An independent review of the city of Erie’s finances found that the city is facing a budget crisis. 

The city recently hired Public Financial Management (PFM) to conduct a five-year financial outlook review of the city’s finances.

Based on their findings, PFM determined that the city is facing significant budget deficits over the next five years.

Without any corrective action, the city is facing a projected deficit of $12.3 million in 2027.  

By 2031, without any action, the deficit is projected to reach $24.4 million.  

Over the past five years, PFM found that the city has relied heavily on federal stimulus money provided by the American Rescue Plan Act, which cannot be used after 2026, and prepayments from Erie Water Works. 

The report from PFM also determined that this year’s budget has a hidden shortfall, due to incorrect budgeting of pension funds.

The 2026 budget has $32 million in revenue that can only be used for employee pensions.  However, the city’s Minimum Municipal Obligation (MMO) contribution to the pension plan is $23.1 million. 

Despite the lower MMO, the city must deposit the higher amount of restricted funds ($32 million) into the pension plans. 

While balanced on paper, this year’s general fund budget has an $8 million shortfall because the city budgeted to use pension-restricted dollars on non-pension related costs.  

Mayor Daria Devlin tells Erie News Now that her administration is aiming to avoid a tax increase in 2027. 

Under previous Mayor Joe Schember, the city’s 2026 real estate tax increase of 1 mill was the first increase since 2020, when the millage rate increased by 1.47 mills (or 12.6%). 

According to Mayor Devlin, her top priority right now is to cut $3 million from the budget.  

Since 2020, the city has added 50 full-time employees, including 20 police officers who were hired using ARPA funds.  

According to Mayor Devlin, PFM will now conduct a management audit of city operations, to review staffing and functions of each department.  

Mayor Devlin says she expects job reductions, starting with management and administrative positions, before cutting any union jobs.  

Full-Time Employee Breakdown

Teamsters: 169

AFSCME: 80

Police:193

Fire: 141 

Cabinet: 10

Elected Officials: 10

Management: 42

Non-Bargaining: 38

Total: 683 employees

Mayor Devlin will meet with Erie City Council members in city hall at 5:30 p.m. on Thursday, to further discuss the PFM findings.