Wednesday, October 2, 2013

Easton Mayor Proposes Raising Earned Income Tax to Close $800K Budget Gap

By Christina Georgiou

Easton Mayor Sal Panto presented the
proposed 2014 city budget at at special
city council meeting Tuesday evening.
Raising the Earned Income Tax rate from the current 1.75 percent to 1.95 percent for city residents is the best way to close a $800,000 projected funds gap in Easton's 2014 budget, Easton Mayor Sal Panto said during a presentation to city council of the 2014 proposed budget on Tuesday evening.

Next year's city budget calls for a general fund of about $32.27 million, an increase of approximately $700,000 over 2013.

"The administration recommends we fill that gap with an increase of two-tenths of a percent in Earned Income Tax," Panto said.

"With this budget, senior citizens won't pay an increase, and in fact, if they recycle--and they're our best recyclers--they'll pay less," he added.

Under the proposal, only residents would see the increase--those paying the "commuter tax" would still pay 1.75 percent.

The shortfall, which was whittled down from nearly $2 million, is largely due to increased healthcare and city pension costs, Panto said.

The mayor credited Public Works Director David Hopkins for the city's upcoming new trash hauling contracts. By breaking the service down into its three basic components, the city will save about $1 million annually for the next seven years over current costs.

The city will now get paid for some recycled materials, and some of the cost savings that will generate will be passed onto city residents, city officials have said. Residents that recycle can sign up to be eligible for a rebate equal to one month's garbage service, or $33, under the program to be implemented in 2014.

But savings on trash hauling costs aren't enough to entirely off-set other rising costs.

2014 proposed revenue sources
Click on any image for a full-size view
2014 proposed city expenditures
Easton, covers health care benefits for employees through self-insurance, paid out an estimated $3.7 million this year due to increased medical claims, far more than in previous years. Panto attributed the spike to a number of serious illnesses among city workers and their families over previous years, but said its unclear whether the costs and claims will continue to rise.

The cost of employees salaries and benefits is a major chunk of the city's annual budget. The 2014 budget calls for both union and non-union employees to see a 2.5 percent raise.

For union employees, the raise is part of their contracts. Panto said giving non-union employees a similiar bump in pay is important to retaining skilled people.

"We need to stay competitive," he said. "We don't want to lose good people."

Another major, but non-negotiable expense for 2014 is pensions, the cost of which has risen $7 million over the last six years, and is set to rise another $3 million next year. The sharp increases are due to the state pulling funding from the municipal pension funding program, leaving local municipalities to foot the bill, Panto has said.

Cutting costs and economizing to balance the budget may mean some hard choices, especially if city council doesn't approve the administration's recommended EIT hike, Panto said.

Some non-essential services' fees are not covering the costs associated with providing them, he said, noting that the city's pools lost $100,000 this year. He suggested the entry fee for non-residents be doubled to help offset the cost.

He also suggested the city might save money by closing one of the fire department's sub-stations.

"Do we maintain three firehouses in a four-square-mile area?" Panto asked, adding, "I don't want to be the one to close pools or firehouses, but the fire department costs $6 million per year."

The city should also seek to recover revenue it's entitled to but isn't receiving, the mayor said, and a major part of that is delinquent fees and taxes. He said the city will be cracking down on "bad" landlords especially to recover funds owed.

"This decision was not made this week. It was made two months ago," Panto said, noting the triple-fatal fire earlier this week is only more impetus for the city to enforce building codes and make sure inspections are up to date.

He added that delinquent accounts for rental properties are hurting Easton's bottom line and neighborhoods, singling out two for scrutiny.

"Domenic DeSai is not a good landlord. Domenic Albanese is not a good landlord. We don't need them here, but if they're going to be here, they need to follow the rules," Panto said.

"Not all landlords are bad, but the majority of derelict accounts are by bad landlords," he said. "We need to get into these homes, and make sure they're safe."

The 2014 proposed budget calls for hiring an additional code enforcement officer to help keep inspections up-to-date and to deal with blight issues.

Money is also proposed to be spent to upgrade the city's billing and tracking systems and help collect fees owed, Panto said.

City council members, who received their copies of the city budget proposal at the conclusion of the mayor's presentation, didn't comment on the suggestions.

A budget review hearing is set for Tuesday, Oct. 22 at the city council committee meeting, and the council is also set to discuss the 2014 budget on Tuesday, Nov. 12, said City Clerk Thomas Hess.

The city's Home Rule charter requires the new budget proposal be advertised and made public for two weeks before city council discusses it.

No comments:

Post a Comment