The man appointed receiver to lead the City of Chester out of its dire financial straits and into a more prosperous standing submitted a recovery plan outlining the painful steps yet to come under his watch.
The plan includes layoffs, firings, salary caps and possibly reworking the very hierarchy of the city government.
The 84-page plan from Michael Doweary paints a bleak picture of a city that has “run multi-million dollar deficits all but one year since 2012,” and is in danger of “running out of cash [that] would shutter the vital and necessary services that residents depend upon every day.”
The city’s financial troubles date back to 1995, when Chester was placed under “Act 47” supervision — a law that allows the state to make decisions for financially distressed cities. But the coronavirus crisis accelerated the financial problems, especially when tax monies from Harrah’s Casino were essentially shut off because of Gov. Wolf’s lockdown orders.
In response, Wolf declared a fiscal emergency for Chester in mid-April, putting the city into receivership.
As receiver, Doweary pledged to “manage the city’s headcount” — meaning he will personally approve any new hires. He also outlined his power to enact “layoffs and/or terminations if needed; converting full-time positions to part-time,” and to restructure or outsource entire departments.
He praised tough compensation agreements the city made in 2017, which helped cut costs and said he will follow a similar path by setting a pay cap “for the Teamsters whose collective bargaining agreement with the City expires at the end of this year.” Caps for non-union employees are also coming.
Doweary also promised to root out improper payments coming from the city’s police pension, saying that unless the abuse of disability pensions is wiped out, any large infusions to the pension will only push the problem further down the road.
He also drew aim at overtime payments to firefighters and police, noting that “police overtime costs historically totaled approximately $2 million annually. Non-public safety overtime can only be spent subject to my approval and I will monitor overtime usage in police and fire.”
The crisis could also permanently reshape Chester city government.
Doweary was critical of Chester’s use of a commission form of city government, as opposed to a strong mayor system. He essentially argues that the commission form means no single person feels accountable, so irresponsible decisions become easier to rationalize.
“There is a pattern of the City government either failing to adopt a realistic budget, failing to follow that budget or both which results in consistent, large deficits,” he wrote about the commission form of government.
As anticipated, Doweary intends to keep up the city’s fight to sell the Chester Water Authority (CWA), a simmering issue that has boiled over at various times over the last decade.
Doweary’s plan “fully supports” the city’s ongoing litigation to “repossess the assets of the Chester Water Authority,” something the CWA says is not legal.
“How can you repossess that which you do not own?” Frank Catania, solicitor for the CWA, told Delaware Valley Journal. Catania has been a frequent critic of the city’s attempts to wrest control of the CWA and has repeatedly claimed the city’s current circumstances are “a manufactured crisis” to create the political environment for the city to somehow annex the CWA.
To support the claims of ownership, Catania provided Delaware Valley Journal with an undated letter in which the Department of Economic and Community Development (DCED) reiterated to the city commission “that the water system is owned by the Chester Water Authority.”
The Commonwealth Court of Pennsylvania is slated to hold hearings in November on the question of CWA’s ownership as it might relate to any sale that could refill the city’s coffers. But Catania told DVJ he feels Doweary is using his plan to fast track other legal issues so quickly that it would completely upend the November hearing.
The gravity of the problem of ownership is illustrated by the fact that the November hearing is en banc, meaning it will be ruled on by all judges in the Commonwealth Court, not just by the usual smaller three-judge panel or with a single judge.
The recovery plan also revealed the police pension is running on fumes.
Doweary said the plan “has less than three months’ worth of cash or assets” that could be converted to monthly payments, and an expected $1.9 million infusion later in the year will only float it for another four months.
“Unless something changes quickly, the plan will run out of cash and fail to make pension payment to retired police officers and their surviving beneficiaries in the first half of 20201.”
Part of the problem, according to Doweary, is pension spiking, where employees cram in as much overtime work as possible late in their career to skew the formula that determines what a person draws in retirement.
“For example, three police officers ages 44, 45 and 42 recently entered the [plan] with pensionable salaries of $210,874, $207,414 and $143,311 respectively. Under the current benefit provisions, these officers will receive annual pensions of $108,073, $103,707 and $71,652 — significantly more than the median household income of Chester residents.”
The City of Chester has not yet responded to a request for comment from Delaware Valley Journal.
