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City of Reading
Budget Guide


January 2019


City of Reading Budget Guide 2019




Table of Contents

Budget Process Page 2
Budget Calendar Page 3
Act 47's Impact Page 4
Funds and Accounts Page 5
Organizational Chart Page 8
Revenue Overview Page 9
Expenditure Overview Page 14
Spending by Department Page 18
Department Descriptions Page 20
Headcount Summary Page 21



Reading City government is critical to everyone who lives, works, owns property in, or visits this southeastern Pennsylvania city of 88,000 people. Reading is the largest municipality in Berks County by population, and it is the seat of the County government, so City government impacts thousands of people who live outside Reading in the surrounding communities.


City government is responsible for public safety functions like police patrol and fire suppression that make Reading a safer place to live, work or do business. City government is responsible for maintaining many of the roads, street lights and sewer systems that residents and visitors rely upon every day. City government has other functions, like code enforcement and zoning, intended to make Reading cleaner, more attractive and more prosperous. And it has responsibility for collecting and managing the money that funds these services in accordance with Pennsylvania law, City ordinances, and resident preferences.


Financially speaking, City government is a complex organization. In 2019, the City expects to spend more than $150 million across multiple funds on the services listed above and on its obligations to its vendors, creditors and retired employees. To cover these expenditures, the City government collects revenues from taxes, fees, service charges, fines, and intergovernmental aid.


Like other Pennsylvania governments, Reading's challenge is to balance its annual expenditures against its available revenues, and to maintain that balance on a recurring basis. The primary tool that City government uses to meet that challenge – and the legal tool for funding the services that touch people's daily lives – is the annual budget.


This Guide will help you better understand the City of Reading budget – what it is, what it does and what it means. It will help you understand how the City's elected and appointed officials put the budget in place and how they use it throughout the year. And it will help you understand your role in the process – how the taxes and fees you pay support City government which in turn provides municipal services to you.



Budget Process

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The City of Reading's government is organized according to a Home Rule Charter adopted in 1996. Reading uses a mayor-council form of government with nine elected officials.


The Mayor holds the executive, administrative, and law enforcement powers of City government and is responsible for its daily operations. Legislative powers are held by City Council with six members elected by geographic district and a Council President selected by city wide election. The City Auditor, who is also selected through city wide election, has oversight of City government finances independent of the Mayor and Council.


Subject to City Council approval, the Mayor appoints a Managing Director who is the chief administrative officer. The Managing Director supervises the following departments:


Administrative Services (Finance, HR, IT)
Community Development
Fire and Rescue Services
Police
Public Works


Subject to Council approval, the Mayor also appoints the City Solicitor who is the head of the Law Department. The City's annual budget allocates money to these departments and other parts of City government, including the Reading Public Library, the Board of Ethics, the Charter Board, and the Human Relations Commission.


Budget process: Executive Branch responsibilities


According to the City's Charter, the Mayor prepares and presents to City Council an annual budget that is “a complete financial plan of all City funds and activities for the ensuing fiscal year.”1 The Mayor also submits to Council a Capital Improvement Program with the proposed projects for the next year and a budget message that explains the proposed budget. According to the City's charter, the Mayor must submit these items to City Council at least 90 days before the start of the next year.


While the charter assigns these duties to the Mayor, he or she is supported by others in the Executive branch. Department directors submit their proposed budgets to the Managing Director and Director of Administrative Services for review, adjustment and consolidation into one document. They are also responsible for projecting the amounts and types of revenue that will be available to fund government spending the next year. The budget calendar on the next page shows this process in more detail.


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1 Article IV, Section 904. Reading's fiscal year follows the calendar year.



Budget Calendar

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Date

Event


June

Department directors submit strategic plan documents to the Managing Director (MD)


July - September

ASD and staff prepare projections of tax and non-departmental revenues. Department directors prepare projections for revenues related to their operations


Mid-July

Department directors submit budget documents to the MD and Administrative Services Director (ASD)

Mid-July through Mid-August


MD and ASD review department budgets with department directors


Mid-August

MD and Community Development Director present Community Development Block Grant (CDBG) action plan to the City Council Finance Committee


September

Revenue estimation committee meets to discuss projections for major tax revenues. Committee includes City Council members and City Auditor


September

MD and ASD amend department budgets and compile them into a comprehensive expenditure budget reflecting Mayor's strategic priorities


October 1


Mayor submits budget, Capital Program and budget message to Council

Once City Council receives information from the Administration, the City Council Clerk prepares a budget summary for publication in a newspaper of general circulation. City Council holds a public hearing on the operating budget 15-30 days after the publication of that summary and a separate public hearing on the Capital Program.


During October and early November, Council's Committee of the Whole holds public meetings with the Managing Director, Administrative Services Director, and any relevant department staff to review the proposed budget. The City Auditor participates in those meetings and prepares non- binding recommendations for Council's consideration according to the Home Rule Charter.


