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Nazareth, Pa., United States

Thursday, March 26, 2009

Allentown: We're Broke, So Let's Borrow Money!

Lou Hershman, the Allentown City Council candidate muzzled at their last meeting, has continued to assert his rights as a citizen. City officials were just forced, in response to a right to know request from Hershman, to reveal its very unhealthy cash balance sheet. He's shared it with me, and I'll be sharing it with you below.

The cash balance sheet reveals just $758,615 in the city's general fund. I reviewed this with a financial expert, who tells me that is "not very much cash at this time of the year. How are they going to make it through the year with that kind of money? This raises more questions than it answers. You've got to have more cash in there somewhere or they're in deep trouble." In the 2009 budget, nearly $35 million is set aside for payroll. My anonymous finance maven wonders whether the city will be able to make payroll with so little cash in hand.

In the face of these dire financial straights, Allentown's Budget and Finance Committee met last night tro rearrange the deck chairs on the sinking ship known as Allentown. Guess who chairs it? That's right, none other than Michael "Muzzles" Donovan. He has his own report right here, in which he incidentally gives himself a B- for his performance as a "councilor."

So what does Muzzles propose? Cuts? Furloughs? Reducing the salaries of city councilors? Nah. Let's just borrow our way out of this jam! That's right, the city is going to borrow money, but it's for "fire trucks, firefighter radios, critical information technology infrastructure improvements, street repairs, and the possibility of moving and expanding police patrol headquarters."

Everyone loves firetrucks.

Muzzles promises this is no scam. No siree. The city would never borrow money for capital projects and then use it for operating expenses. Except when it did. It floated a bond a few years ago to end Allentown's financial nightmare. It was very controversial. Many people were killed. But that was then.

As Muzzles explains, "I'll stress that the funds do not sit in the General Fund. They sit in the Capital Fund until appropriated for use by the Council."

This is a promise from a "Councilor" who refuses to follow his own Home Rule Charter, so I don't think it will be long before some or most of that borrowed money finds its way into the general fund. Call it a hunch. After all, Councilors must be paid.

Allentown Cash Balance Sheet

Available Cash:

General Fund: $1,809,636 less $1,051,021 from Trexler Fund = $758,615
2006 Loan Fund: $5,184.995
Capital Fund: $1,623,110
Water Fund: $1,212,399
Sewer Fund: $4,754,898
Debt Service: 0 -
Equipment Fund: $214.570
EIT Escrow: $12,107,533
Solid Waste: $1,076,785
Golf Fund: $297,043

Total available: $28,280,969 less $1,051,021 = $27,229.948

Excluded Cash

Risk Management: $5,211,039
Workers Comp Trust: $972,001
Escrow Lancaster 0 -
E-911: $929,871
Trexler Park ($1,051,021)
PA Motor Holding Accounts: $597,426
LST: $52,942
OPT: $1,045
SRE : $75,378
SRE Interim: $3,534
Per Capita: $39,148
Water/Sewer Collection: $399,912
Deed: $37,320
PHFA $8,863
Payroll Withholding: $637,930

Total Excluded Cash: $ 7,915,388 less$ 1,051.021 = $8,966,409

Total Cash $ 36,196.357

Above Includes receipts to 3/17/09 and expenditures to 3/23/09

NOTE: Temporary borrowing is for this schedule only. Funds were not transferred- To cover negative cash the Trexlar Fund borrowed from the General Fund
The total of the 4th quarter 2008 distribution for the City is $1,982,850.84.



Obama is a clown, period.

Rising Sun said...

Is Obama the Mayor of Allentown now?

That's an alarming balance sheet if I can reckon.

Bernie O'Hare said...

I don't get the Obama reference either. This is a local issue. Donovan is no Obama.

Joe Hilliard said...


I will be dusting off my Attorney Actor shingle again.

Yes, I am not an attorney, but I play a good one on t.v. 2 - 0 vs. the City.

