Thursday, December 16, 2010

Tax Hike Looms in Bethlehem

At Bethlehem City Council's final budget hearing on December 15, a CPA in Financial Services was among City employees begging for her job. She offered to work part-time and without benefits. Her plea fell on deaf ears. So did the concerns of firefighter Dave Saltzer, who bluntly stated that the proposed elimination of two positions in his department "is going to increase the potential for more disasters." In fact, City Council voted to freeze all step increases for all non-union workers, and deferred a 1.5% annual increase until July 1.

These are just some of the painful measures that appear likely in what Mayor John Callahan called the "most difficult budget" he's encountered in his 13 years in city government. And that pain will extend to taxpayers, too. Council member Eric Evans also proposed a 3/4 mill tax increase, which is expected to bring in a little over $1 million next year. That tax hike was approved 5-2, with Council members David DiGiacinto and J. William Reynolds voting No. In addition, Council intends to borrow another $16 million for unpaid bills, which includes $1.2 million for the City's annual pension payment.

Callahan had asked for $20 million, and had said he could live with $18.5 million. But he'll have to make do with $16 million.

An independent audit of Bethlehem's finances revealed that in 2009, Bethlehem was several months late in making its annual pension contribution. City administrators blamed the late payment on cash flow problems, and assured Council President Bob Donchez during an August Finance Committee hearing that this year's payment would be on time.

It now appears the money must be borrowed.

Callahan's administration also wants to borrow $6 million for capital projects, including a new EMS Center and upgrades to the City's 911 system. City Council authorized a loan in August, but Mayor Callahan told Council he spent the money on medical costs and now is asking to "replenish" the fund. At Donchez' direction, City Council Solicitor Chris Spadoni asked to review the loan documents, but they were still available before the hearing.

"This city budget has been a disaster and farce from the start," complained Dana Grubb, a former city worker. "No city administration has ever shown such little integrity or alienated the city workforce like this one has." Mayor Callahan poured himself a glass of water as Grubb spoke.

Karen Dolan, who dominated much of the discussion during a five-hour hearing, was irritated that money borrowed for capital projects was spent for something else. "It's distasteful and we don't like it. ... There's a mess and we gotta' clean it up and do better next time and every time in the future."

David DiGiacinto was all for letting City administrators solve it themselves. "There's no funding for it. There's no revenue source," he complained.

DiGiacinto, Dolan, Evans and Donchez all proposed $350,000 in reductions to Callahan's budget, some for as little as $500. DiGiacinto even suggested that the City should consider selling its golf course, which is losing money.

Although Reynolds chairs the Finance Committee, he offered no spending cuts. He instead focused on the golf course and the advantages of requiring patrons to pay for carts on weekends.

A CPA and fire fighters are being eliminated and step increases are being frozen, but funding for Bethlehem's mounted police unit was left intact. Donchez and Evans had proposed its elimination, but a firestorm of protest erupted, and several police officers and Bethlehem residents were among the seventy-five people at the hearing.

The horses stayed home.

City Council will vote on the final budget on December 21. If the 3/4 mill tax increase is adopted, a homeowner whose property is assessed at $100,000 will see taxes increase $75.
Updated 11:25 AM: The Morning Call, Express Times, Bethlehem Patch and WFMZ all have separate accounts.


Anonymous said...

will grubb's former history as a city worker ever be relevent enough to explain his vitriol towards the callahan administration?

Anonymous said...

wasn't grubb fired by callahan for fighting with coworkers?

Anonymous said...

Is that controller the Holland woman who has done such a good job?

Bernie O'Hare said...

Anons 6:31 & 6:36,

Dana Grubb's past is no secret and was splattered all over the newspapers. We can talk about that, or we can talk about why Bethlehem is such a financial disaster.

Bernie O'Hare said...

The Controller made no appearance at last night's meeting, and was at the helm as Bethlehem went thru 2 deficits, w/o bothering to mention them. I think she's been largely ineffective, and I say this as someone who supported her.

Anonymous said...

Kudos to Reynolds and Digicinto for putting the taxpyers first.

Bernie O'Hare said...

There's something to be said for that. It's very difficult to justify during a recession, but I'd have to agree with Evans and Dolan. They will pay a price for this, but I honestly could see no way around it myself. Having said that, I think it is important for Council to insist on controls to keep money from being diverted from its intended purposes, which appears to be an ingrained Callahan tactic.

They cut away at the staff to the point where I think public safety is in jeapardy. They are borrowing money. But it's still not enough.

Anonymous said...

Dolan is on her way out---she will be beat in the next election

Anonymous said...

"Kudos to Reynolds and Digicinto for putting the taxpyers first."

Let's get that right, DiGiacinto put the taxpayers first. Reynolds was his typical Johnny Casino rubber stamp. DiGiacinto is the only one that puts the taxpayers first. Next Mayor in the making!

Anonymous said...

There is no way that DiGiacinto will be able to beat Donchez in a Mayoral Democratic Primary.

Bob Donchez will be the next mayor in Bethlehem.

Anonymous said...