Council generally concludes its budget review in November and votes to approve or reject the budget and the Capital Program in the final weeks of the calendar year. In addition to the budget itself, Council votes on ordinances setting the Capital Program, the major tax rates for the next year, and the number of positions by department.


If Council does not adopt a budget by December 15, then the Mayor's original proposed budget becomes the official budget for the next year. According to the City Charter, “in any year following a municipal election year the Council may, within forty-five (45) days after the start of the fiscal year, revise the budget and tax levies adopted by the previous Council.”2



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2 Article IX, Section 906.



Act 47's Impact on the Budget

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In November 2009, the Secretary of Pennsylvania's Department of Community and Economic Development (DCED) designated Reading as a distressed municipality according to the criteria in the Municipalities Financial Recovery Act (Act 47 of 1987). At the request of then Mayor Thomas McMahon, DCED reviewed the City's financial performance and found that its spending exceeded its revenues by a large enough margin and for a long enough period that the City should be placed under Commonwealth oversight.


The Secretary then appointed Public Financial Management (PFM) as the City's “Recovery Coordinator.” PFM is responsible for developing multi-year financial and strategic “Recovery Plans” to help bring City government's finances back into balance and move it toward true long term financial recovery. City Council adopted the first Recovery Plan in 2009 and an Amended Recovery Plan in 2014.


The 2014 Amended Recovery Plan has a provision that allows the City of Reading to seek approval from the Berks County Court of Common Pleas to levy an earned income (or wage) tax on commuters who work in Reading but live elsewhere. Pennsylvania local governments generally can only tax the income of their own residents. Act 47 municipalities like Reading can use this commuter tax for a limited period of time subject to the limits in Pennsylvania law, the provisions in their Recovery Plan and County Court approval.


The City's 2019 budget has a 0.3 percent commuter tax for capital improvements, as provided in the 2014 Amended Recovery Plan. Most commuters will pay a total earned income tax of 1.3 percent in 2019, with 1.0 percent going to their home municipality and 0.3 to the City of Reading.


According to Act 47, the Amended Recovery Plan sets the maximum amounts that the City can spend each year on total compensation for both the employees in each labor union and those employees who are not represented by a union. These maximum allocations apply to the employees' salaries, any other forms of cash compensation, and the City's share of employee health insurance costs. Employee compensation is determined through collective bargaining between the City and its labor unions, and those negotiations are also subject to the Amended Recovery Plan's limits.


In October 2014, the Pennsylvania General Assembly amended Act 47 to add the following budget related deadlines for Act 47 communities.


Deadline

Required action

120 days before year end

The City begins developing a budget that complies with the Recovery Plan

75 days before year end


The Mayor submits a budget to the Recovery Coordinator for review

45 days before year end

Recovery Coordinator returns the budget to the City with any modifications necessary to comply with the Recovery Plan

30 days after budget passage

The Recovery Coordinator notifies DCED whether the City has adopted a budget that complies with the Recovery Plan



Budget Building Blocks: Funds and Accounts

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The City's budget is separated into funds according to generally accepted accounting principles. Each fund should have at least the same amount of revenue as expenditures each year. The difference between revenues and expenditures in a fund is its “annual result.” If revenues exceed expenditures, then the positive annual result is a surplus. If expenditures exceed revenues, then the negative annual result is a deficit.


The City Charter requires the Mayor to submit a balanced budget where “total proposed expenditures shall not exceed the total estimated income.”3 City ordinances describe that goal in more detail as follows


The City's objective is to achieve and maintain a structurally balanced budget in all funds such that recurring revenues fund recurring expenditures. The City shall maintain a reserve containing a minimum of 20% of regular general fund operating expenditures based on the annual General Fund budget of City or a minimum of $22,000,000 whichever is higher…


Each line in the budget starts with a numeric code that tells the reader which fund is used and which City department is responsible for the item. Here are examples of revenue account codes (property tax) and expenditure account codes (salaries).


Fund

Dept

Division

Object

Complete Code

Account Name

Amount

01

00

00

3010

01-00-00-3010

Property Tax Current Year

$21,700,200

20

00

00

3010

20-00-00-3010

Property Tax Shade Tree Fund

$251,554

01

01

01

4000

01-01-01-4000

Mayor's Office Salaries

$228,920

20

07

02

4000

20-07-02-4000

Shade Tree Fund Salaries

$51,530


The City's 2019 operating budget has nine funds, and the largest is the General Fund (01). The City uses the General Fund to track revenues and expenditures related to several of its daily operations – police patrol, fire suppression, code enforcement, etc. The General Fund also contains most of the revenues and expenditures that the City uses for its own administrative needs - payroll, purchasing, human resources, etc. The General Fund is discussed in more detail later in this Guide.

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3 Article IX, Section 904.



Fund Account Name

01

General Fund

20

Shade Tree Fund

34

Capital Improvement Fund

35

Liquid Fuels Fund

50

Water Fund

52

Self-Insurance Fund

54

Sewer Fund

55

Sewer Retail Fund

56

Solid Waste Fund

Shade Tree Fund (20)


The City levies a 0.2-mill real estate tax to maintain trees, bushes and shrubs on publicly owned properties. That revenue and its use are tracked in this special revenue fund.