They took $8 million of the bond refinancing money and plopped it into the General Fund. This was after we challenged that fact that Pawlowski wanted to borrow $12 million extra (hmm.. $12 million worth of problems today) for no declared purpose. The DCED rightly rejected this scheme and made it clear that the City could only use the borrowed money to refund bonds.

The days of 'smoke and mirrors' BS will rapidly be ending in Allentown.

They ignored this point of the law. They will be challenged.

They, like many governmental entities are spending so fast that they keep borrowing money to balance the books but the cash bleeds out faster.

If Council's ideas go forward, there will need SEVERE state scrutiny and forensic audits performed to make sure money is allocated and counted properly.

I have been working with State Reps and Senators (none local of course, they don't want to rock the boat) and we have been waiting for the 'smoking gun'. The Mayor's admission in that article has provided it.

Anonymous said...


This is business as usual for Allentown, but now this model has been replicated for the entire country by the Democrats. Look how many Democrats voted along party lines for the ”Re-investment Act”. I suspect most house “D’s” will support the wildly bloated Obama budget. The Democrats are turning America into Allentown.
But don't worry everything will be just fine.
Scott Armstrong

Anonymous said...

Yeah but when we reduce spending later we will be the real budget cutters.

Allentown Democrat Voter

Anonymous said...

Gee Whiz, if only we had the leadership of Scott Armstrong to follow!
So Scott, what do we do from here? How do we pay the bills? How do we fix it?

Snap to it, you know everything, Please tell us exactly what to do.

Just once, stop braying about how you knew all about the problems, ans tell us how to realistically fix it.

Leaders don't only point fingers of blame, they also point the way to the solution.

This is nothing more than a lynch mob of morons.

Anonymous said...

Bernie -

I'm not sure how recent the cash balance is, but with EIT and real estate revenues coming due in April/May the city should be fine in the short term.

I also doubt the city has much ability to borrow (at least at favorable terms) given their bond rating and the financial climate right now.

This leaves the city with the option of hoping that there is some sort of "bailout" coming their way from the federal or state government.

Unfortunately for voters, even if there is no bailout, the blue ribbon committee that the Mayor formed will meet in secret and the cash flow pinch will not come until later in the year.

All that will allow the Administration to continue to keep the real financial picture hidden from the voters before election time.

In the end, the best that the Mayor can hope to do is continue to push this off to future generations of taxpayers. He has not dealt with the spending issues that are causing the deficits. It is a bleak future for Allentown taxpayers.

Anonymous said...

"To cover negative cash the Trexlar Fund borrowed from the General Fund"

Bernie, Red Light Here !

Trexler Fund needs to borrow?

What is the Trexler Fund? Is this part of the Trexler Trust...a multi-million dollar trust that
has x no. of paid trustees overseeing its expenses.

Bernie O'Hare said...

"I'm not sure how recent the cash balance is, but with EIT and real estate revenues coming due in April/May the city should be fine in the short term."

Actually, that's a problem. A lot of that money should be in by now.

Anonymous said...

I get the Obama reference quite clearly and believe it is germane. This is exactly what the country voted to do via Obama. And Obama complied by quadrupling Bush's deficit in fewer than 60 days.

Allentown is simply following the lead by borrowing and spending (a.k.a. "stimulus) its way out of a borrowing and spending crisis. You were orgasmic about Obama's election, and now his same economic program administered on a local level is problematic for you?

What am I missing here?

I'm no fan of Allentown's current leadership either. The apparent inconsistency is curious, however.

Rising Sun said...

Ah yes, somehow Obama applies. But you see, if the Republicans ran Allentown, they'd cut taxes (because that would fix the revenue problems), and cut spending (because Allentown doesn't need deep investments in cops, economic development, infrastructure, and other things). They'd tighten the belt, because they believe this crazy story Reagan told them that tightening the belt can increase revenue. That sounds like the kind of creativity Allentown needs these days. They don't have major quality of life issues to address.

Bernie O'Hare said...

Anon 9:11,

First, I voted for Obama, but was hardly "orgasmic" about it. It was a close call.

