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Episode 3, Ridley Park Financial Stress Introduction


Ridley Park has experienced a common municipal problem characterized by a financial term known as “Structural Operating Deficit”. There are many municipalities throughout the United States that are dealing with this problem including our neighbors in Norwood.

Here is a simple explanation of what a “Structural Operating Deficit” is:

A Mom and Pop with 2 elementary school kids inherited $100,000 seven years ago. They placed the $100,000 in a savings account for college expenses for the kids. Mom and Pop both worked to make ends meet.

For the past 7 years they spent more than they earned

  • they spent all the $100,000 of savings,
  • they have maxed out their credit cards,
  • they have mortgaged the house to the max
  • Local taxes keep going up
  • they are beginning to be unable to pay all the bills so the collection agencies are showing up at the door
  • They drop out of the Swim Club and The Athletic Club
  • They sell one of the cars
  • No more Restaurant meals, movies or vacation trips to the beach
  • Go back to minimum Cable TV or Rabbit Ears

They have options. They can both get second jobs and they can get jobs for the kids. Ridley Park does not have those options.

A few of the easiest options Ridley Park has are:

  • cut costs by making hard decisions
  • postpone, scale back or cancel projects to free up cash - will help a lot
  • renegotiate loans - will help a little
  • delay paying bills at the end of the year – a bad idea - but for Ridley Park may be inevitable in 2010
  • Levy an income tax on non-residents
  • Sell off precious open area for housing development to increase tax base
  • Increase Real Estate Taxes and Fees

My assessment of the situation is Ridley Park reached the brink of the Norwood abyss in 2007. Extraordinary assistance to the borough manager provided by unpaid council members, extraordinary financial measures and a little bit of luck were required in 2008 and 2009 to make ends meet.

In 2010 there are many ways to improve the financial stability of the Borough. They all take a concerted effort by involved Residents and Taxpayers of Ridley Park and prudent fiscal management of Borough finances by Councilors and the Manager. Concerned Republicans, Democrats and all other residents of Ridley Park need to:

  • Clearly and dispassionately understand the underlying problems
  • Understand the major factors that lead to financial instability and insolvency
  • Develop a plan of action
  • Communicate concerns to Council

In the forth episode I will show revenues from taxes and service fees. Don’t we already pay too much in taxes? To recover from the period from 2001 to 2007 and on the current path, the answer is a resounding no!!!

In subsequent episodes I will address what I believe are the primary roots of the problem and what I believe are the essential elements of a solution.

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