Capital Improvement Fund (34)


As required in the City's Amended Recovery Plan, a portion of the earned income tax on residents and commuters is set aside to fund capital projects in this fund. These projects involve the purchase, construction, replacement or rehabilitation of infrastructure (roads, bridges, buildings) or other assets that meet the City's definition for capital projects except for the large sewer treatment plant construction project, which is paid by the Sewer Fund.


Liquid Fuels Fund (35)


The Commonwealth of Pennsylvania collects revenue from the state sales tax on motor fuel and then distributes a portion of that revenue to eligible municipalities, like Reading. The City holds that revenue in this special revenue fund and then uses it for street paving, ice and snow removal and related activities.


Water Fund (50)


Reading's primary water supply sits eight miles north of the City at Lake Ontelaunee. City government owns a system for collecting, purifying, pumping and distributing water to Reading residents, businesses and other property owners. The City government leases that system to the Reading Area Water Authority (RAWA) and uses this enterprise fund to track financial activity related to the system, including RAWA's annual lease payment.


Self-Insurance Fund (52)


The City is self-insured for worker's compensation, general liability, and property damage. The City transfers money from other funds to this Self-Insurance Fund and then pays insurance claims out of it. Since most operations are supported by the General Fund, that fund makes the largest contribution to the Self-Insurance Fund. The City is also self-insured for active and retired employee health insurance, but those expenditures are tracked primarily in the General Fund or wherever the employee's salary is or was budgeted.


Sewer and Sewer Retail Funds (54 and 55)


The City government owns and operates a wastewater treatment plant on Fritz Island which is designed to treat 28.5 million gallons of sewage per day originating from Reading and 11 other municipalities. Four pumping stations (three in the City, one near West Reading) support the treatment plant. City government uses these enterprise funds to track financial activity related to that system. The fund's primary source of revenue is sewer treatment fees paid by residents, businesses and other property owners. Starting in 2016, the City uses the Sewer Fund (54) to track activity related to the wastewater treatment plant, including the major reconstruction project, and the Sewer Retail Fund (55) to track activity related to City rate payers.


Solid Waste Fund (56)


The City provides residents with curbside collection of recyclable materials and regulates curbside garbage collection. The City uses this enterprise fund to track financial activities related to that work.


Along with showing the relevant fund, the budget account codes also show the department and division within City government that is responsible for the line item. This is especially useful on the expenditure side.


The chart to the right shows account codes for each department in the General Fund and the organizational chart on the next page shows the division codes within each department. Most of the City's non-departmental expenditures are either debt service payments or fees paid to an organization that collects taxes on the City's behalf.


Modified accrual accounting


The numbers in the City's General Fund budget are recorded using the modified accrual basis of accounting.


This means the City records revenues when they are “available or measurable,” regardless of when the actual cash is collected. So, if the City receives cash in January 2020 for a tax that was levied in November 2019, the City will record that money as revenue in 2019. The City generally records expenditures when they are incurred, regardless of when the actual cash payment is made.


Separate of the budget, the City also monitors its cash flow position to ensure there is enough cash available to pay obligations when they are due.


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General Fund Department Codes

Dept

Account Name

01

Office of the Mayor

02

City Council

03

City Auditor

04

Managing Director

06

Administrative Services

07

Public Works

08

Police

09

Fire

10

Community Development

12

Law

13

Library

14

Non-Departmental

17

Board of Ethics/Charter Board

18

Human Relations Commission




City of Reading Organizational Chart 2019


This organizational chart shows the departments and divisions within City government's executive branch. The numbers in parentheses are the division codes used in the City's budget account codes.




Revenues: Where does City government get its money?

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Reading City government uses a mix of revenues to fund the services it provides, compensate its employees and pay its debt and other obligations. Locally generated taxes account for more than half of the revenue in the General Fund, which is the City's largest. Other funds, like the Sewer Fund or the Water Fund, rely more on user charges. This section describes the major sources of revenue in the City's General Fund so the reader understands where City government gets its money, why it uses those sources, and how much it expects to collect in 2019.


General Fund Revenues by Category




2017

Actual

2018

Budget

2019

Budget

2018 to 2019

Variance ($)

2018 to 2019

Variance (%)

Real Estate Taxes

24,585,899

24,208,460

24,505,200

296,740

1.2%

Act 511 Taxes

28,778,462

29,635,000

29,365,000

(270,000)

-0.9%

Licenses, Permits and Fees

5,208,525

5,024,300

5,190,800

166,500

3.3%

Intergovernmental

7,660,069

7,466,870

7,911,630

444,760

6.0%

Charges for Service

5,103,561

5,069,230

5,240,350

171,120

3.4%

Interest and Rent

1,563,049

2,504,000

1,477,000

(1,027,000)

-41.0%

Other Revenues

5,474,064

5,059,160

5,451,880

392,720

7.8%

Transfers

12,275,000

12,460,500

12,774,710

314,210

2.5%

Use of Unassigned Reserves

0

1,250,000

2,300,000

1,050,000

84.0%

General Fund Total

90,648,629

92,677,520

94,216,570

1,538,550

1.7%



Real Estate Taxes                 $24.5 million (26% of budget)


The real estate tax is City government's largest source of revenue. It represents about a quarter of all General Fund revenue. Berks County determines the value of the land and buildings for each parcel of property in the City (i.e. “assessment”) and then the City sets the tax rate charged to the property owner (“millage”). The assessed value of a property may differ from its market value, which is what the property would be worth if the owner sold it.


