Speaker numbers apply only to this recording.
On September 26, 2026, Erie City Council held a budget analysis session with PFM (Public Financial Management) consultants Gordon and Lauren Sokovich. The session focused on the city's financial condition, a projected $12.3 million general fund deficit for 2027, and a range of short- and long-term options to close the gap. PFM emphasized that recent reclassification of pension-restricted reserves had boosted unrestricted fund balance to $30 million, buying the city more time to implement structural solutions.
PFM reported that the baseline projection shows a $12.3 million deficit driven by spending growth outpacing revenues, particularly from positions added since COVID, and the structural mismatch between flat real estate tax revenues and rising costs. Positive news: the finance director’s work allowed reclassification of previously restricted pension funds, raising the unassigned fund balance from $14.5 million (below the recommended 17% threshold) to $30 million (well above the 17% minimum). PFM advised maintaining a two-month reserve (17%) plus a disaster reserve (about 3%), leaving roughly $10 million in available reserves that could be used as a bridge—provided it is tied to specific long-term reforms, not a band-aid.
PFM presented the likely need for a real estate tax increase after several years without one. A one-mill increase would raise approximately $2.9 million (quarter of the deficit) and cost the owner of a $100,000 assessed home about $100/year; a two-mill increase would double both the revenue ($5.8 million) and taxpayer impact ($200/year). PFM noted that when adjusted over multiple years, a one-mill increase amounts to an average annual increase of about 1.2% since 2020, close to cost of living. Council members expressed concern about burdening residents, especially given the city’s low median income, and stressed that any tax increase must be paired with expenditure reductions and aggressive collection of money owed to the city (e.g., by the parking authority).
PFM highlighted that full-time equivalents in the general fund grew from roughly 516 to nearly 560 over the past decade. A framework was proposed to evaluate added positions by weighing cost (salaries, benefits) against value to the city. Positions would be categorized as high priority (keep if value justifies cost), high priority with offsetting reductions/revenue (set aside for investment), or not justifiable (eliminate). For health insurance, costs have grown about 6% annually (prescription drugs up 15%) while employee contributions rose only 1%. PFM recommended implementing savings strategies for non‑bargaining employees immediately, and using contract reopeners (AFSME) or negotiations to extend changes to unionized staff.
PFM noted that operating expenditures in top departments grew by $2 million over five years and another $2.5 million in the 2026 budget alone. They recommended scrutinizing large increases and considering a holistic capital budget approach to evaluate equipment and vehicle purchases.
PFM included home rule as a long-term option to gain flexibility in raising the earned income tax beyond the current 1% cap, enabling revenue diversification and growth. Council members raised strong concerns, particularly about the risk of gerrymandering if council districts are created, and potential threats to state pension aid. A councilor stated that without a provision for citywide at-large representation, public support would be absent. The mayor confirmed that the city has engaged legal counsel to analyze pension risk and expects an answer within two weeks. PFM stressed that home rule requires extensive public education and cannot succeed without community buy-in.
Multiple council members expressed frustration that the parking authority, which the city created and backstops, has not made its full annual contribution (estimated at $500,000–550,000 in prior agreements) for several years. One councilor stated the authority owes the city $4 million and argued that asking residents for tax increases while the parking authority withholds payment is unfair. The mayor reported that the city has demanded a negotiation response by October 1, with a goal of finalizing an agreement by year-end, and warned that if no progress is made, she will replace the board. PFM recommended formalizing a transparent multi-year agreement and considering applying the parking tax to authority properties, as other cities do.
PFM warned that the city’s debt service is currently around $5 million but is projected to double to $10 million by 2033. Using the freed-up reserves can help address this future spike if set aside early.
And get started. Tonight we are having another budget analysis session. But we have our friends in from PFM. So I will go ahead and mic pass over for you all to kind of you're going to be running this show. Oh boy. Well, thank you again for the uh for the opportunity uh to speak with you and to work with you. Uh I am joined by my colleague uh Lauren Sokovich, who has worked side by side with me on this, has also worked Reading, uh Chester, lots of other places. Uh she we when we build these, when we do these plans, we have a financial model that we're you saw the output of the last time I was here with the revenues and the expenditure projections. And Lauren is responsible for not just building those models, but she actually runs our training program. So she's kind of like the Yoda to our our Star Wars Jedi's. I don't know if that's a I don't know. Talk about that later. Um but we'll uh take you through the uh the the presentation that we have here uh tonight. Um just as a reminder for where we are. If you're on the second slide, I need to do like the old school boop or something so people know to change the slide. Who's bringing the slides? Maybe no one's ready to slide. Boop. Oh, that's right. I need the little uh clicker, yeah. So I could change the slide. Excellent. Thank you. Uh just to remind you where we are. This is a this is a three-step process. So we're now near the I guess in the summer to talk about the financial condition assessment, baseline projection, what are your finances look like if you don't take any action. We talked about the deficit as we were projecting it about a 12 million dollar deficit for for next year. That's the of course the deficit that you're just starting to think about how to tackle in in uh with specific decisions coming up for next year. In between then and now, we met with all of the department directors, the division managers, we did a review of operations, um, what do you do, why do you do it, how do you do it, how many people, that sort of stuff. Uh we'll talk about this a little bit more, but we we spent part of that discussion uh honing in on the things that the city has added since COVID. So you'll recall when we were here, we talked about the fact that spend spending is growing faster than revenues. Um of that is because of positions that have been added over the last really six years. Some of that's because of large what large expenses that are you know certainly uh uh defensible and perhaps necessary, the Miller Brothers building for public works, the large axon contract. But asking your department directors to give us a sense for what the value of those added positions, what do you get for spending more, and then comparing that to the cost. And there's two different things. The cost is relatively easy to calculate, right? If I add 10 police officers, it's 10 officers, it's their salaries, their health insurance, you multiply it out. It's it's not very complicated. But the question is what's the value of it? What do they do? What are they doing that's new? Are they do you have new specialized forces?