July 24, 2015 | 1:00 PM

Surplus gives York a ‘window of opportunity’ to implement financial changes

Photo by Pictures of Money/ via Flickr

(York) — If the City of York does nothing between now and 2020, it will have a more than $2 million deficit. Luckily for City Council members, however, there is a “window of opportunity” to make beneficial changes now.

Gerald Cross, the executive director of the Pennsylvania Economy League, said the city is in the midst of a period of budget surplus after years of deficit that could last through 2017 thanks to some tough decisions council members made since the city’s Early Intervention Program Multi-Year Financial Plan report was issued in 2011.

The unaudited 2014 surplus is roughly $1.2 million and the projected surplus for 2015 is roughly $4.3 million. But that drops steadily until a projected deficit of more than $500,000 in 2018 and a jump to more than $1 million the next year.

In Cross’ presentation Tuesday for the July 2015 report, he listed several changes the city made that has helped the current financial situation including:

Ã¢â‚¬¢ Increases in real estate property taxes, refuse fees and parking taxes

Ã¢â‚¬¢ Modifying health benefits to reduce costs

Ã¢â‚¬¢ Reducing departmental staff

Ã¢â‚¬¢ Negotiating police labor contracts

That last one illustrates a significant expense for the city: rising pension and health care costs, which together comprise what Cross calls “legacy costs.”

The legacy costs — defined by Cross as legitimate “payments rendered today for services rendered in the past” — will amount to nearly $18 million in the League’s 2020 projections.

“Costs increase at a greater rate than revenue increases,” Cross said. “That’s why you have to do something to increase revenues.”

Revenue, comprised of earned income and real estate taxes, will total only $20.3 million. Add on a rough $20 million of total city payroll and that revenue just can’t keep up.

“When I saw that projection I thought, ‘Oh my God, we can’t cut any further,’” said council Vice President Henry Nixon, but the report gives avenues for financial gains.

Options Cross encourages the city to pursue include monetizing or ridding the city of assets currently subsidized by its general fund, focusing more squarely just on the city’s core competencies and renegotiating legacy costs with employees.

“The really significant amount of savings and the significant changes for our future are monetizing assets and bringing the unions into the conversation so they fully understand the ramifications of what it is they’re asking,” Nixon said. “We need to play as nice as we can in the sandboxes. We don’t want it to be an adversarial situation.”

He called December’s labor contract renegotiations with the police union, which saved about $2.7 million and the jobs of 32 officers in the four-year contract, “wonderful, an extraordinary step in the right direction, especially with the retired police.”

“I have a tremendous amount of respect there and would like to see the same from the firefighters,” he added.

Fred Desantis, the president of York Professional Firefighters, the firefighters union, said the union is currently in talks with the city for a contract change to retirement health care costs that could save $3 million.

We are not against helping the city save that $3 million,” he said.

Other council members did not return calls Thursday.

Right now, some assets, like the city’s ice rink operation are bleeding money from the city. Others, like the sewer system, actually generate millions of dollars for the city, Nixon said.

The League report suggests the city “hold the line” on contract costs for employees, limit the dollars for new contracts and ensure the first year costs of any newly negotiated contracts not exceed the costs of the last year in the prior contract.

Cross also said filing for Act 47, the Distressed Municipality Option, could be a tool for the city because it increases revenue opportunities by removing the cap on earned income tax and property taxes, but that revenues and fixes from that are not permanent.

“They can probably do that without Act 47, they’ve done a lot on their own,” Cross said. “We are now saying Act 47 would not provide an overriding benefit to the city.”

Reporter Mark Walters contributed to this report