“I need to know, why do we have a deficit already?” asked President Wanda Williams.
During an empty house Harrisburg City Council Budget & Finance Committee meeting on May 7th, the City Treasurer, Mayor, and members of the Act 47 Team made a presentation on the city’s projected $1.01 million end-of-year deficit.
“They’re just projections,” Act 47 financial advisor Steve Goldfield stressed.
But it’s those projections that lead Mayor Eric Papenfuse to call for a hiring freeze in April.
Until at least June 1st, no one new will be hired despite a desperate need for more people to carry the administrative and service load of the city.
In an interview with City Council Budget & Finance Committee Chair Ben Allatt, he explained that he fully agrees with Papenfuse’s approach.
“This is responsible government,” Allatt said.
While no one knows how the city’s budget will actually turn out by the end of the year, at this point in time it looks like the city could fall a bit short, that is if the city does nothing but sits back and lets it happen.
“The biggest variable cost we have is personnel,” Allatt explained pointing to a chart of projections. “Our hands are tied on basically everything else like city services and debt obligations. So by controlling our personnel costs where we can, we have the ability to manage the budget. It’s proactive budgeting.”
This is not something the City of Harrisburg is used to doing.
In fact, in the past, the city pulled money from water and sewer funds to fill budget gaps apparent as the end of the year approached. That’s not an option anymore.
Another common solution was for the city to carry over a significant amount of its payables to the next year. “The city did that time and time again without accounting for it in the budget, so each year,” Allatt explained, “we had bills due in the new year but the money wasn’t budgeted. It’s not something we should do again.”
To avoid these common practices that continually exacerbated the city’s structural deficit, the Papenfuse Administration had to tighten the reins where it can.
However, when the hiring freeze was announced, some City Councilors did not take the news well, most especially President Williams who has been hoping to hire an assistant City Clerk for Council.
It became clear at the May 7th meeting that the confusions, tensions, and challenges between the executive and legislative branches of the city’s government goes beyond dollars and cents.
Frustrated at the budget projections and mandated hiring freeze, Williams blasted the Mayor and scolded the Act 47 Team.
She wasn’t alone in her anger. Councilor Sandra Reid pointed to the suggested privatization of the city’s sanitation services and declared that “They’re holding the city hostage.” While she didn’t name who “they” is, she said it’s the “moneymakers and brokers.”
Act 47 Team leader Fred Reddig from the state Department of Community and Economic Development attempted to defuse the situation, “This year is not a perfect year” but said, “I’m very optimistic about the future of this city. We need to work together.”
Aside from the fact that the city’s recovery is only five months old, one of the greatest problems is that Keystone Collections Group didn’t notify about 1000 employers of last year’s EIT increase.
As a result, the actual tax collection revenues are not as high as they should be.
Also, this past snowy winter delayed the implementation of the new parking rates resulting in less-than-expected revenues in the city’s coffers.
The Administration hopes its hiring freeze will help right the budget and get the projections back on track. By the start of June, the city plans to be ready to begin to judiciously fill the most needed positions. City Council and the Mayor will sketch out a “priority position” list.
In the meantime, Chair Allatt thinks this is the most sensible method. “It’s a projected deficit based on not doing anything about it. But obviously, we’re doing something about it.”