is Pamela@SpectrumGlobal.net.