Guest Opinion/Editorial
By Jeff Warren
When it comes to government finances, we hear the catchphrase all the time – "we need to do more with less." These words are uttered from public officials in the federal government to our local school board members. This is also painfully true in millions of households across America as we continue to see costs rise and wages plateau. Settling for the "same ol’, same ol’" just isn’t working any more when darker financial pictures are on the horizon, especially when it comes to local government’s public pensions.
Earlier this year, my City Council colleagues and I were presented with a proposal that would raise the commuter tax on all non-residents that work in the city from 1 to 1.75 percent. City Council has been advised that the tax is needed to cover $1.35 million of a projected $1.85 million shortfall in the city’s pension obligations. Raising the commuter tax would soften that blow.
First, there is genuine concern within our business community that this tax will be a deterrent for commuters and patrons to support our city and for employers to want to stay and keep operating their businesses. Will small business owners living outside our borders want to pick up and relocate their businesses to Easton? Will we witness merchants taking their business elsewhere? What will happen to our local economy?
Second, there is a concern that we will hurt and deter regional cooperation by targeting other’s paychecks and wallets. Will our neighboring local governments be discouraged to embark on inter-municipal agreements down the road? Will we begin an alienation process that lasts for decades as we strive to enhance cooperation? Do we balloon and manifest the “city vs. suburbs” mentality that is already prevalent here in the Lehigh Valley?
These are all valid questions that have no easy answers, but they contribute greatly to the debate. The overall question as we move forward is: why is this happening, and why is the commuter tax even an option?
Laws mandating defined benefit plans for municipal workers’ pensions are the issue. Investment losses affect contribution requirements instead of the benefits. Further, state law currently prevents municipalities from making the changes they might want to make to their pension system.
Accordingly, our state government then graciously allows local governments to institute a commuter tax to specifically help fund pensions. If one looks at the overall picture, this is a mechanism for the state to continue passing the buck onto our local municipal governments.
Harrisburg needs to step up to the plate for every taxpayer, worker and local government in the Commonwealth and address the pension issues that truly affect us all. While the General Assembly worked on the public pension issue in November 2010, the end result did not go far enough. In essence, the state legislature continues to push costs down to local governments and ultimately, the taxpayer. They need to come to the aid of local governments and they need to do it now without hurting Pennsylvania’s workforce in the process.
City Council, in the meantime, still needs to find a solution to the gap in our pension obligation.
I, along with other City Council colleagues, have been a proponent of instituting a PILOT (payment in lieu of taxes) on properties within Easton that are tax exempt.
If one were to look at the dozens and dozens of properties in the city that have received tax exempt status over the years, one would be shocked. The PILOT option would generate significant revenue for the city, since over 40 percent of the property in Easton is tax exempt.
Finding solutions and mechanisms to cut costs within local government budgets is increasingly difficult. It is the main reason the concept of regionalism must remain at the forefront of the Lehigh Valley’s public agenda for the long-term. Municipal governments like Easton must have the opportunity to enhance our ability to enter into inter-municipal cooperative agreements with our neighboring municipalities in order to cut costs.
From my seat on City Council, a commuter tax doesn’t seem to be the best solution to a decades-old problem. In the end, it’s just not good government, which is perpetrated by the Commonwealth. While it is never a good time to place an added tax on individuals, at this point in our economic recovery it’s certainly not ideal. It penalizes middle-class working families who are lucky enough to be employed, isolates our neighbors, and may very well hurt Easton’s local economy for many years to come.
Jeff Warren is an Easton City Councilman.
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Jeff Warren rightly places much of the blame for this crisis in 23 Pa. cities on state government. But he works for the state, with Senator Lisa Boscola. What efforts are taking place, on a statewide level, to effect change? Since they are currently on a 12-week break, I would think that the LV delegation would be very concerned about this problem and address it publicly.
ReplyDeleteLet me hasten to add that I agree with Warren about a PILOT program as a temporary measure, and several county council members indicated they support that idea. That is preferable to a commuter tax.
