FOR IMMEDIATE RELEASE:
Erie, PA (March 4, 2021) — Erie Mayor Joe Schember: Approval of debt prepayment plan sets City on path for no real estate and income tax increase for the next 5 years
Erie Mayor Joe Schember presented a plan to the Erie City Council during their Finance meeting on Wednesday which, when approved, will be a major step toward realizing his goal of no real estate and income tax increases for City residents for at least 5 years, until 2026.
The plan seeks to achieve this success by using $78.7 million from the Erie Water Authority lease deal to pay down the city’s debt and by leaving $15 million in the General Fund to cover budget shortfalls while the Mayor and his team work to fix the city’s structural deficit. This debt reduction will save the city expenses for principal and interest payments of $86,266,308.80 over the next 19 years. That means the City will save on average, over $4.5 million per year in loan payments for 19 years. Most of the City payments will be made during the first 5 years. These actions will result in a City balanced budget for five consecutive years, with the goal of eliminating the need for any increased real estate or income taxes over that time.
This plan is conservative, as the 10-year General Fund Forecast does not account for any increases in revenue or decreases in expenses. For instance, the City is working to diversify revenues, implement more equitable fees, expand the tax base by increasing the number of people living and working in the city, and reduce expenses.
The City’s main remaining financial issue is the structural deficit, which means that annual expenses increase at a faster rate than revenue. This proposal gives the City a window of opportunity over the next five years to increase revenue and decrease expenses. Using Public Financial Management’s (PFM) Five-Year Financial Management Plan, Mayor Schember and his team have identified a list of priorities that they will continue to examine and implement to reduce the City’s structural deficit. Like many other cities, this issue has existed for decades. As residents have moved out of the City, tax revenue has declined while the need to provide critical services and take care of the City’s aging infrastructure, assets, and resources has remained. Realizing that the issue has become too large and unsustainable, Schember’s administration is committed to tackling this issue head on.