The first reading of the 2020 budget by Bradford City Council Tuesday brought some unwelcome news — the potential of a tax increase that now stands at 3.94 mills.

“Remember this is only the first reading of the budget,” said Mayor Tom Riel after the meeting. “It always looks dark and bleak in the beginning. This will change.”

Councilman Brad Mangel, who oversees accounts and finances for the city, read a prepared statement explaining the biggest cost driver in the budget is a state mandated $500,000 increase in minimum municipal obligations for pensions — which represents just under 3 mills of property tax dollars alone.

“The pension obligation next year will be over $2 million,” Riel said after the meeting, “and we’re only taking in $2.8 million in property taxes this year.”

Mangel said, “Pension obligation is recognized as an enormous burden on the taxpayers and we are hopeful that the state determines a way to help communities such as ours. We are required by law to make these payments and will continue to do so until the pension funds are fully funded.”

He said city officials are watching pension reform very closely.

“Shame on the state for not passing pension reform at the local level,” Riel said. “Until they do, it is going to get worse. These pension plans are burying small communities across the commonwealth.”

Mangel provided a list of payments the city is required to make, including contractual raises for city employees. Without considering benefits — or any other expenses — the wages alone come to $3.8 million for 2020.

Real estate taxes for 2020 are budgeted at $3.1 million.

Something has to give, officials said.

Riel said, “Every year we knock all the fat and gristle off the bone. There is virtually nothing left to cut. Wage increases, we have to give them by law. How do you come up with an additional half million increase without raising taxes?”

There is little choice but to start looking at some painful cuts.

“The city does not have the luxury to continue to provide the services it currently provides with mandated increases like the pension obligation and contractual obligations,” Riel said, “so we are taking a hard look at cutting some of the basic services the City of Bradford provides.”

He declined to go into much detail, but gave curbside recycling as an example.

“We’re looking at the possibility of — due to financial hardship — still continuing to have a recycling program but discontinuing curbside pickup.”

Last year the city took in $21,000 in revenue from a program that costs more than $150,000.

“It’s a luxury we can’t afford,” Riel said. “We’re looking at providing a recycling center at the DPW complex with greatly increased security measures for City of Bradford residents only.”

Mangel said the city is looking at areas where fees may be increased, too.

“We will also be actively pursuing all of the city’s delinquencies including refuse, mercantile and business privilege tax,” he explained. “The city is also evaluating a different approach in the collection process.”

The mayor declined to comment on whether the city will look to cut jobs.

“The city has had a declining population since 1930 and a declining tax base for decades,” Riel said. About a third of the properties in the city are tax exempt, but are still provided with services paid for by tax dollars.

Mangel explained the city is a core community, “where much of the population goes for services, business, recreation and events, but also one where less and less people reside. This presents a problem to the core community as the tax base slowly erodes but the services required to maintain the core community are still needed.”

The councilman reiterated that city officials will continue to work on the budget to try to pare down wherever possible, “with the ultimate goal being that the City of Bradford government continues to operate efficiently with the level of services to city residents maintained at appropriate levels.”

Breaking down salary totals, Mangel explained the police salaries will be $968,164; fire, $1,110,639; public works and refuse, $717,329; parks, $219,267; administrative, $265,669; temporary help for the fire department, $75,623; council and the remaining city employees, $581,175.

“As it is every year, our back is against the wall with budget season,” Riel said, “but it’s even worse when we have to come up with an extra $500,000 for pensions that we cannot afford.”

Mangel explained that this year, there was an increase in workmen’s compensation, but no increase in health insurance.

Also at the meeting, council approved on second reading an ordinance raising garbage fees by $1 a month, and rental unit registration and renewal fees to $45 per unit.

Council also accepted the resignation of Mark Hollenbeck as city solicitor, effective Dec. 21, meaning that he will no longer be a city employee. Instead, the city will employ his law firm through a contract.

Riel explained the change was possible due to a change in Third Class City Code.

“Before, he had been an employee with benefits,” Riel said. “This means his firm will be employed by the City of Bradford with no benefits. It will be a cost savings to the city of $25 to $30,000 a year.”

Council appointed Hollenbeck Law Offices as legal counsel.

Council also appointed current Police Chief Chris Lucco to the position of city administrator, effective Jan. 3.