Second, I supported his stimulus, but was unenthusiastic about that, too, mainly bc no one was listening to the Rs and it was rushed.

Third, the Obama stimulus is designed to help the economy recover. It is aimed at helping us get jobs. It has nothing to do with a cash deficit in the government.

Fourth, the A-town package is a loan that will ostensibly go to capital projects, although I do not trust council that refuses to follow either the Sunshine Act or its own HRC. But it is not aimed at creating jobs or anything of that sort.

That's what you're missing here.

Both governments are spending money they don't have but so did Bush. The analogy to Obama is off and needlessly injects partisan politics into what should be an issue of good government. I would expect that reasonable Dems who examine what is going on in A-town to scratch their heads at the possible bait and switch, especially since it has now shown it will ignore the law when it suits its purposes. But you lose those Dems when you inject partisan politics into the mix. You equate Obama, who is relatively popular, with a city council and mayor that are increasingly unpopular. It's unnecessarily divisive and you set yourself up for failure when you do that.

LVCI said...

I do have rather a long response to all this...

(Perhaps I should update this previous posting)

Anonymous said...

To sum up every Scott Armstrong post:

Blah, blah , blah, Democrats are evil. Blah, blah, blah. Democrats are evil. Blah, blah, blah. etc, etc, etc.......

Taylor Swift

Anonymous said...

Obama's popularity is plummeting. He's currently lower rated than Bush was after the same period in office, and despite the contentious election dispute. Washington's trickle-down investment in capital improvements is designed to create and preserve jobs. If you believe this, why won't Allentown's scheme do the same?

No bait and switch here. It's your blog. You get to have it both ways.

Anonymous said...

Reagan's not president. Bush is not president. R's don't run Allentown.

Allentown is now the manifestation of the complete liberal agenda, sort of a "Philadelphia-lite."

Stop blaming dead and retired politicians and savor each and every moment in the paradise you created.

Rising Sun said...

Anon 11:22,

Because federal government and local government are very different, and their capabilities are a far cry different. It's like saying a poodle and a pit bull are the same. Sure, they're dogs, but they operate a lot different. The federal government is large enough to borrow big numbers of cash, local governments should try to be more prudent.

Anon 11:27,

I'm not blaming anyone for anything. I'm simply stating, for those who are unhappy with the city, the alternative cannot work. Reaganomics would not get the city out of it's mess. Cutting taxes and tightening the belt don't work when it comes to creating more revenue.

Besides all of that, I just don't think this is an ideological debate here.

Anonymous said...

Rising Sun wrote:

"But you see, if the Republicans ran Allentown, they'd cut taxes (because that would fix the revenue problems), and cut spending (because Allentown doesn't need deep investments in cops, economic development, infrastructure, and other things). They'd tighten the belt, because they believe this crazy story Reagan told them that tightening the belt can increase revenue."

Actually you don't have to go back to Reagan. When Bill Heydt (a Republican) left office 7+ years ago, the city had more police officers than it does today and a six million dollar surplus IN THE BANK.

The city's financial situation was so good that he felt comfortable enough (with Council's approval) to cut real estate taxes by a half mill.

Roads and alleyways (infrastructure) were on a systematic schedule to resurface them on a regular basis, and the city needed no Pothole Hotline (which was announced yesterday by Ed Pawlowski).

Under Afflerbach and Pawlowski, taxes have gone up, the number of police officers has decreased, city bridges are closed due to lack of repair and we're spending more than ever.

Taxpayers are now actually paying more for less!

Anonymous said...

Rising Sun wrote:

"The federal government is large enough to borrow big numbers of cash..."

Actually it cannot. Nobody is buying. The Fed is now printing more money to buy our debt.

That is a recipe for disaster.

Anonymous said...

The federal government is not borrowing. It is printing. The good news here is that a left leaning blogger is concerned about spending. There is hope.

Anonymous said...

Taylor Swift,

Is this an intelligent response?

“To sum up every Scott Armstrong post:

Blah, blah , blah, Democrats are evil. Blah, blah, blah. Democrats are evil. Blah, blah, blah. etc, etc, etc.......

