PETERSBURG, Va. — She had felt sick the night before when she broke the news to department heads, and now it was 4:30 p.m. and Dironna Moore Belton still couldn’t eat her lunch. She opened her salad and found that her fiance had slipped in a note of encouragement.
She was going to need the note more than the food.
Belton, 38, the interim city manager, was about to step in front of the City Council and a packed hall of residents and tell them they had to make drastic — even shocking — cuts to city services. Reduce funding for schools whose students are already among the lowest-performing in the state. Cut fire and police services in a city that has an unusually high rate of violent crime. Close departments, shrink city pay, shut down museums. Even withdraw support for the summer league baseball team.
The alternative was far worse.
Without these steps, Belton would tell them, Petersburg had about a month before it would confront the unthinkable: total collapse.
This city of 32,000 just south of Richmond is facing a financial crisis unusual for fiscally conservative Virginia — or any state. In at least the past four years, the city spent all of its reserves and then kept spending money it didn’t have. It took out short-term loans based on anticipated tax revenue to keep paying bills.
When the loans ran out, it stopped paying. Some fire and rescue equipment has been repossessed. The city trash hauler is threatening to stop pickup. And lenders will not give Petersburg any more loans.
In his 46 years minding state ledgers in various roles, Virginia Finance Secretary Ric Brown has never seen anything like it. “As a rule, most Virginia localities are in pretty good shape,” Brown said.
What’s more, there is no mechanism in state law to help Petersburg — no provision for bankruptcy, no set way for the General Assembly to step in.
Belton’s task was to make the council confront this and act. Every member would hate to hear the message, and the prescription would draw gasps and cries of disbelief from residents at the meeting later that night. And to make it a little tougher for Belton, this toxic presentation was, in effect, her job application.
As interim city manager since March 4, Belton was living out a dream she had had since coming up through the Petersburg schools. Hers was an unlikely ambition — a young black girl hoping to lead a city that, at the time, was largely run by whites. Now she had the chance. But she had to apply for the permanent job at the same time she was recommending measures no city wants to take.
So, no, she hadn’t eaten lunch. She didn’t have the stomach for it.
Petersburg’s budget crisis began coming to light early this year, but the city has a long relationship with suffering. Residents are quick to cite three momentous calamities, even though one occurred more than 150 years ago.
The siege of Petersburg during the Civil War continues to define the place. The fame of that nine-month stalemate, when Union Gen. Ulysses S. Grant and his forces camped outside town and residents black and white starved within, has long been a lure for history-minded tourists. Old families still tell tales of scraping by.
More recently, in 1985, the tobacco giant Brown & Williamson moved out of state, taking thousands of jobs and pulling the props out of the local economy. And in 1993, a deadly tornado blasted through the downtown historic district and set back revitalization efforts by decades.
Add in the recent recession and nationwide real estate crisis, and today Petersburg’s economy is a shambles. Nearly 3 in 10 residents live in poverty, more than twice the statewide rate. As the population has declined from its peak in 1980, it has also aged — more than 15 percent of residents are 65 or older, vs. 13 percent statewide.
And its streets of dilapidated and abandoned homes can make Petersburg the butt of jokes, such as last month when actor Rainn Wilson, in town to shoot a movie, posted on Instagram a photo of a boarded-up building behind a sign proclaiming “Upscale Apartment Living” and captioned it “courtesy of Petersburg, Virginia.”
So it’s not surprising that the city would have budget problems. But the magnitude went unnoticed or unaddressed. The previous city manager oversaw the construction of a $12.7 million public library and, early this year, had the council considering plans to replace the 1856 city hall with an $18 million complex. It all unraveled, however, after a problem with water meters.
A campaign to install new “smart” meters throughout Petersburg was a disaster. Some of the devices were improperly calibrated, and some were installed incorrectly. Water billings went haywire. Some residents weren’t billed for months at a time, while others got exorbitant bills. And revenue stopped flowing to the city, causing a money crunch.
