Without the infusion, the city would not have had enough money to pay employees this week.
Revenues fell short by $545,000 which combined with an unusually large number of lawsuits primarily involving police in the Chester County city of 13,000 led to the $2.1 spending gap, Marcarelli said.
The trust fund was established in 2002 when Coatesville sold its water and sewar assests to Pennsylvania-American Water Company for $48 million. Since then the city has siffoned off all but $11 million.
"It doesn't replenish itself," Marcarelli said, noting that the fund will be $9 million going into 2013.
Next year's budget, he said, "will be a huge challenge."
City council president has blamed excessive lawsuits involving police for the overspending. The former chief, Julius Canale, retired in May and the city has been looking for a replacement.
Some of the suits involving the city's police were internal, such as the civil rights complaint filed June 26 in U.S. District Court in Philadelphia by Cpl. Larry Cooper alleging discrimination against black officers, while others were filed by members of the public, according to council president David Collins.
The transferred 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, 973,000 for a tax anticipation loan and interest, Marcarelli said.
Contact Kathy Boccella at 610-313-8132, firstname.lastname@example.org or @kmboccella on Twitter.