Taylor Swift”

Try a little harder than mere insult if you want to impress. I give you credit for signing your name to your post. Normally, as with the other Armstrong basher, those who substitute rudeness for argument prefer anonymity.

Scott Armstrong

Rising Sun said...

Anon 3:16,

You believe that? Why doesn't anyone else in Allentown, or the greater Valley, remember these great days of Mayor Heydt? Last I checked, most voters rejected him four years ago. Most people remember a different story. Could it be that your memory is bad, those stats are cooked, or the good voters of Allentown want to suffer?

Anon 3:20,

Actually there are people buying our debt. Read the Chinese press and you can see, they are having a debate about this. Grant you, we can have a debate about the merits of that. Secondly, yes, we are printing money to finance it, as we have in the past at times. Again, this is something federal government can do that local governments cannot. This is and of itself doesn't scare me. The reality is, we've been running ridiculous debts since the beginning of Bush's term, through until now, but at least now, our current President is giving us something back for that.


Some of us don't mind debating you. I'll say this though, Taylor is right about how you sound. By the way, if you don't like people being rude, don't do it to others.

Anonymous said...

"The reality is, we've been running ridiculous debts since the beginning of Bush's term ..."

President Obama quadrupled Bush's deficit in fewer than 60 days. His own budget office projects initially lower debt for four years and then breathtaking increases for the next six and beyond. And this will only happen if his "worst economic crisis since The Great Depression" is resolved quicker than any mild recession in modern time - and followed by a never before seen period of economic boom. Impossible.

Allentown is just following the Dear Leader's example. It has lots of defenders. It's just got to work. That, and hockey, maybe.

Rising Sun said...

Anon 5:16,

Read history. His budget projects 4% growth on out, the CBO projects 2%. I can definitively say we beat 4% growth under Bush II, Clinton, Reagan, Nixon, Johnson.... Well you get the point. 4% growth in a year is not a "never before seen period of economic boom" It's kind of average growth. It's quite possible that we'll beat the projections.

Rising Sun said...

All of this misses the main point. This argument is supposed to be about the management of Allentown city government. As I said, city government does not equal federal government. There certainly is an issue in Allentown, the balance sheet doesn't look healthy.

dick nepon said...

Here is an interesting take on Government spending - getting Value for our dollars!

Minnesota's Bottom Line: Better Results for Dollars Spent was released for public dialogue last night with an audience of 100 Minnesota stakeholders. While we looked at a wide range of ideas, we had time to flesh out nine of them, based on the following principles:

* Promoting collaboration, sharing, across levels and types of government
* Funding consumers of services rather than suppliers of service
* Offering flexibility in how things are done while strengthening accountability for results
* Integrating funding sources around the needs of citizens rather than the convenience of the government system
* Distinguishing between the "deciding" function of government and the "doing"
* Strengthening accountability through greater transparency of actions and records
* Having a preference for results-inducing incentives over coercive forms of compliance

dick nepon said...

My point here is that we need some new thoughts, some new ideas. I haven't heard a new idea from the present administration, and don't expect any from his campaign contributors now known as the Blue Ribbon Committee, who will only report after the primary. I have at least put forth some ideas on my Facebook Green Ribbon page,(http://www.facebook.com/topic.php?topic=9837&post=84434&uid=57740191481#/group.php?gid=57740191481)
and invited everyone to join in with ideas. We do have a future, but what it looks like is our choice.

Anonymous said...

Rising Sun,

So I should acknowledge your/Democrat magnanimity to debate me. Rather pompous on your part?

Why not keep it simple and stick to the issues/issues? Why the constant resort to insult? One could perceive this tactic as an indication of a lack of confidence in argument and ideas.
Ten years of previous involvement in Allentown Politics has toughened me up a bit, simple slander and bullying will not dissuade me from expressing my opinion. Therefore, you (and the rest) might want to reconsider the use of these tactics. Frankly it is tedious to the sites participants.
Readers of this site see it for what it is, so move on, make your point, and prepare for the rebuttal.
Scott Armstrong

Rising Sun said...