Mayor W. Howard Myers said the council in March fired its city manager, William E. Johnson III, in large part because of the meter fiasco. For an interim manager, city leaders turned to Belton, who had come to oversee Petersburg’s transit system in 2013 after working in state government.
“We felt she was doing a wonderful job with our bus transit system, and we felt that — being vested in the city of Petersburg — she would be the best individual to help us move forward,” Myers said.
She didn’t know what she was getting into. Belton asked about finances and was told there was a city shortfall of about $2 million. But as she pushed for more details about the $102 million budget for the coming year, she found more problems — or rather, less money. And with a short-term financing note coming due, she took the extraordinary step of asking the state finance agency to take a look. What it found stunned everyone.
When Belton was growing up, she would help her grandfather on his farm and one time asked him what she had to do to never work like that again. “Get your education, girl,” he told her. She attended a mostly black elementary school, then went to a white private middle school, then to a majority-black high school. There she was chastised for sounding “too white,” even as her mother would admonish her to enunciate more clearly. She never felt like she fit in.
As early as sixth grade, Belton couldn’t understand why a majority-black city didn’t have a government that looked like the community. But later, at Virginia Tech and in graduate school at Virginia Commonwealth University, she absorbed a different message: Going back home to a struggling city would stunt her career.
“I took a long time in my career running from Petersburg,” she said, because the city seemed lost. “We were always so depressed, no matter what we did.”
In recent years, African Americans have assumed most city leadership positions. After seeing how successful communities around the state managed to help themselves, Belton began to think she could make a difference in Petersburg. When the transit job led to the interim city manager role, she was ready for action.
She fired the city finance director. As she pushed various departments for answers, she wound up clearing out the city spokeswoman and the police chief, as well. But perhaps Belton’s boldest act was to call the state for help.
A team of three municipal finance experts combed through the city’s books over the summer. On Aug. 3, Brown, the state finance secretary, took the unprecedented step of personally addressing the Petersburg City Council about what had been found.
That’s when the full magnitude of the predicament emerged to the public. The city had, basically, three strikes against it: It had a roughly $12 million shortfall in its operating budget, had spent all its reserves and had at least $14 million in unpaid bills. It would be unable to make payroll by the end of the year.
The blame fell on city leaders who had continued to fund programs even as revenue shrank or funding sources dried up. The city was using short-term loans to paper over the problem, and city staff members had — apparently — not communicated the full situation to the council.
“There is no way in the world we anticipated a crisis such as this,” the mayor said in an interview.
Reaction from residents was sharp. After activists calling themselves Clean Sweep Petersburg blamed the council and called for steep budget cuts, Myers, who is black, wrote a memo dismissing the group and its cause as “scare tactics from a few racist and Republican supporters.” Others on the council distanced themselves from his comments.
But this was just outlining the problem. Now Belton had the hard task of coming up with a solution. And the clock was running, with a credible budget plan needed by early September to be able to borrow money in time to keep the doors open.
She decided she needed expert help. She got the council to hire PFM Group to come up with an emergency budget plan. The consultants would be detached outsiders who could look objectively at the problem and offer rational solutions — similar to the International Monetary Fund swooping into Greece to stave off financial collapse, but smaller and sadder.
What they proposed, and what Belton had to sell, was a litany of municipal horrors.
“Nothing is good about any of these recommendations in terms of their impact,” PFM Managing Director David Eichenthal told the council and a standing-room-only crowd of residents in the town’s old train station the night of Aug. 23. Eichenthal, who has reviewed municipal budgets all over the country, said Petersburg’s combination of structural deficit and poor cash flow is “somewhat unique.”
Not acting to fix it, he continued in dry understatement, carried “significant risk.” The city could shut down in less than a month. The state might help support law enforcement, but if Petersburg stopped mandatory payments for schools, it could wind up in court. Meanwhile, other services would end.