Mills

Taxes Due

Berks County tax

7.675

$536

Reading School District tax

17.930

$1,255

Total City tax rate

17.689

$1,238

Total tax rate/bill

43.276

$3,029

The City charges a millage rate of 17.689 per $1,000 of assessed value including 0.2 mills for the Shade Tree Fund and 0.2 mills for the Reading Public Library. City tax payers also pay real estate taxes to Berks County and the Reading School District. The table to the right gives an example of how those millage rates translate into an annual tax bill.


For 2019, the City budgets $24.5 million in real estate tax revenue in the General Fund, including $2.3 million from prior years. Berks County collects current and prior year real estate tax revenues for the City.


Sample Real Estate Tax calculation

This is a sample real estate tax bill calculation for a house assessed at $70,000


Act 511 Taxes                $29.4 million (31% of budget)


Like most Pennsylvania cities, Reading uses the Commonwealth's Local Tax Enabling Act (Act 511 of 1965) to levy taxes on City residents and commuters who work in Reading but live elsewhere.


The largest of these taxes is the earned income tax (EIT). In 2019, City residents will pay a 3.6 percent EIT with 1.5 percent going to the Reading School District, 1.8 percent to the City for operations and 0.3 percent to the City's capital improvement fund for projects like large vehicle purchases and facility improvements. Commuters who work in Reading but live outside the City will usually pay a 1.3 percent EIT with 1.0 percent going to their home municipality (usually split between local government and school district) and 0.3 percent to the City's capital improvement fund.


The City's ability to tax commuters is tied to its status as a distressed municipality under Act 47 oversight.4 To exit Act 47 oversight successfully, the City needs to demonstrate it can balance its operating budget without the revenue from the commuter tax. Therefore the City started shifting a portion of the commuter tax from operations to the capital fund in 2016.


Since Reading is a Home Rule community, City government has control over the resident EIT tax rate. It can change the tax rate without seeking court approval or relying on the additional taxing powers in Act 47.


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4 Please see page 4 for more discussion on this point.

For 2019, the City budgets $22.0 million in General Fund EIT revenue.


Resident EIT Rate

City Tax for Operations

City Tax for Capital

RSD

Tax

Total Tax

2014

2.1%

0.0%

1.5%

3.6%

2015

2.1%

0.0%

1.5%

3.6%

2016

2.0%

0.1%

1.5%

3.6%

2017

1.9%

0.2%

1.5%

3.6%

2018

1.9%

0.2%

1.5%

3.6%

2019

1.8%

0.3%

1.5%

3.6%

Commuter EIT Rate

City Tax for Operations

City Tax for Capital

Home Jurisdiction Tax

Total Tax

2014

0.3%

0.0%

1.0%

1.3%

2015

0.3%

0.0%

1.0%

1.3%

2016

0.2%

0.1%

1.0%

1.3%

2017

0.1%

0.2%

1.0%

1.3%

2018

0.1%

0.2%

1.0%

1.3%

2019

0.0%

0.3%

1.0%

1.3%


Other taxes that the City levies under Pennsylvania Act 511 include:



Pennsylvania laws shape Reading's tax policy


Pennsylvania law limits the types of taxes Pennsylvania cities can use and, in some cases, the maximum rate they can charge. For example, Reading is using the maximum tax rate allowed by state law for its local services and business privilege taxes. Pennsylvania law governs the City's use of a commuter earned income tax and generally does not allow cities like Reading to use a sales tax. As a Home Rule municipality, Reading has more control over its resident earned income tax rate, real estate transfer tax, and per capita tax.


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5 The total tax is $52 a year with $47 going to the City and $5 to the Reading School District.



Licenses, Permits and Fees                   $5.2 million (6% of budget)

City ordinances require businesses and individuals to take certain actions to ensure the health, safety and quality of life for their customers, residents and visitors. This includes securing the appropriate license or permit related to the activity and paying the associated fee. The City also levies fines for violations of the City's traffic code and quality-of-life ordinances. This category contains the revenues from those fees and fines.


The largest item is cable franchise fees which account for $0.9 million. The second largest item in this category is the rental housing permit fees that landlords pay annually and account for

$0.9 million in the 2019 budget. The City budgets another $720,000 for traffic fines and non- criminal violations of City code.


