Reading could withdraw as much as $24 million from its financial reserves over the next two budget cycles as city officials scramble to close projected deficits without raising property taxes again. Mayor Eddie Morán presented his administration's $129 million 2027 budget proposal to Reading City Council on October 5, a plan that maintains investment in public safety, cuts overall operating costs, and, according to Morán, does not raise taxes. But the reserve drawdown needed to make the numbers work has raised fresh concerns that the city could slide back toward the kind of financial distress it spent more than a decade trying to escape.
The scale of the problem comes from the city's own finance chief, who says Reading is likely to end 2026 with a $12 million deficit and faces a similar shortfall in 2027, according to Berks Weekly. That would follow a pattern already underway: the city pulled $1.9 million from reserves in 2024, its first reserve deficit since 2018, and faced a similar shortfall in 2025. Reading's original budget documents had projected far steeper deficits of $8.3 million in 2024 and $9.7 million in 2025, though the station's report notes that actual losses came in significantly lower than those projections.
A City Still Shadowed by Act 47
Reading participated in Pennsylvania's Act 47 financial recovery program from 2018 to 2022, exiting through cost-cutting, salary stagnation, and growth in general fund reserves. That exit followed a much longer arc than the recent program alone suggests: Pennsylvania Department of Community and Economic Development records show Reading was first designated financially distressed under Act 47 back on November 12, 2009, following severe three-year operating deficits, and remained under state oversight for more than 12 years before the state formally rescinded the designation in June 2022. Reading is one of 32 Pennsylvania municipalities to have entered Act 47 status since the law was enacted in 1987, the department's records show.
The city's home rule charter requires Reading to keep its unrestricted general fund balance at 20% of the overall general fund budget or $22 million, whichever is higher — a threshold that rises to at least $25.8 million for 2027 under the charter's formula, per the same account. Reading's 2024 end-of-year audit, conducted by outside auditors, showed an unrestricted balance of around $36 million. City finance official Jack Gombach could not provide Reading's current reserve balance when asked, the outlet reported. Separately, Spotlight PA has reported that Reading's total general fund reserve balance stood at approximately $51 million at the end of 2024, with roughly $36 million of that categorized as unrestricted funds available for general operations.
Where the Money Is Going
Personnel costs dominate the budget, with around 70% of general fund spending allocated to employees. City officials are negotiating to avoid a 19% increase in healthcare costs; the 2027 budget currently reflects a smaller 13.6% hike, worth about $2.5 million. Separately, reporting from BerksConnect shows that rising employee pension and health benefit costs account for $4.3 million in new expenditures in the 2027 draft budget — a figure that exceeds the budget's total net growth of $2.88 million, meaning reductions elsewhere are offsetting only part of the surge.
Fire and emergency services overtime has been a particular strain. Reading budgeted $950,000 for firefighter overtime in 2026, and spending had already topped $1.3 million. The city's fire department is not fully staffed and fills in for EMS when needed, at firefighter salary rates, according to Gombach. A study from Albright College's Center for Excellence in Local Government, reported by Firehouse Magazine, found Reading is the only municipality in Berks County operating a fully professionally staffed municipal EMS service, while many providers are in trouble and two may not survive the rest of 2025 — a dynamic that helps explain why the city says it needs to raise salaries to hire more competitive EMS workers.
Cuts, Fees, and a Reluctance to Raise Taxes Again
Reading officials eliminated between 16 and 19 longtime vacant positions for the 2027 budget, including the vacant zoning administrator role. City official Joe Famiglietti said the goal is to avoid layoffs in the new year, and he reduced year-over-year operating costs for 2027 by $1.4 million. Famiglietti also plans to work with departments to raise various user fees instead of taxes, though officials have not decided on exact increases; the budget team will meet with department heads over the coming year to work that out. Gombach said that if officials cannot justify rates by service-delivery costs, they will not raise them.
The caution around new taxes follows a bruising year politically. The Morán administration originally proposed a 9% property tax increase last year before City Council cut it to 6%, which taxpayers are now absorbing in the current budget. That history matters because Reading's proposed 2027 municipal property tax rate of 19.217 mills already stands as the highest among all municipalities in Berks County, according to BerksConnect's review of city budget documents. With a median household income of $44,091 and a poverty rate of 28.7% — more than double Pennsylvania's statewide average of roughly 12%, per U.S. Census Bureau data — city leaders have limited room to lean on property owners again.
A Pattern City Council Has Seen Before
This isn't the first time reserves have filled the gap. City Council approved a $12.3 million draw from reserves alongside the 6% property tax increase when finalizing the 2026 budget in late 2025, according to Berks Weekly. The proposed 2027 budget also projects increases in earned income tax and non-property revenue of more than $1 million, and officials say they plan to expand the tax base through special projects, per Gombach.
Not everyone on council is convinced reserve draws and fee tweaks are sustainable. Council member Maria Rodriguez suggested last year that Reading adopt regular, incremental tax increases instead of large, unexpected ones. The city's auditor position is vacant this budget season, and council member Donna Reed may consider proposing a small property tax increase of her own. Former finance director Jamar Kelly has described previous budget deficit figures as hypothetical, while Famiglietti noted that delayed emergency-services billing provided a one-time revenue boost in 2025 that officials do not expect to repeat. Reading departments expect to spend less on employees overall because of the eliminated positions, even as salaries rise, though the city has not followed through on planned retirement buyouts for eligible employees, Famiglietti said.
Reading has avoided a formal deficit for five years, having previously gotten by on higher-than-expected and one-time revenues that officials now say they do not expect to continue, this year or going forward. Council's budget review began with an October 5 Committee of the Whole agenda, with a budget review session scheduled for Wednesday, October 14, 2026, as members weigh whether to accept the administration's reserve-heavy approach.
