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A $206 million deficit in the city's fiscal 1991 budget is scaring potential investors away from Philadelphia and hindering efforts to raise enough cash to pay the city's bills until tax revenues are collected this winter. To raise funds, the city will try to sell $400 million in short-term notes, which it would repay in several months. But the deficit, which more than doubles last year's $73 million shortfall, has made investors wary of purchasing notes. Without the infusion of funds that would come from the sale, the city could run out of money as soon as this month or as late as the end of the year. The short-term note offer is not unusual for this time of year, but the amount $400 million is unusually high. The deficit, revealed in August, resulted in part from a July State Supreme Court ruling which said the city must repay $25 million in real estate transfer taxes. The city must also pay $25 million to rebuild the MOVE property destroyed in 1985. And in May, City Council members rejected Mayor Wilson Goode's proposal to raise the city wage tax. Council members did pass a sales tax, but it has not been approved by the state legislature. In a televised address in August, Goode stressed a need for cooperation among the administration, City Council, the state legislature, and Governor Robert Casey. Goode has blamed the council and state lawmakers for blocking the city's effort to increase its revenue. The rating on Philadelphia's long-term bonds is the lowest among large U.S. cities, according to Michael Johnston, assistant vice president at Moody's Investment Service. This reflects a comparitively high risk for bond purchasers, and means that the city must pay a high interest rate on its notes. Johnston said that Moody's has not been asked to rate the short-term notes. Investment institutions will "think carefully" before buying notes from Philadelphia, Johnston said. City controller Jonathan Saidel has said that the sale of short-term notes neither cures the city's financial ills nor forces the necessary cooperation among local officials. Some civic leaders have called for an independent board to manage city finances similar to that which brought New York City through its bankruptcy in the mid-1970s. The Associated Press contributed to this story.

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