Intergovernmental Revenue                   $7.9 million (8% of budget)


The City receives grants and other financial aid from the federal, state, and county governments. Usually this intergovernmental aid can only be used for a specific purpose. The largest item in this category is the $3.7 million in State pension aid that the City receives from the Commonwealth to help pay its Minimum Municipal Obligations to the employee pension plans. The Commonwealth distributes this aid to local governments based on their eligible employee head count, the total amount of State revenue available, and other factors.


Service Charges                   $5.2 million (6% of budget)


Similar to the license and permit fees, the City has other fees that charge the cost of providing a service to the individual or organization that directly benefits from it. The largest item in this category is the $3.0 million in emergency medical service (EMS) transport fees for people who use the City's ambulance system. The Service Charges category also includes fees charged to property owners for rental property inspections ($600,000), the Borough of Kenhorst payment for City police coverage ($467,000), and an admissions tax of 5.0 percent on tickets for events at the Santander Arena, Santander Performing Arts Center, and FirstEnergy Stadium ($500,000).


Interest and Rent                   $1.5 million (2% of budget)


The largest item in this category comes from the Reading Parking Authority's (RPA) that manages and operates all public on-street (parking meters) and off-street (surface lots and garages) parking in Reading. The RPA's budgeted payment to the City in 2019 is $850,000.


Other Revenues                   $5.5 million (6% of budget)


This is a catch-all category for revenues not grouped elsewhere. The largest item is the contributions that employees make toward the premium costs of their health insurance coverage, budgeted at $2.1 million. Employees make these premium contributions each month, separate from any copayments, coinsurance or deductibles that they pay when they receive medical care. City government records the employee contributions as revenue and then records the health insurance claim costs as expenditures.6 This category also has $1.2 million to reimburse the General Fund for costs associated with the sewer system.


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6 Please see page 16 for more discussion of the City's fringe benefit costs.



Transfers into the General Fund                   $12.8 million (14% of budget)


The City transfers money to the General Fund from other funds to support its daily operations. The largest item is the $9.8 million transfer from the Water Fund, which is a portion of RAWA's lease payment to the City. The City also transfers $3.0 million from the Sewer Fund under the terms of a 2005 federal consent decree related to the wastewater treatment plant.


Other Funds


The 2019 budget has eight funds in addition to the General Fund. Please see page 6 for a brief explanation of each fund and their major revenue sources. Please also note that the table below includes money carried over from prior years since that is the City's budgeting convention, even though that money is not revenue from a traditional accounting perspective.


Revenues by Fund7


2017

Actuals

2018

Budget

2019

Budget

2018 to 2019

Variance ($)

2018 to 2019

Variance (%)

Real Estate Taxes

24,585,899

24,208,460

24,505,200

296,740

1.2%

Act 511 Taxes

28,778,462

29,635,000

29,365,000

(270,000)

-0.9%

Licenses, Permits and Fees

5,208,525

5,024,300

5,190,800

166,500

3.3%

Intergovernmental

7,660,069

7,466,870

7,911,630

444,760

6.0%

Charges for Service

5,103,561

5,069,230

5,240,350

171,120

3.4%

Interest and Rent

1,563,049

2,504,000

1,477,000

(1,027,000)

-41.0%

Other Revenues

5,474,064

5,059,160

5,451,880

392,720

7.8%

Transfers

12,275,000

12,460,500

12,774,710

314,210

2.5%

Use of Unassigned Reserves

0

1,250,000

2,300,000

1,050,000

84.0%

General Fund Total

90,648,629

92,677,520

94,216,570

1,538,550

1.7%

Shade Tree Fund

N/A

276,560

430,784

154,224

55.8%

Water Fund

N/A

12,053,630

12,312,440

258,810

2.1%

Sewer Fund8

N/A

26,841,970

43,612,770

16,770,800

62.5%

Sewer Retail Fund

N/A

25,053,770

24,745,000

(308,770)

-1.2%

Recycling/Trash Fund

N/A

6,183,820

6,759,520

575,700

9.3%

Total Revenues

N/A

163,087,270

182,076,584

18,989,314

11.6%


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7 Revenues for Liquid Fuels, Self-Insurance, and Capital Funds are excluded from the total.

8 This total excludes proceeds from the PENNVEST loan ($51.3 million in 2018), which the City records as revenue in this fund.



Expenditures: How does City government spend its money?

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Reading's City government is responsible for public safety, public works, and community development functions that touch the lives of Reading residents, business owners, commuters, and visitors every day. City government is responsible for collecting and managing the money that fund these services in accordance with Pennsylvania law, City ordinances, and resident preferences. And City government has internally focused functions, like human resources and purchasing, that are integral to most large organizations.


By its nature, City government is labor intensive, especially for the operations supported by the General Fund. Therefore, Reading, like many other cities, makes most of its General Fund expenditures on the employees who deliver municipal services. Personnel expenditures cover employee salaries and wages and other forms of cash compensation, like overtime. They also cover employee benefits, like employer-provided health insurance or the City government's annual contribution to the three employee pension plans.


This section describes the major expenditure categories in the City's General Fund so the reader can understand how the City spends the money it collects and how much it expects to spend in 2019. This section first describes the City's expenditures by category, cutting across departmental boundaries. The next takes a closer look at the department by department allocation.


