Reading is now under state supervision. The Department of Community and Economic Development last week said the city is financially distressed under the terms of Pennsylvania’s Act 47.
DCED Secretary George Cornelius within 30 days will select a coordinator to draft Reading’s fiscal recovery plan. City revenue has been underperforming and a $2.5 million deficit is anticipated for fiscal 2009, the city’s third consecutive budget gap, Moody’s Investors Service said.
Act 47 allows the state to oversee local governments under fiscal distress and make sure that essential services continue. Reading is the 19th municipality to be placed under oversight under the law.
“Act 47 status is neither a state takeover, nor a determination of bankruptcy,” Cornelius said. “No interruption in the delivery of essential services is anticipated. Moreover, ultimate responsibility for city policies and priorities, and the day-to-day management of city affairs, remains with elected city officials.”
Reading has $226.5 million of debt, including $45.8 million of general obligation bonds. Moody’s rates the credit Baa3.