No, not that budget: Cities hammer out their 2016 finances

     The skyline of downtown Pittsburgh is silhouetted by the rising sun on a foggy morning, December 2015. (AP Photo/Gene J. Puskar)

    The skyline of downtown Pittsburgh is silhouetted by the rising sun on a foggy morning, December 2015. (AP Photo/Gene J. Puskar)

    It’s budget time in the city. See which municipalities are raising taxes and which are cutting services.

    If you’ve been watching the state legislature recently, you might think budget deadlines are like terms and conditions agreements: they exist on paper, but many people don’t bother reading the fine print.

    But like the terms and conditions, if you ignore budget deadlines, you can end up in a hairy legal situation. Which is why — unlike the state government — most cities in Pennsylvania managed to get their municipal budgets in order before the end of the year deadline.

    Property and real estate taxes are measured in mills in Pennsylvania. One mill is one thousandth of a dollar, or $1 for every $1,000. The millage rate is the amount of tax assessed on each $1,000 of property. If the millage rate is five, every $1,000 of property will be charged $5. A $100,000 house will set you back $500 in property taxes. Of course, an increasing millage rate means an increasing tax bill for residents. 

    The good news

    Some cities, perhaps burned out on watching negotiations in the statehouse, passed their budgets unanimously.

    ErieHow much? $72.1 millionTax increase? NoCheck it out

    Erie City Council passed Mayor Joe Sinnott’s budget 7-0 on Dec. 17. At the final hearing, council president David Brennan proposed reallocating $177,000 from equipment and supplies to public safety. That proposal missed the five-vote requirement by one. Both the mayor and the police chief said they felt public safety spending was sufficient. The largest portion of the budget goes to the Erie Police Department — nearly $24 million.

    LancasterHow much? $52.66 millionTax increase? NoCheck it out

    No tax increase, but residents aren’t getting off totally free: water and sewer rates increased to help pay for infrastructure improvements. The average resident will pay $44 more a year, according to Mayor Rick Gray. The City Council passed the budget 6-0, with one councilor absent, on Dec. 16. One unexpected savings: the city has put off purchasing body cameras for police officers for a year. That money has been reallocated to the library and EMS systems.

    AltoonaHow much? $29.4 millionTax increase? Earned income tax rate increase from .25 to .40 percentCheck it out

    City Council passed Mayor Matt Pacifico’s budget unanimously on Dec. 9. The increase will help pay for pension increases. Altoona is preparing for a union renegotiation in 2016, since Act 47, the state’s distressed city program, froze city wages in 2014. The city ended 2015 with a budget surplus of $1.7 million and expects the 2016 budget to have a surplus of $1.2 million.

    The tax increases

    Perhaps the lesson is that if you want to pass a budget easily and unanimously, keep taxes steady. But unfortunately, that’s not always possible. Here are the cities that had to bump up that tax rate for 2016.

    PhiladelphiaHow much? $3.9 billionTax increase: 4.5 percent property tax increaseCheck it out

    Philadelphia does its budget differently than the other cities in the state, with the fiscal year starting July 1. The months-long budget negotiation ended on June 16th, when Mayor Michael Nutter and the 16-member city council struck a deal. The biggest issue was education funding: the Philadelphia School District wanted $103 million in new revenue. Nutter proposed funding that with a 9.34 percent real estate tax increase, which the council deemed too burdensome on residents. Instead, the schools got $70 million, funded by the property tax increase and other smaller tax increases. The $3.9 billion operating budget included larger allocations to the Department of Licenses and Inspections, the Department of Parks and Recreation and public safety.

    AllentownHow much? $99.9 millionTax increase? 24 percent increase to earned income tax, one percent increase to property taxCheck it out

    Mayor Ed Pawlowski’s 2016 budget was passed 5-2, with concerns raised about an ongoing FBI investigation of the mayor. The increase to the earned income tax, from 1.33 to 1.65 percent, is expected to bring in $5.5 million. The one percent property tax increase was a surprise addition at the council hearing. WMFZ-TV reported that the mayor called it an “accounting adjustment.” The city has been receiving less than the 5.81 mills it expects because residents are taxed on their land and their homes separately. Those two numbers should add up to 5.81 mills, but in reality, it tends to be lower. The increase will bring those numbers in line and shouldn’t be seen as a tax bump.

