Coatesville City Manager Harry Walker was confronted last night with evidence he had withdrawn $500,000 from the city's dwindling Trust Fund and then keeping the withdrawal hidden from council.

Council met last night in a special public work session to get an update on the city's finances in light of his request to withdraw $900,0000 from the Trust Fund. Walker claims the money is mainly needed to cover police overtime caused by an arson spree. But the meeting quickly focused in on the administration's overall handling of city funds and the two withdrawals from the Trust Fund in December totaling nearly $500,000.

The revelation came after Walker reiterated a claim that he has not raided the Trust Fund to balance the budget as had the previous administration. Council President Marty Eggleston then pulled out a 14-page bank transaction report that showed Walker personally authorizing a $465,000 drawdown from the Trust Fund on Dec. 17. A few days later, on Dec. 22, a second withdrawal for $35,000 was made without the bank identifying the authorizing agent on than "client".

Ironically, the withdrawals came as the city was preparing the 2009 budget with Walker making repeated claims the budget was being balanced without raiding the Trust Fund. "Doing all those discussions you didn't bother to tell us," council Vice President Kareem Johnson asked, referring to the withdrawals.

Walker, however, insisted he had not raided the Trust Fund, instead claiming the $500,000 was money not used by previous administration when at the end of 2005 council approved withdrawing $8.5 million from the trust fund to cover overspending during the Janssen Administration.

Eggleston, saying he didn't want to be mistaken, then requested Walker to get the authorizing resolution approved in 2005. While the resolution did authorize tapping into the Trust Fund, it stipulated the money was to be spent in 2006 to prevent an egregious tax increase.

Eggleston: "When was the money spent?"

Walker: "2008"

Eggleston: "That's totally significant to me."

Walker said he always knew the money was there. "That we didn't get it all," he said.

Walker said he was faced with a cash shortfall and he instructed his staff to search for additional revenues. It was then, he said, it was discovered that in 2005 council had authorized the $8.5 million withdrawal, but had never drawn down the entire amount, roughly only $7.3 million.

The alternative, he said, was to call for a tax increase. "That was someplace I didn't want to go," he said. At one point Walker complained that he was being asked to do more with less than the previous administration.

Eggleston then provided a personal story of how he had found $80 in the pocket of a coat he had not worn for some time. "I went and told everybody about it. And you, Mr. Walker, find $465,000 and you don't tell anyone."

Council Member Ed Simpson then questioned interim Finance Director Donald McKenzie where in the city's financial statement presented to council last night did it show the deposit of the $465,000. McKenzie said it was listed simply as revenue.

"Somehow, somewhere you got to show the money (from the trust fund) coming in," said Simpson.

McKenzie: "Because it's revenue you don't show it coming in."

Eggleston, at one point, advised Walker to be forthright about the Trust Fund. "Right now you're dancing around it. And I find it disturbing."

He added: "The appearance of impropriety is impropriety. You have to be careful."

The $500,000 drawdown from the Trust Fund meant selling a certificate of deposit before its maturity date, causing the city to pay a $10,000 penalty for early withdrawal.