Video: ‘Financially distressed’ city faces tough choices

  1. Closed captioning of: ‘Financially distressed’ city faces tough choices

    >>> of reports continues tonight on america at the crossroads . tonight, a city that was hit hard even before this last recession came along. tom brokaw is back here from pennsylvania . welcome.

    >> redding , pennsylvania , was once a thriving manufacturing center turning out steam engines for knitted goods and then it was a destination for discount store , but now redding 's proud past is only a memory as it struggles like so many cities in this country, to just stay alive economically. in a classroom at redding high school there is an energetic debate on the city's economy.

    >> 15 years ago we were the number one outlet center of the world.

    >> reporter: redding was once a destination city, buzzing with factories and overflowing with retail stores . today it is a far different place.

    >> i was giving a speech in class, and how i opened up the speech was by show of hands who cannot wait to get out of redding and sure enough my whole class raised their hand.

    >> reporter: senior tyler washington says that after college he wants to come back some day, but he doesn't know when.

    >> unfortunately, we don't have a diversity of employment so if they're interested in certain fields they know they have to go off to another city.

    >> reporter: this mostly vacated industrial site but then, that business went south. the company that owned the plant, packed up and moved out. there is light at the end of the tunnel .

    >> reporter: mayor thomas mcmahon is chief executive of the city of 81,000 people. unemployment is 12%. the city has the highest poverty level in the state. it also has a shrinking tax base .

    >> our total bill for police and fire on an annual basis is $40 million. our total tax income comes in on property tax and incomed tax is over 30.

    >> redding has been designated by the state as officially financially distressed, a status that gives the city the power to raise taxes and it gives it more power on collective bargaining with public union. in return, redding must balance its budget. according to the mayor, the only real solution for places like redding is to team up with surrounding governments to share assets and opportunities.

    >> we've got to get away from this little mentality that every borough and burgh and tiny city has to survive on their own. i think metro government makes a lot of sense.

    >> in the meantime, more cuts in the city budget and that worries police chief big hine. he has lost 20% of his force in the last four years.

    >> we are cut to the bone in so many places that public safety , police officers and fire fighters now are feeling that pinch.

    >> woodworking, photography, all types of arts.

    >> reporter: albert boscoff, a prominent businessman is making redding an art center , to renovate downtown neighborhoods. despite the tough odds he refuses to give up.

    >> if you were a young investor without the emotional attachment to redding that you have, would you be putting dollars into the city at this point?

    >> it's not a great investment from a real estate point of view because it hasn't gone up yet. our feeling is with the housing program and with the things we're doing downtown that we will see a reversal in real estate .

    >> reporter: redding has a proud history, dating in the mid- 1700s , but now a third of its population lives in poverty. a third of its students drop out of high school . if redding is to have a renewal it can't come soon enough. brian, redding is not alone. other pennsylvania cities that once relied on manufacturing have lost 40% of those jobs in the last 20 years. so to survive, many experts believe the old rules of separate cities and counties will have to be changed. they should consolidate so costs can be shared and opportunities created on a regional basis. brian?

    >> redding is a great place. a whole lot of people cheering for it. tom, thanks. the series continues tomorrow night.

By Tom Brokaw Correspondent
NBC News
updated 3/2/2011 8:16:01 PM ET 2011-03-03T01:16:01

Editor’s Note: This week, NBC is taking a look at the challenges and opportunities for America.  As part of the series, "America at the Crossroads," NBC's Tom Brokaw travels to Reading, Pa., emblematic of many struggling cities where factories have shut down and jobs are scarce.

In a classroom at Reading High School, there's an energetic debate on the city's economy.

"Fifteen years ago, we were the No. 1 outlet center of the world!" one girl said.

Reading was once a destination city, buzzing with factories, overflowing with retail stores. Today, it is a far different place.

“I actually was giving a speech in class and I opened up the speech by a show of hands, ‘Who cannot wait to get out of Reading?’ and sure enough, my whole class raised their hand,” said senior Tyler Washington.

He says that after college, he wants to come back someday, but he doesn't know when.

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Principal Wynton Butler says Reading doesn't have diversity of employment to keep students here.

"So if they're interested in certain fields, they know they have to go off to another city," Butler says.

One vacant industrial site is symptomatic of what happened to the city. Until about 10 years ago, 3,000 people made truck frames there, but then the company that owned the plant packed up and moved out.

Now, the city's unemployment rate is 12 percent and the poverty level is 34.5 percent — the highest in Pennsylvania. The city also has a shrinking tax base.

"Our total bill for police and fire on an annual basis is about $40 million," Mayor Thomas McMahon, chief executive and chief cheerleader of this city of 81,000 people. "Our total tax that comes in on property tax and earned income tax is only 30 (million dollars)."

Reading has been designated by the state as officially "financially distressed," a status that gives the city the power to raise taxes and more power in collective bargaining with public unions. In return, Reading must balance its budget.

Reading is not alone. Other Pennsylvania cities that once relied on manufacturing have lost 40 percent of those jobs in the past 20 years.

Many experts believe that the old rules of separate cities and counties will have to be changed, that they should consolidate so costs can be shared and opportunities created on a regional basis.

McMahon says places like Reading should team up with surrounding governments.

“We've got to get away from this little mentality that every borough and burgh and tiny city has to survive on their own," McMahon said. "I think metro government makes a lot of sense.”

In the meantime, the prospect of more cuts in the city budget worries Police Chief Bill Heim. He has lost 20 percent of his force in the last four years.

"We're cut to the bone in so many places that public safety, police officers and firefighters are now feeling that pinch," Heim said.

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Albert Boscov, a prominent businessman, is leading the charge to make Reading an arts center, to renovate downtown neighborhoods. Despite the tough odds, he refuses to give up.

Asked if he were a young investor, without the emotional attachment to Reading that he has, would he put dollars into the city at this point, Boscov was optimistic.

“It's not a great investment from a real estate point of view because it hasn't gone up yet,” Boscov said. “Our feeling is with the housing programs, with all the things we're doing downtown, that we will see a reversal in real estate.”

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