Petersburg could lay off 24 full-time employees, close one of its fire stations, raise taxes, and shut down its museums and tourism centers to help reduce the city’s $12 million budget deficit.
David Eichenthal, managing director of Richmond consulting firm Public Financial Management, on Tuesday evening presented a 19-step plan aimed at reducing the city’s budget deficit to the City Council at a packed Union Train Station.
“The city has to take some action at this point. The $12 million deficit is a real issue from a budgeting perspective but also for the city’s ability to obtain long-term financing,” Eichenthal said. “I wish we had more time, but the problem is, the clock is ticking.”
Several local activists pushing for more government accountability criticized the City Council for barring public input at Tuesday night’s meeting. Some of them wore tape over their mouths in protest.
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The City Council did not act on the specific proposals Tuesday, but voted to take corrective action after a Sept. 6 public hearing on the proposed budget amendments and tax increases.
While the changes wouldn’t take effect until Oct. 1, they would be a first step for the city to secure short-term funding to remain operational.
Underscoring the urgency of the situation, interim City Manager Dironna Moore Belton said that without cash flow, the city would be unable to meet payroll and its monthly debt-servicing obligations next month, resulting in a shutdown of all city functions with the exception of public safety.
The proposal aimed at saving Petersburg recommends a mix of layoffs, tax increases, a reduction or the shutdown of several public services and facilities, hiring freezes, the termination of museum and tourism funding, and the consolidation of various city departments.
The 54-page plan calls for a staff reduction of at least 24 of the city’s nearly 600 full-time employees — 18 of them in the city’s Fire Department. A part-time employee also would be laid off.
The consultants’ report states that locally elected leaders would prefer to avoid tax increases and layoffs in public safety agencies, but “unfortunately, the magnitude of the city’s fiscal challenges demands that every revenue and spending option be fully explored and considered.”
The amendments would produce about $12.5 million in savings and new revenue in the current fiscal year and about $15.1 million in fiscal 2018.
Belton said that the city leaders are presented with some very difficult choices, “but we know they are the choices the city needs to make to control its own destiny.”
In their report, the consultants also encourage the city to form stronger partnerships with neighboring localities, starting with “an honest assessment” of existing relationships.
Neighboring local governments and city-funded entities like Petersburg’s school system have been “directly affected by the city’s inability to make timely payments on outstanding obligations.”
Of the city’s $18.8 million debt, more than $8.5 million is owed to other government entities, according to the report.