General Fund Expenditures by Category




2017

Actual


2018

Budget


2019

Budget

2018 to

2019

Variance ($)

2018 to

2019

Variance (%)

Salaries

26,575,765

27,336,160

27,611,960

275,800

1.0%

Pension

14,879,246

17,064,150

17,125,400

61,250

0.4%

Fringe Benefits

13,158,328

15,554,477

16,280,540

726,063

4.7%

Overtime

3,608,908

2,952,100

3,212,380

260,280

8.8%

Premium Pay

913,422

981,117

971,380

(9,737)

-1.0%

Other Personnel

2,102,713

2,538,410

2,494,790

(43,620)

-1.7%

Debt Service

13,266,270

11,712,390

11,358,760

(353,630)

-3.0%

Utilities, Supplies & Maintenance

3,957,714

4,520,360

4,628,490

108,130

2.4%

Contracted Services

3,157,776

3,809,300

4,498,575

689,275

18.1%

Other (including IT support)

2,798,937

3,696,103

3,698,057

1,954

0.1%

Contingency

35,000

160,594

3,878

(156,716)

-97.6%

Transfers

2,332,356

2,352,359

2,332,360

(19,999)

-0.9%

Total General Fund

86,786,435

92,677,520

94,216,570

1,539,050

1.7%



Cash Compensation for Full-Time Employees                    $31.8 million (34% of budget)


The first six categories in the table above are related to employee compensation at a total budgeted cost of $67.7 million in 2019. Salaries for full-time employees account for about 29 percent of total General Fund expenditures. Other forms of cash compensation include payments for working overtime ($3.2 million) and premium payments for longevity or working holidays ($1.0 million).


City Pension Contribution                         $17.1 million (18% of budget)


The City has three employee pension plans – one for police, one for firefighters and one for all other employees. By Pennsylvania law the City is required to make annual contributions to those plans, which are calculated by the City and reviewed by an external actuary. The City's contribution is based on the actuary's biennial review of the pension plans' assets, liabilities and other factors that determine plan funding levels. The $17.1 million pension contribution budgeted in the General Fund for 2019 is the City's full contribution to the police and fire plans and most of the contribution for the non-uniformed employees. Other funds, like the sewer fund, cover the rest of the non-uniformed employee plan contribution.


Fringe Benefits                            $16.3 million (17% of budget)


City government provides medical, prescription drug, dental, vision, and life insurance coverage to its current employees. The City and its employees share the premium costs for medical and prescription drug coverage, with the City paying the majority of those costs. Employees usually pay the full premium costs for dental and vision coverage and then may pay other costs through copayments, coinsurance, or deductibles when they receive medical care.


The City also provides medical and prescription drug coverage for retired employees and their spouses until they reach age 65 and are eligible for Medicare. Retired employees may also share the premium costs associated with their insurance coverage depending on their date of retirement and the terms of their collective bargaining agreements.


The City is self-insured so it pays the actual cost of claims until the cost of a single illness or injury reaches $150,000 at which point the City has additional “stop loss” coverage. If the total claim costs are higher than budgeted for the year, then the City may spend more than the $16.3 million budgeted in the General Fund. If total claim costs are lower than budgeted for the year, then the City may spend less than $16.3 million.


The City budgets the full cost of these benefits for active and retired employees, including the employee's portion. Then, the City records the employee premium contributions as revenue in the General Fund.


Other Personnel Costs                    $2.5 million (3% of budget)


This is mostly the City's share of federal payroll taxes or wages for temporary, seasonal or part- time employees.


Debt Service                      $11.4 million (12% of budget)


The City budgets $11.4 million in the General Fund to make principal and interest payments on its debt. The City budgets additional money in its Sewer and Sewer Retail Funds to repay debt related to that system and the wastewater treatment plant project.


Utilities, Supplies and Maintenance                         $4.6 million (5% of budget)


The largest individual line items in this category cover the City's spending on street lighting ($1.0 million), telephones ($370,000), light and power at City facilities ($463,000 combined), and motor vehicle gasoline ($420,000 combined). This category also includes several smaller line items for supplies, maintenance agreements, or repairs.


Contracted Services                     $4.5 million (5% of budget)


This category covers many of the arrangements where the City pays another organization to provide service under a contractual agreement. The largest subset of these contracts are with tax collection agencies that collect earned income, business privilege and other taxes on behalf of the City ($639,000). Other large items in this category include Public Works' contracts for building repairs ($600,000) and the City's contribution to the Reading Recreation Commission ($500,000).


Other Operating Expenses                        $3.7 million (4% of budget)


This is a catch-all category for expenditures not grouped elsewhere. The largest individual items are an allocation for machinery and equipment ($389,000), the contribution to the Reading Public Library ($362,000), and legal services ($304,000).


Transfers out of the General Fund                    $2.3 million (2% of budget)


Just as the City transfers money into the General Fund from other funds to support its daily operations, the opposite is also true. The largest item in this category is the transfer to the Self- Insurance Fund where the City pays claims for worker's compensation, general liability, and property damage.


