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WILKES-BARRE — If the gunshot wound to the city’s financial health doesn’t kill it, the cancer will, a consultant warned Thursday.
Both need to be treated, but not at the same time, Gordon Mann, director of The PFM Group, said as he offered a number of options after his diagnosis.
“You need to address the bullet wound and you need to put yourself in the position to address the cancer,” Mann said at council’s special public meeting.
Mann provided an update on where the city stands and where it’s going if nothing is done to address the structural problems of flat revenues and escalating expenses for pensions, payroll and long-term debt. His Philadelphia-based firm, hired to develop a multi-year plan of action under the state’s Early Intervention Program for struggling municipalities, identified a number of steps to stabilize the city and balance its books.
“Don’t run out of cash,” Mann advised as a solution to the immediate problem of the bullet wound. The grim analogy was borrowed from former Philadelphia Mayor and state Gov. Ed Rendell, Mann said.
And don’t bother playing the blame game and pointing the finger at prior administrations either, he advised. “It may not be your fault, but it is your problem,” Mann told the council that’s often rebuffed Mayor Tony George’s attempts to fix the problems he’s blamed on his predecessor, Tom Leighton.
The problem has been building for years as the city continues to borrow money, Mann pointed out. Another deal pending before council would restructure the long-term debt and pay for a $5.5 million project to repair portions of the Solomon Creek wall that provided flood protection to South Wilkes-Barre.
“By the end of next year, you will find it very, very difficult to pay your pensions, your debt and your employees. That’s a miserable place to be,” Mann said.
Without changes, the city’s cash flow will evaporate from the combination of $2 million for its five pensions plans and $2 million more for debt service in 2018, Mann pointed out.
Among the suggestions he presented:
• Establish more affordable pension benefits for new hires.
• Levy a distressed pension earned income tax, as allowed by state law, on residents and commuters as a means to shore up pension funds.
• Institute a wage freeze for the more than 270 city employees, the majority covered under collective bargaining agreements.
• Increase copays and deductibles for health insurance and mandate the use of mail order pharmacy for prescriptions.
• Privatize some city departments or services such as the ambulance, trash collection and park maintenance.
• Require all employees to work either 7.5 or 8 hours daily. (Some work only 6.5 hours a day.)
Mann stressed the city should not act quickly to cut services, but it should not rule it out either.
“The answer here is not to outsource trash. It’s not right now,” Mann said.
Council Chairwoman Beth Gilbert and the mayor engaged in a lively back-and-forth when she asked why it took so long for the administration to include council in a discussion on the financial issues.
“Why was the city in relatively good financial shape under the last administration? In less than two years in the new administration, it seems like we’re on the verge of economic collapse,” Gilbert said.
George, making a rare public appearance at a council meeting, responded, “I don’t think it’s my administration. I said I was left this by the prior administration.”
Gilbert was concerned about the effects of some of PFM’s suggestions, but the mayor called her to task for what he said was her inaction and refusal to approve his remedies.
“And you can’t keep putting your head in the sand. You tabled the motion when I tried to restructure the debt,” George said.
He and Councilman Bill Barrett stood on common ground on the possibility of the city adopting Luzerne County assessments. The city is the only municipality in the county that uses its own assessments.
“If we’re going to do this, we’ve got to start looking at the big picture,” Barrett said of using county assessments to boost tax revenue.
PFM will come to council later this year with recommendations for the city to follow in a multi-year plan.
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