Coatesville will have to tap into trust fund to make payroll

Coatesville is again running out of money and must turn to a fund established by the sale of its utilities.
Coatesville is again running out of money and must turn to a fund established by the sale of its utilities. (SHARON GEKOSKI-KIMMEL / Staff Photographer)
Posted: October 07, 2012

After spending $2 million more than it had budgeted, Coatesville will have to dip into a trust fund to pay its bills for the rest of the year.

Without the cash infusion, the city won't be able to make its payroll after this week, city leaders said.

The council plans to authorize the withdrawal of $2.2 million from the trust fund when it meets Monday, after failing to approve the bailout three times in recent weeks, according to Council President David Collins.

Collins, one of three council members who voted against dipping into the trust fund, said he expected the board would now "move forward" and authorize the transfer so the city can pay its bills.

The shortfall has become an annual ritual in the Chester County town of 13,000, which grew up around the old Lukens Steel Co. Collins said the city had withdrawn from the trust fund for a number of years.

"The city is hemorrhaging money," he said.

What is responsible for the bloodletting are lawsuits, on average seven or eight a year, the majority involving the Police Department, he said.

While Solicitor John Carnes has said that 60 percent of the city's lawsuits involve police, Collins maintains it is more like 75 percent to 85 percent.

He said management problems led to the excessive lawsuits. The former chief, Julius Canale, accepted a retirement package in May after 24 years with the department.

The trust-fund money will be used to pay $275,000 in lawsuit settlements, $65,000 in legal fees, $550,000 for police salaries, $275,000 for a bond payment, $129,000 for a pension payment, and $973,000 for a tax anticipation loan and interest, according to the finance director, John Marcarelli.

Revenue is expected to be about $545,000 less than originally budgeted, Marcarelli has said.

The trust fund was established in 2002 when Coatesville sold its water and sewer assets to Pennsylvania American Water Co. for $48 million. Since then the city has siphoned off all but $11 million.


Contact Kathy Boccella at 610-313-8123, kboccella@phillynews.com, or @kmboccella on Twitter

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