In 2017, the City built an $182,000 contingency into its budget to handle any unanticipated shortfalls. The 2018 and 2019 budget have much smaller amounts, $161,000 and $4,000, respectively.


Other Funds


The 2019 budget has eight funds in addition to the General Fund. Please see page 6 for a brief explanation of each fund and their major expenditures.


Expenditures by Fund9



2017 Actual


2018 Budget


2019 Budget

2018 to 2019

Variance ($)

2018 to 2019

Variance (%)

Salaries

26,575,765

27,336,160

27,611,960

275,800

1.0%

Pension

14,879,246

17,064,150

17,125,400

61,250

0.4%

Fringe Benefits

13,158,328

15,554,477

16,280,540

726,063

4.7%

Overtime

3,608,908

2,952,100

3,212,380

260,280

8.8%

Premium Pay

913,422

981,117

971,380

(9,737)

-1.0%

Other Personnel

2,102,713

2,538,410

2,494,790

(43,620)

-1.7%

Debt Service

13,266,270

11,712,390

11,358,760

(353,630)

-3.0%

Utilities, Supplies & Maintenance

3,957,714

4,520,360

4,628,490

108,130

2.4%

Contracted Services

3,157,776

3,809,300

4,498,575

689,275

18.1%

Other (including IT support)

2,798,937

3,696,103

3,698,057

1,954

0.1%

Contingency

35,000

160,594

3,878

(156,716)

-97.6%

Transfers

2,332,356

2,352,359

2,332,360

(19,999)

-0.9%

Total General Fund

86,786,435

92,677,520

94,216,570

1,539,050

1.7%

Shade Tree Fund

N/A

276,560

430,790

154,230

55.8%

Water Fund

N/A

12,053,630

12,312,440

258,810

2.1%

Sewer Fund

N/A

29,494,870

27,517,670

(1,977,200)

-6.7%

Sewer Retail Fund

N/A

25,053,770

24,745,000

(308,770)

-1.2%

Recycling/Trash Fund

N/A

6,183,820

6,759,520

575,700

9.3%

Total Expenditures

N/A

165,740,170

165,981,990

241,820

0.1%


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9 Revenues and Expenditures for Liquid Fuels, Self-Insurance, and Capital Funds are excluded from the total.



Expenditures: Spending by Department

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Public safety accounts for the majority of Reading City government's spending in its General Fund, as it does in most Pennsylvania cities. The Police Department has the largest budget within the General Fund at $37.5 million and the Fire Department, which includes ambulance service, is next with $19.6 million. Public Works has $8.6 million in the General Fund, excluding much larger amounts allocated for sewer and waste water treatment in other funds. The Non-Departmental category shown below is mostly the City's debt service and interfund transfers.


General Fund Expenditures by Department10




Note: Spending on the following units is combined in “Other” for graphic illustration purposes – Managing Director, City Council, Office of the Mayor, Human Relations Commission, City Auditor, Board of Ethics, and Charter Board.


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10 The 2019 budget allocates information technology costs to the departments that use those services, which is reflected in the graph below and throughout this document. Other City documents may show IT costs grouped together within the Department of Administrative Services, which would make the budget for Administrative Services larger and the budgets for other departments smaller.



General Fund Expenditures by Department


2018

Budget

2019

Budget

Variance ($)

Variance (%)

Police

36,793,598

37,473,440

679,842

1.8%

Fire and Rescue Services

19,414,379

19,560,048

145,669

0.8%

Non-Departmental

16,322,592

15,859,744

(462,848)

-2.8%

Public Works

8,635,276

8,629,000

(6,276)

-0.1%

Community Development

5,000,680

4,495,990

(504,690)

-10.1%

Administrative Services

2,828,131

4,709,000

1,880,869

66.5%

Library

938,560

962,580

24,020

2.6%

Law

864,750

933,470

68,720

7.9%

Managing Director

484,154

306,638

(177,516)

-36.7%

City Council

507,150

436,560

(70,590)

-13.9%

Office of the Mayor

413,300

419,940

6,640

1.6%

Human Relations Commission

231,980

194,500

(37,480)

-16.2%

City Auditor

195,470

188,160

(7,310)

-3.7%

Board of Ethics/Charter Board

47,500

47,500

0

0.0%

General Fund Total

92,677,520

94,216,570

1,539,050

1.7%



Expenditures: Department Descriptions

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Most of the General Fund allocation goes to five operating departments that report to the Managing Director who reports to the Mayor. The responsibilities of those operating departments are briefly described below. Please see page 8 for an organizational chart of City Government.


Police                                                 $37.5 million (40% of budget)


The Reading Police Department handles law enforcement responsibilities such as patrol, criminal investigation, and emergency dispatch for police-related calls. The Department also oversees the part-time school crossing guards.


