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Report: Chester faces looming fiscal crisis

The independent analysis of the City of Chester presented to the public Tuesday night minces few words:

The independent analysis of the City of Chester presented to the public Tuesday night minces few words:

The city is reeling from a $16.3 million deficit. Economic growth is far too slow. Its personnel costs are on the verge of crippling Chester's finances. And income taxes must be raised - while the number of city employees, cut.

"Extreme measures must be taken," the report, issued by Philadelphia economic consulting firm Econsult Solutions cautioned. "And no department of the city will be able to avoid making difficult decisions."

In paragraph after paragraph for nearly 140 pages, the report on Delaware County's poorest municipality reinforced just one point: Chester is teetering on the edge of financial disaster. And there will be no easy fix.

Chester's woes, however, are complicated by an even bigger problem: The city must be fiscally solvent - or at least on the path toward it - in less than two years.

The looming time bomb - enforced by the state for municipalities enrolled in its Act 47 program, a last-resort option "financially distressed" towns - comes just six months after a new administration took control of this struggling city in January. And while the recommendations to raise taxes and slash jobs come from the consultants hired by the state, tough months could be ahead for Mayor Thaddeus Kirkland and his administration.

At a meeting in Chester City Hall, multiple city employees and residents voiced their concerns on a report that could dramatically shape their city.

"I don't trust this recovery plan. I don't trust the next recovery plan," said Tohran Freeman, one of the first residents to take the microphone. "Taking things away from the city and people is not going to help us recover."

For nearly two hours, statements such as those were issued again and again to representatives from Econsult Solutions, who before taking public comment Tuesday, presented three key recommendations:

The city needs a full-time chief financial officer, they said. Chester's tax base must also grow - by a temporary increase of the earned income tax and the implementation of an amusement tax. And the city's workforce must be reduced.

But most residents on Tuesday did not agree.

Their taxes, some residents said, are already too much. The city's emergency personnel, with fewer than 100-full time police officers and just two fire departments, are overworked, employees said.

And the city has attempted before to keep revenue afloat with highly-lauded economic deals, including the addition of Harrah's Casino and PPL Park (now Talon Energy Stadium) for Major League Soccer's Phialdelphia Union. But they only have proved to be a temporary fix.

How much can taxes be raised, residents asked, in a city where the median income is $28,600?

And how will any of the fixes, they asked, be any different from the past?

Yet the city - which operates with a $50 million budget - will face bigger problems than emergency personnel. City revenues, the report said, are stagnant and costs continue to increase.

Chester's operating deficit in 2016 alone will be $9.2 million. And if no changes are made, the report warns, Chester will have a cumulative deficit of nearly $38 million by 2020.

"We are working hard to try to understand," said David Unkovic, attorney at McNees, during a rare moment of peace in the evening.

But inside Chester City Hall Tuesday night, more than 150 residents filled the seats and stood shoulder-to-shoulder to hear from Econsult Solutions. Mayor Thaddeus Kirkland and his administration, who declined comment on the report, sat in the front row.

More than two dozen residents took the microphone to offer their opinions. As each spoke, residents grumbled and clapped, shaking their heads in approval at times, and shouting when they disagreed. At one point when the room turned particularly tense, police had to escort one resident out as he shouted at consultants.

The consultants from both Econsult Solutions and the law firm McNees, Wallace & Nurick answered questions and took notes.

The groups are tasked with taking residents' concerns and reworking the report where possible. Then, Chester's city council must approve or reject the plan by the end of the month.

If the plan is approved, consultants and Chester's administration must begin implementing the recommendations immediately.

And if Chester does not exit Act 47 by the 2018 deadline, it faces two drastic options: Having a receiver appointed, or even more severe, filing for bankruptcy. A one-time three year extension, however, can be granted.

"This isn't something where we want to say 'You have to do this,'" said Stephen Mullin, president of Econsult Solutions. "We want to work with Chester on this."

610-313-8113 @mccabe_caitlin