Erie recovery provides hope

Both cities limped along year after year, struggling to balance their budgets and pay their bills.

But as the last decade progressed, Erie began putting many of its financial problems in the rearview mirror, while the city of Scranton continues to battle against a sea of red ink.

"We didn't meet the criteria of the state for bankruptcy or being a distressed city, but the situation was not good. We had no reserve account of any kind and we had several issues facing us that had to be dealt with," said Erie's Democratic Mayor Joyce Savocchio, elected in 1990.

When she came into office, Ms. Savocchio said, Erie -- which has a population of just over 100,000 and is the hometown of Gov. Tom Ridge -- was looking at two major expenses.

It faced a mandate from the state to update and improve its sewer system and wastewater treatment plants so they did not threaten Lake Erie. The cost for the project was $100 million.

On top of that, city officials had to contribute $180 million to the city's underfunded pension plan.

They also knew they had to begin replacing an aging fleet of police cars and fire and garbage trucks.

"The bond rating was junk so we couldn't have floated a bond because the insurance rates were too high. If the public knows that you're falling apart, you can't reinvest in yourself," said Ms. Savocchio.

That's when the city government and the local business community began to work together to help turn the city around, the mayor said.

A 4-mill tax increase was necessary to generate extra revenue and the city updated its accounting system to track its cash flow better.

It applied for and received a variety of equipment grants from the state. A turnaround in the national economy also helped Erie, as it did many other municipalities.

Ms. Savocchio said the city's bond status was eventually upgraded to "just below AAA" and it instituted a plan to refinance its pension fund and make the necessary improvements to the sewerage system.

Slowly but surely, things began to change and the city began to produce balanced budgets.

Erie, a third-class city with a strong mayor-council form of government, will end 2000 with a balanced budget of $47 million. The city has passed a $48 million budget for next year, which it also expects to balance.

"We still have a long way to go, but I think we're really able to work together to turn this around," said Ms. Savocchio.

"The last couple of years have been pretty good here," says John Guerriero, who covers city government for The Erie Times-News. "They refinanced the pension fund debt and are paying it back and that has helped get them out of a jam."

Erie's finance director, Chuck Herron came to the post three years ago after holding a similar position in the Buffalo, N.Y., suburb of Dunkirk. He maintains the city's strong-mayor form of government features some advantages over city governments run by a city manager, which have more legislative powers vested in council.

One of the disadvantages city manager governments often face, Mr. Herron believes, is that unless a manager is given a long-term contract, he or she is often discouraged from going against council's wishes.

"The problem with city managers is they serve at the will of council, so if you want to shoot the messenger, you cancel the contract and get a new messenger," he said.

Scranton's Home Rule Charter Study Commission had voted in October to change to a professional city manager form of government. But the group on Wednesday voted 6-5 to instead keep the city's strong-mayor form. The commission is working to rewrite the city's charter, which will now include its support of a strong mayor. The proposed charter will be put on the ballot in May for city voters' approval.

A native of Kansas, Mr. Herron said many midwestern small towns rely on city manager governments.

But, Mr. Herron adds: "If you don't have strong candidates for mayor, that also presents an opposing argument. If you try something for 20 years and it doesn't work, maybe you should try something else," he said.

No matter what form of government is used, Mr. Herron said, cities must be more efficient than in the past if they want to operate successfully.

"I equate it with running a business. You just can't continue to do the same things this year that you did last year," he said. "You have to continually reinvent yourself to make sure you collect all the revenue you're supposed to. It's much more complicated than it was 25 or 30 years ago."

SATURDAY: A closer look at the strong-mayor form of government.

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