No, I don't want your graciousness. Last time we got into it, you went to the "you're stupid" route. I was pointing that out.

I have no problem debating the merits of any issue you'd like. Wouldn't be the first time. I agree with you, we should go that route, I'm saying practice what you preach, don't cry now that some nice lady smacked you around on here. I'm simply saying beyond that, she's right about what she said. I'm sure some of us are guilty of just beating down the right too. Fair's fair here, have some thick skin.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Insults are predictable and empty of insight, dull read and reflect more on the user than the target.

Scott Armstrong

Anonymous said...

Rising Sun wrote:

"Could it be that your memory is bad, those stats are cooked, or the good voters of Allentown want to suffer?"

My memory is fine, and the "stats" are easily verifiable. Allentown voters, however, have shown an amazing ability to elect and re-elect big-government Democrats despite the results.

This dynamic is nothing new for cities across the country, just new for Allentown. Unless something changes, Allentown will continue to suffer.

Big government doesn't work. Eventually they run out of other people's money to spend.

Anonymous said...

The reason Heydt lost and Afflerbach won was that Afflerbach said everything people wanted to hear and people didn't pay close enough attention as to whether or not his words were truth. Heydt was his own man and people didn't always like his honest talking. Quite frankly I would rather not like the words and be spoken to honestly than sweet talked while being lied to. Heydt may not have been perfect but he did what he was supposed to do - he kept us on good financial footing and he wasn't a shmoozer and he didn't bore us to death with his powerpoint presentations. He served Allentown well even if people were bothered by him. People get hung up on their feelings and don't address the real issues. As an Allentonian from birth I can honestly say under Afflerbach and Pawlowski, I feel robbed. Afflerbach, Kuhn, Blackburn, Pawlowski, Wermsdorfer....It is all one BIG joke. Only problem, is it isn't funny. Please don't bother to say than why don't you come up with ideas...I have plenty of them. I run a neighborhood group in center city, I'm an advocate of the police department, I believe we need to make cuts in our government. I think we should look at government in a different fashion. We should systematically address departments with zero based budgeting. Quite frankly there are too many programs whose purpose was served or never served and should be removed from the taxpayer's burden. There are too many top level postitions and way too much beauracracy. Term limits should most definitely be instituted as well for our elected officials. There's alot that this adinistration could do to address Allentown's financial situation other than borrowing more debt; only problem is that it takes leadership and the ability to curtail spending. Something this administration shows no skill for.

Kim Beitler

Anonymous said...

Retired ASD teacher here.

Kim, I just want to "piggy-back" on what you have written about Mayor Heydt. I had the pleasure of working with him on a large community event.

For me, Bill Heydt, was the last qualified and effective Mayor Allentown has had. I believe Bill Heydt really knew what he was doing. He was direct on issues, didn't seem to dance around those issues, made concrete decisions, and obviously brought Allentown to a positive place while he was in charge.

Thank you, Bill Heydt! Sometimes, we can't value something until it's gone.

Anonymous said...


At this point some neophyte will write, if you have all these good ideas why don’t you run for office. They won’t even know that that you did, you were one of the evil Republicans.

Scott Armstrong

Right On said...

I couldn't agree more. I hope Bill Heydt is reading these blogs.
If he runs one more time, he has to defeat Fast Eddie, The citizens have to see the handwriting on the wall. Borrow ourselves out of debt? Come on.

Anonymous said...

Time for Fast Eddie to move West and time for Donovan to head North. Go home guys.

The budget thing was no secret. These guys are a bunch of lying political fools.

The mayors staff is dying to give away the Americus as long as someone will pay the back taxes to cover their salaries for a little while longer.

Tough times have just begun. Hopefully they are not going to cut jobs means they are planning to do just that.

Allentown will be a true welfare city.

SomeNeophyte said...

Hey Kim,
If you have so many great ideas, why don't you run for office?