Wednesday, October 23, 2013

Easton City Council Mulls 2014 Budget, Considers EIT Hike

By Christina Georgiou

A pie chart illustrates sources of revenue and their proportions
for the 2014 City of Easton budget.
Click on the image for a full size view.

Easton city council members scrutinized the revenue side of the proposed 2014 city budget at its Tuesday night finance committee meeting, looking at various line items and discussing whether the estimates were accurate.

The council will introduce three ordinances at its regular meeting this evening, each with a different rate of Earned Income Tax (EIT) residents may pay to the municipality next year--1.35, 1.45, and 1.55 percent, though only one will ultimately be passed by the council sometime next month, Easton Mayor Sal Panto said. Currently, both residents and those that work but do not live in the city pay the same rate.

If the highest rate is passed, city residents will pay a total of 1.95 percent EIT, with 0.5 percent going to the school district. Commuters will continue to pay the same rate as this year under Panto's proposal.

Introducing all three possible rates will allow for flexibility while the 2014 budget undergoes adjustments while still allowing for the amount of time the ordinances need to be aired publicly before passage, the mayor said.

The city faces a shortfall in excess of $1 million, and raising the EIT, along with some city service fees is the best way to make up the difference, Panto has said. Other cost-saving  options include closing one or both of the city's pools, or shuttering one of the city fire department substations, the mayor has suggested, though he's said he's reluctant to do either.

As Chris Heagele, the city's finance director, presented estimated revenue line items Tuesday evening, some council members questioned whether some of the estimates were too conservative and wondered whether if city's Home Rule Charter requirement that the annual proposed budget be presented by October 1 hinders having the most accurate estimates to work with.

Councilman Roger Ruggles said he thinks a number of the revenue estimates were too low, and that actual funds taken in by the city by the end of the year would be higher. He particularly questioned whether EIT revenue from non-city residents, admissions taxes, and parking revenue wouldn't be more next year than is currently projected.

Heagele admitted that non-resident EIT revenue is likely to rise as more workers and their employers become aware of the tax, implemented earlier this year, and that admission tax revenue is also likely to increase with the increase in numbers of visitors to the newly expanded Crayola Experience.

"We feel we're going to get an even higher rate of collection next year," he said.

Some city parking revenue numbers were "trending low" due to the three months Crayola was closed for renovations, which affects the estimated parking revenue for 2014, Heagele said, but erring on the side of caution is safer than assuming the city will have more money next year.

Panto said he too favors a conservative approach to estimating what the city will likely take in next year.

Councilman Jeff Warren also supported being cautious about revenue estimates.

"I'm with the mayor that the conservative figures on this (is the way to go) because we don't have the numbers," he said.

Actual revenue figures from this year used to prepare the 2014 budget proposal was only available through August, due to the requirement it must be presented by October 1.

City Administrator Glenn Steckman said changes to the proposal are likely as the process progress, however.

"This is a living, breathing document. It's going to change," he said. "This is our best estimate at any time."

Warren suggested that the requirement for the budget to be presented so early needs to change so more accurate revenue estimates can be generated.

"I believe we need to potentially revisit these dates (for the budget)," he said, noting that while the Home Rule Charter probably intended the early date to allow more time for public input, the requirement seems to be hampering the process.

A pie chart illustrating Easton's 2014 proposed expense
Click on the image for a full size view.
"It's hindering the ability for us to really see things," Warren said. "It's something we need to look at down the road."

Another budget discussion, this time looking at the expense side of the equation, is scheduled to take place in city council chambers this coming Monday, October 28, at 6 p.m. All the city department directors are expected to present their respective portions of the proposed budget at that time.

If necessary, an additional budget hearing will take place on Tuesday, November 12.

The 2014 budget proposal calls for a general fund of about $32.27 million, an increase of approximately $700,000 over 2013.

The city's Home Rule Charter requires the city council to pass a balanced budget by December 1.

Updated at 10:42 p.m. to correct the possible new EIT rates and the EIT rate paid to the school district.

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