Reading Draft Budget Holds Tax Rate, Plans $12.4M Draw

Reading would keep its property tax rate where it is next year and plan to use $12.4 million from its fund balance, the money left over from prior years, to balance the books. That is the core of the city's 2027 draft budget, a $129,250,646 general fund plan that City Council has begun reviewing. The general fund pays for the city's day-to-day services, including police, fire, public works and code enforcement.

The draft grows the general fund by $2,875,207, or about 2.3 percent, over the current 2026 budget of $126,375,439 (page 1). Employee benefit and pension costs alone rise a combined $4.3 million, more than the total increase, and cuts elsewhere make up the difference. The Reading Eagle reported on the draft earlier this week.

The tax rate stays at 19.217 mills

The draft keeps the city's real estate tax at 19.217 mills for 2027 (page 1). A mill is $1 of tax for every $1,000 of a property's assessed value, so a home assessed at $100,000 would owe $1,921.70 in city property tax. That rate is the same one residents pay this year. It was 18.129 mills from 2023 through 2025, and the city raised it 6 percent for 2026, according to the property tax table on page 1 of the draft.

Reading's rate is the highest municipal rate in Berks County, though the city's school district rate is the lowest, as our guide to 2026 tax rates by municipality shows. Your full bill also includes county and school taxes; our property tax explainer walks through how the pieces fit together.

The city expects to collect less of what it bills

The draft lowers the city's collection rate assumption to 88.0 percent, from 91.0 percent in 2024, 2025 and 2026 (page 1). The collection rate is the share of billed property taxes the city expects to receive during the year; the rest arrives late, with penalties, or not at all.

That change has a cost. The draft bills $27,469,948 on a taxable assessment of $1,429,460,800, based on the county's July 2026 assessment report, and expects $24,173,554 of it to come in. This year's budget expected $25,011,645 at the same tax rate (page 1). By our math, the 2027 levy would yield about $824,000 more if the city had kept the 91 percent assumption. Total real estate tax revenue still rises in the draft, by $367,895 to $27,241,373, largely because the city expects to collect $382,406 more in prior-year taxes (page 2).

What pays for the budget

Beyond the reserve draw, the draft leans on taxes tied to paychecks and home sales.

• Earned income tax: $31,000,000, up $1,805,000 from the 2026 budget of $29,195,000 (pages 1 and 2). The earned income tax is a local tax on wages and self-employment profits, usually withheld from paychecks. The city collected $32,353,485 from it in 2025, so the 2027 figure sits below last year's actual result.
• Real estate transfer tax: $7,600,000, up $1,100,000 from the 2026 budget of $6,500,000 (page 2). The transfer tax is charged when property changes hands. The city collected $9,911,954 from it in 2025.
• Transfers from city utilities: $10,881,159 from the water fund and $4,500,000 from the sewer fund (page 6).

The sewer transfer has a limit. A January 2024 change to the federal consent decree governing Reading's sewer system raised the amount the city may move from the sewer fund to the general fund each year to $4.5 million, from $3.0 million, according to a city memo in the Oct. 5 Committee of the Whole packet (page 8). That packet also carries Bill 82-2026, which shifts $1.5 million of this year's transfer from one sewer fund to another; the memo says the general fund total does not change.

The planned $12,446,300 use of fund balance is $90,071 less than the $12,536,371 the 2026 budget planned to use (page 1), so the draw is not new. It covers close to 10 percent of the 2027 plan. It is a budgeted figure: the draft's columns for actual 2024 and 2025 results show no fund-balance use recorded on that line (page 6). The draft does not state how much the city holds in reserves or how much would remain afterward.

What drives the cost growth

Fringe benefits, the budget line for employee benefit costs other than pensions, rise $2,530,937 to $21,147,354, about 13.6 percent. Pension costs rise $1,814,987 to $19,256,237, about 10.4 percent (page 1). Together those two lines make up about 31 percent of the general fund.

The police department budget grows to $49,732,573, up 4.6 percent, and fire to $30,550,624, up 7.6 percent (pages 20 and 25). The two departments account for about 62 percent of general fund spending.

The draft's position budget, updated Sept. 25, budgets raises of 3.5 percent for management and AFSCME union employees, 5 percent for police and 4 percent for fire (page 56). Management and AFSCME employees got 3 percent for 2026. The position list counts 658 positions, 601 full-time and 57 part-time, with full-time salaries rising to $49,040,035 from $47,723,457 (page 74). That list covers more than the general fund, including sewer and trash positions.

Some lines shrink. Operating expenses fall $1,407,210, debt service falls $305,012, and the city expects $314,100 less in interest income (page 1).

Where the document does not add up

The draft's totals disagree with each other in places. The summary on page 1 puts 2026 general fund spending at $126,375,439, but the department-by-department detail totals $126,084,128 for 2026 (page 35), a gap of $291,311. As a result the detail pages show spending growth of $3,166,518, or 2.51 percent, while the summary shows $2,875,207. The revenue detail has a smaller mismatch: licenses and fees total $6,397,900 on page 3 against $6,417,900 on the summary, and other revenues total $2,742,000 on page 6 against $2,722,000, two $20,000 differences that cancel out. The revenue summary on page 6 also lists the total increase as $2,718,807 rather than $2,875,207, because it shows no change for reimbursements even though that line rises. The 2027 totals of $129,250,646 match throughout. Questions about which 2026 figure is correct are for the city's finance department.

What happens next

The Oct. 5 Committee of the Whole agenda scheduled a budget, capital and position ordinance overview, the start of council's review (packet page 1). The city's calendar lists a Budget Review session on Wednesday, Oct. 14, at 5 p.m. on its budget page. The same calendar lists a Committee of the Whole meeting at 5 p.m. and a regular council meeting at 7 p.m. on Monday, Oct. 12. The city has not posted a date for a final adoption vote. Last year's budget appears on the same page as "2026 Approved Budget 12/12/25."

Residents can speak to council during public comment at regular business meetings, held the second and fourth Mondays of each month at 7 p.m. in Council Chambers, according to the city's public comment page. Meetings move to Tuesday when a federal holiday falls on a Monday, and agendas post on the city website three days before each meeting. Oct. 12 is Columbus Day, a federal holiday, but the city's calendar still lists meetings that night, so check the calendar before attending. For comparison, our report on the Berks County budget shows how the county is also drawing on reserves.

Sources and contact

• City of Reading 2027 Draft Budget (PDF, 75 pages; page numbers above refer to the PDF)
• City of Reading budget page and meeting calendar
• Committee of the Whole agenda packet, Oct. 5, 2026 (PDF)
• City of Reading public comment rules
• Reading Eagle, Oct. 6, 2026

Reading City Council: City Hall, 815 Washington St., Reading, PA 19601; council@readingpa.gov; 610-655-6205.