The prescription for making expenses match revenue, and thus making lenders more willing to help the city pay its bills, was humbling, even belittling, in its cold logic. PFM’s report contained a catalogue of the city’s shortcomings. Petersburg’s three museums — sources of local pride, especially Blandford Church and its exquisite collection of Tiffany stained glass — were found to have a grand total of 36 visitors per day.
The city should have a booming tourism industry, the consultants said, then added: “It does not.” Recommendation: Shut the museums.
There was an unavoidable sense that Petersburg somehow didn’t deserve nice things. The city’s fire department, for instance, is so well-staffed and well-equipped that it recently won an insurance designation given to only the top 1.3 percent of fire departments nationwide.
“Unfortunately,” the consultants wrote, “the city is not in a position to provide fire service at this level.”
Despite a high rate of violent crime, the consultants recommended a way to cut police and jail expenses that drew shouts from the audience: Put fewer criminals behind bars.
Take schools funding to the lowest level allowed by the state. Push more property owners designated as “nonprofit” to pay taxes. And the recommendation that drew the longest, angriest crowd response of the night: Increase the city’s cigarette tax, currently one of the lowest in the state.
At the conclusion, at Belton’s urging, the council adopted the recommendations in principle. Members have until Tuesday’s meeting to decide on the specific cuts and tax increases they will use to meet the bottom-line financial targets.
The residents filing out of the train station generally agreed that harsh steps are needed; they just didn’t like the things that would personally affect them.
“You can’t predict crime. We all would like to have not as many inmates,” said Cassandra Conover, the Petersburg commonwealth attorney.
“They’re going to kill our school system,” PTA President Linwood Christian said.
“We need a solution, but I’m not sure they’ve found it,” said Charlie Cuthbert, a lawyer running for one of two city council seats this fall.
“It’s dire, and it’s a quagmire,” said Johna Vazquez, a school technology integrator.
Since the meeting, Standard & Poor’s has cut Petersburg’s credit rating to BB from BBB — officially junk status. It was already the lowest-ranked locality in Virginia; even towns in hard-hit coal country rate no lower than A. The S&P report gave the city a negative outlook, judged its management performance to be weak and questioned whether it would be able to sustain its tough budgetary plan.
The state is keeping an eye on the situation. Gov. Terry McAuliffe (D) recently told a Richmond radio program that he would consider sending in state troopers to help ensure public safety.
“What happens in Petersburg affects the commonwealth of Virginia, and it affects our reputation in the nation and globally. So we want to make sure every part of Virginia shines,” McAuliffe said.
For Belton, conscious of straddling the city’s racial lines, there is a particular sense of determination. One of Petersburg’s most treasured landmarks is a complex of brick warehouses near the riverfront, most of them empty. Belton cannot help seeing them two ways.
First, they should be producing revenue — she’s working with the National Park Service to open a visitor’s center in one; others were used in filming the PBS Civil War drama “Mercy Street.”
But she also sees the history passed down through her family members, who told of slaves coming into the South Side Depot and being marched across the same gray cobblestones that are still underfoot to be sold in the farmers market, the women naked and graded like cattle.
“God really favors those who’ve had things like that happen to them,” Belton said. “Because those things happened here, we are not allowed to fail. . . . That’s really what’s driving our purpose. We are not allowed to fail.”
She’s talking about the city, but she may also be referring to herself. Soon after the council holds its meeting Tuesday, it will reconvene to interview candidates for city manager, the terrible job that Belton nonetheless deeply wants.
Myers won’t say how many candidates the council is considering. “We’ve had a number of applicants, I can say that. A generous number of applicants,” he said. “There is a process, and everyone will have their opportunity to interview and tell us all the wonderful things they are . . . ”
He paused, and Belton finished his sentence: “. . . capable of doing.”
“All their capabilities, yes,” Myers said. He smiled uncomfortably, then reached toward Belton’s arm. “You’re not going anywhere — today, anyway.”
Because her plan is, so far, the only idea for keeping the city afloat.
Laura Vozzella contributed to this report.