    ReadingHow much? $89 million*Tax increase? Property tax to rise two mills

    Reading City Council passed Mayor Vaughn Spencer’s budget 4-2 on Nov. 23. The two nay votes were over the $350,000 allocated to the public library — some felt that was too generous considering the city’s financial stress. Nine full-time city positions were cut and three part-time positions added. The city is already looking ahead to 2019, when the city is expected to leave the Act 47 recovery program. If its finances are not in order by then, the city will be put into state receivership.

    ScrantonHow much? $132.2 millionTax increase? Property taxes are up 5.7 percentCheck it out

    City council voted 3-1 on Dec. 3 to pass Mayor Bill Courtright’s budget. The budget includes $29.1 million in new debt intended to help fund backpay owed to the city firefighter and police officer union. The budget also creates five new positions, which city councilor Bill Gaughan tried to eliminate. Gaughan was the one nay vote, telling the Times-Tribune, “A city in the dire financial position we’re in should not increase its budget. As we continue to ask our residents to pay more and do more with less, we should practice what we preach.”

    HarrisburgHow much? $60.7 million*Tax increase? Local services tax increased from $1/week to $3/week

    Harrisburg City Council passed Mayor Eric Papenfuse’s budget 5-2 but will reopen the discussion in January when three new city councilors come on board. The local services tax is charged to workers in the city who earn over $24,000 a year and mainly affects those who commute into the city. The increase is expected to bring in at least $3 million in revenue. If the new city council votes that increase down, it will have to find a source for the money or consider cuts.

    BethlehemHow much? $73.7 million*Tax increase? Property taxes will rise 2.2 percent

    Bethlehem raised property taxes on both the Northampton County portion of the city (17.15 mills) and the Lehigh County area (5.42 mills.) Mayor Robert Donchez’ budget accounts for rising pension and healthcare costs, though Bethlehem’s city government is at the smallest size in recent memory. The city is preparing for 2017, when it will begin larger payments for a $16 million loan it took out in 2011.

    The controversial

    Some cities are following in the footsteps of the state legislators, struggling to strike a budget deal between mayors and city councilors.

    WilliamsportHow much? $24.1 millionTax increase? Millage rates could increase by 1.89 mills

    Check it out

    Williamsport City Council adopted a budget on Dec. 17, but Mayor Gabriel Campana has said he will not sign it. He was hoping for more funding for police officers and security cameras, as well as street repairs.  The city saw a record number of homicides in 2015, and Mayor Campana released a statement saying the budget endangered residents’ safety. The funding the mayor was angling for remains in the budget’s bottom line, but it isn’t allocated directly for those services. The money could still end up being used for public safety. The city council budget created more street maintenance positions than the mayor originally requested.

    YorkHow much? $99 millionTax increase? No, a one percent real estate tax decreaseCheck it out

    The proposed budget had York’s first tax decrease in modern history. But on Dec. 15, when city council gathered to vote, it cut $450,000 of revenue from the budget. City council voted 3-1 to not move $150,000 from the York City School District into the general fund. The council also nixed a six percent sewer rate increase that was expected to generate $300,000. Despite the tax decrease, there is a concern that high taxes and fees are pushing residents out of the city. A special meeting is scheduled for Dec. 28 at 10 a.m. to either find $450,000 or cut parts of the budget.

    Update: York City Council passed an ammended budget on Dec. 28, which was vetoed by Mayor Kim Bracey. After a series of negotiations, City Council created a compromise budget that included moving $150,000 of realty transfer tax from the school district into the general budget. Bracey signed the budget in time for the Dec. 31 deadline.  

    PittsburghHow much? $519 millionTax increase? NoCheck it out

    The Pittsburgh budget doesn’t raise taxes and the city council passed it unanimously. Then the Intergovernmental Cooperation Authority, a state-appointed fiscal watchdog, said the proposed revenue streams are not certain enough. The Authority is particularly concerned about $1.6 million expected income from a rental registration fee that the city is trying for the first time. City landlords have threatened to sue over that fee, which could imperil the funding. Mayor Peduto’s office said the city has enough surplus to cover that deficit if it emerges. The ICA says the city is in violation of state law if it uses a budget that the authority hasn’t approved.

    *2016 budgets for Reading, Harrisburg and Bethlehem were not available online. 

    Editor’s note: This story has been updated to include the outcome of York’s budget negotiations. 

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