Fire and Rescue services                 $19.6 million (21% of budget)


The Reading Fire and Rescue Services Department is responsible for fire suppression, fire prevention, special rescue and emergency medical services. In addition to fire and EMS calls, the Department responds to incidents involving hazardous materials and motor vehicle accidents.


Public Works (Operations)                $8.6 million (9% of budget)


The Public Works Department has four divisions – Operations, Wastewater, Utilities and Solid Waste. Only the Operations Division budget is in the General Fund. Operations handles repair and maintenance for the buildings, streets, bridges, parks and other public spaces owned by City government. It also manages the municipal garage for City government's vehicles.


Community Development                 $4.5 million (5% of budget)


Community Development works to ensure the City's business owners, landlords and residents maintain their properties in accordance with community and legal guidelines. This includes zoning, code enforcement, land use planning, historical preservation, rental housing inspection, building plan review and trade licensing functions. The Department also promotes economic and community development in Reading and oversees City government's use of its federal Community Development Block Grant (CDBG) funding.


Administrative Services                    $4.7 million (5% of budget)


The Department of Administrative Services manages the City's finances (budgeting, accounting and treasury functions), purchasing, human resources and information technology. The Department also manages the Citizens Service Center that is the primary means for handling citizen inquiries related to issues other than public safety.


In addition to these operating departments, City Council holds the legislative powers of the City and the City Auditor has oversight of City government finances independent of the Mayor and Council. Led by the City Solicitor, the Law Department provides legal services for the Mayor, City Council and the operating departments.


The Reading Public Library is governed by a Board of Directors with the City and County governments and the Reading Public Library Corporation each appointing five members. The Library is part of the larger Berks County Public Library System and has its own budget separate of City government. While the Library Board oversees day-to-day operations, City government owns the four library facilities and employs 10 of the employees at the Reading Public Library.



Head count: How many full‐time positions does the City government have?

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The tables below show the total number of budgeted full-time positions in each department since 2014 according to the position ordinances passed each year. Some positions are listed within the General Fund, but another fund actually pays the employee's compensation. The City also has part-time positions not shown here.


General Fund Division

2014

Full-time

2015

Full-time

2016

Full-time11

2017

Full-time

2018

Full-time

2019

Full-time

Office of the Mayor12

4

4

4

4

4

4

City Council

3

3

3

3

3

3

City Auditor

2

2

2

2

2

2

Managing Director

3

3

3

2

2

2

Human Relations Commission

2

3

2

2

2

2

Solicitor

6

6

6

6

6

6

Director of Administrative Services

4

4

4

4

3

3

Accounting

8

5

5

5

6

6

Citizens Service Center

11

10

10

10

10

10

Information Technology

9

9

9

9

8

8

Human Resources

4

7

7

7

6

6

Purchasing

1

1

1

1

2

2

Administrative Services subtotal

37

36

36

36

35

35

Public Works Administration

4

5

8

8

7

7

Garage

10

10

10

10

10

10

Highways

16

15

15

15

16

16

Parks

8

8

6

6

6

6

Public Property

7

7

7

6

7

7

Public Works subtotal (General Fund only)

45

45

46

45

46

46

Police - Criminal Investigations

29

30

30

30

30

30

Police - Special Services

29

29

29

29

29

30

Police – Patrol

133

132

132

132

132

129



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11 The 2016 position count comes from the amended ordinance adopted in early 2016.

12 One of the four positions was not funded in 2015.



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General Fund Division

2014

Full-time

2015

Full-time

2016

Full-time11

2017

Full-time

2018

Full-time

2019

Full-time

Police – Administration

3

3

3

4

4

5

Police subtotal

194

194

194

195

195

194

Fire Administration

7

7

7

7

7

7

Fire Special Services (Preventive Education)

4

4

4

4

4

4

Fire Training

1

1

1

1

1

1

Fire Suppression

109

100

92

92

92

92

Fire EMS

31

32

33

33

33

33

Fire subtotal

152

144

137

137

137

137

Community Development Administration

2

3

3

2

2

2

Planning

1

1

0

0

0

0

Property Maintenance

32

28

28

28

28

28

Trades

7

8

8

8

8

8

Zoning

4

4

5

5

4

5

Community Development subtotal

46

44

44

43

42

43

Library

10

10

10

10

10

10

Total General Fund

504

494

487

485

484

484



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Other Funds


Fund

2014

Full-time

2015

Full-time

2016

Full-time13

2017

Full-time

2018 2019

Full-time Full-time

Community Development – HUD Funded

7

6

4

4

4

4

Shade Tree Fund

2

2

2

2

1

1

Self-Insurance Fund

1

1

1

1

1

1

Sewers

18

19

19

19

19

19

Wastewater Treatment Plant

45

44

44

44

44

44

Recycling & Trash14

19

18

17

17

8

8

Water

0

0

0

0

0

0

Capital Fund

0

0

0

0

0

0

Total Other Funds

92

90

87

87

77

77


ALL FUNDS 596 584 574 572 561 561


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13 The 2016 position count comes from the amended ordinance adopted in early 2016.

14 The City outsourced recyclable collection work during 2017.



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