ReplyDeleteYour initial comment that we have to do more with less is interesting. I do remember that you suggested that benefits be eliminated for part time elected officials. Your suggestion met with little applause. Easton has a lot of problems beyond pensions. It is paying major dollars for lawsuits. If the lawsuits did not exist, would the need still be there for the tax. Also, I remember a council man saying that this proposed tax was temporary. Once certain ratios were achieved the tax would go. I guess my problem is this: Do you really have other choices? If you do not tax, then you default. Or, put this increase on city residents and property owners. It's great to float all these ideas but in the end time is your greatest enemy. Perhaps the city should just file for Act 47. Then you can impose a commuter tax. Harrisburg tried to do that. Curious, all of the legislators in that area vowed to stop the tax in the legislature. They did not have any solutions. Should we be surprised? Our state government has little on intelligence witness all those behind bars. Here, Easton proposed the tax. Not one squeak out of our representatives. Not even big enough to be mice I suppose. So I guess you have your options: impose the tax and be hated by every non resident employee and Mr. Ohare or do nothing and watch the city file for bankruptcy. The latter option of doing nothing is a favorite of our state legislatures; you can find much guidance there.
ReplyDeleteEaston is a tiny, land locked city, with too many renters and too many "don't tax us" non-profits. The college, the hospital and others must now be made to do what housing authrorities have always done, that is make a contribution in lieu of taxes. This formula sends payments to taxing bodies such as city, county, schools. What does Easton benefit by having Lafayette College within the city? really. What is the direct benefit? It's too late to tell them to move. Make them pay their way. Either that, or force them to admit every kid from Easton for the cost of a public college education. Either way, they need to pay for this "privilege". Same with the hospital (if it is within the city). Free or reduced health care for residents.
ReplyDeleteI am sick of this. Same with renters. They need to pull their weight. Make these adjustments now. In addition, Easton must reduce spending. To all Easton municipal workers with defined benefit pensions...it's over starting yesterday. Cannot afford 'em! All future employees get a 401-K with 5% city, 5% employee match. Also, for the current employees, conversion of the defined benefit into a lump sum equivilent, which eliminates the city's future involvement in these ridiculous legacy costs, which were promised by short-sighted idiots.
If I run for office on this platform, would anyone vote for me?
Voice of Reason
no vote from me. We give cops defined benefits and nothing else. They do not receive social security. How long do you thing a cop can chase people on foot? Age 40? Age 50? Age 60? Or, how old can a cop be to fight a person? Problem is that this business is for young people. Much like the military. 20 years and you are out. Half salary pension, no cost of living adjustments. As time wears on the cost of living erodes the pension to nothing. So, you propose a defined contribution with matching city contribution. That cop needs to work to age 65 at least to be able to retire. Guess what happens when he sees a criminal running at age 55. The criminal runs and gets away. What you suggests seems to be the answer, but the problem is that it will not work. Police suffer from injuries that they carry through life. Many are not able to adjust to the private sector after working through their youth. Unfortunately, that is the price for having a policeman in today's world. We just have to get use to paying for it.
DeleteAnon July 20: To address a couple of points you've made--Easton Hospital doesn't actually lie within city limits. It's in Wilson Borough. I'm not sure of its property tax status, but regardless, the money would go to Wilson Borough anyway.
DeleteRental properties, with the exception of state- and county-owned housing, do pay property taxes. And, since the landlords are in it to make money, you can bet that renters are "pulling their weight" in that regard, since the property taxes the property owner is paying is coming from the rent they pay.
BTW, for all that various folks like to bash rental properties and renters, there are quite a few of us that are responsible and active in the community. It makes a lot more sense for certain segments of the community to rent rather than own, for instance, single professionals, especially younger ones. And, though in some areas, like the West Ward, where dividing former single residences into apartments causes parking and other crowding issues, in other areas, like Downtown, that is the kind of housing that is being developed. Think Pomeroy, and the former WEST building, along with A&D tile. These buildings, when reassessed, will generate more property taxes than they formerly did, at least after the tax breaks they were given through the special programs that were used to provide incentive to redevelop them run out. Which means that strangely enough, older rentals may well be generating more local tax $ than some of the newly developed ones, depending on where they are situated.
Otherwise, your points, along with everyone else's are well made. Thanks. Keep 'em coming.