Although Dana Grubb was fired for fighting, you must look at what drove him to that point. I beleive it was his uncovering of these illegitimate practices that put him in the line of fire.

That aside, his remarks are relevant. Council cuts $350,000 from the budget. Great! Did you happen to notice that BEDCO is giving the city $350,000? Makes you wonder about true cuts.

Bernie O'Hare said...

Yeah, it's nickels and dimes. NC Fiscal Affairs Director Vic Mazziotti says that, if you spend your time making little cuts here and there, you end up with a whole lot of nothing. But it is hard for part-time legislators to sink their teeth into a budget. We have to give them that. That's why City Council should have used its budget analyst this year. All kinds of alarm bells are going off.

Anonymous said...

Rubberstamp Reynolds is in full campaign mode, and he's once again rubberstamping what the administration wants. If you've been following along, this is the same administration that (at least publicly) didn't want a tax increase at all. Why would Rubberstamp go against his master?

Reynolds spent more time worrying about $15 golf carts than anything to do with salary cuts for the department heads or cutting their perks. Last year he was texting city department heads while votes for millions of dollars were going on.

DiGiacinto has integrity, which is something that Reynolds can't even fake!

As far as Donchez being the next mayor. He voted for every dollar borrowed and every tax increase, personally that's not the person I'd vote to be mayor.

Clem said...

Bernie O'Hare said...

We can talk about that, or we can talk about why Bethlehem is such a financial disaster.

11:01 AM

The big picture reason, and it is my pleasure to play this song over and over again, is because the idiot citizenry continues to accept these "painful" moves as actual accomplishment.

It is the rule that governments (and school districts, for that matter) everywhere are a financial mess. That's because their parasitic model of regular annual increases well in excess of those realized by their host, excessive defined benefit pensions, lifetime medical benefits,first class facilities, cars, overstaffing, and providing every Goddamn little service from leaf collection to babysitting WAS NEVER SUSTAINABLE.

Yet every year they go through the motions, pat each other on the back, and the ignorant masses praise them for their Herculean efforts to hold the increases to a minimum.

You cannot fix stupid. Simply cannot.

Anonymous said...

Since Vic Mazziotti has helped blowed the Northampton County surplus his advice seems silly. "A penny saved is a penny earned", little cuts add up. I am shocked that an alleged Fiscal manager would have such a cavalier attitude towards cost cutting.

No wonder he has been called one of the biggest hallwalkers in the County.

Bernie O'Hare said...

By anonymous cowards afraid to identify themselves. Vic Mazziotti is perhaps the second or third brightest person I know when it comes to municipal finance, and his plans have resulted in a savings to NC of 10 MM per year. And his point is that you get nowhere going after nickels and dimes.

Anonymous said...

Bernie -- completely agree. Vic Mazziotti is an extremely competent finance guy. He knows his stuff.

Anonymous said...

I guess you don't know very bright municipal finance guys. Maz was less than spectacular in Allentown and given the fiscal woes of Northampton County your mysterious "$10 million" savings a year sounds more like a wet dream than reality.

Why not claim he saved a billion dollars a year, it would be no more less truthful. Fact is there is no proof the County has saved a dime and in fact has "mysteriously" spent money while accomplishing little.

Oh, I forgot the double digit raises to the union folk. Some savings.

Bernie madeoff with millions

Anonymous said...

Diagiacinto a hero here? Are you freakin kidding me? He rails all the timee about the mayors fiscal irresponsibility ( and he's correct) and then votes against a modest increase (that actually falls way short)and he's a hero? More like a coward! If you cant come up with the cuts to balance the budget mess, you have to raise revenue...That's if you have the balls, of course..Kudos to the five councilmen and women who supported the increase..

Anonymous said...

On Karen Dolan... she is a teacher in the BASD who will reap the benefits of a BS contract with 4 percent raises when most government workers are taken nothing or being threatened with layoffs. Then, as a City Council person, she as the gumption to dish out no raises and job cuts!!! GIVE ME A BREAK!!! Total lack of credibility with this woman in my book. In fact... she should not even be on City Council because of this type of conflict.

Anonymous said...

"Dana Grubb's past is no secret and was splattered all over the newspapers. We can talk about that, or we can talk about why Bethlehem is such a financial disaster"

not everyone read or remembers.

when you quote him, you need to point out his bias

Bernie O'Hare said...

"I guess you don't know very bright municipal finance guys."

No, I don't, because there aren't that many. Mazziotti is one of them. I wrote a post detailing exactly how it all adds up. I've also written about anonymous cowards.

Bernie O'Hare said...

"not everyone read or remembers."

If I were to tell the real story, Callahan ends up looking pretty bad.

Anonymous said...

To those who think a tax increase is such a terrific idea:

Please send YOUR donation to the city. Any amount will be greatly appreciated, but YOU are encouraged to give until it hurts.

Make your checks payable to BROKE CITY FUND, 10 East Church Street Bethlehem, PA 18018

Anonymous said...

Dear 9:20,

Maybe you live somewhere where you dont need snow plowed or where you dont need police or fire protection. Those of us who live in the city dont want the city of bethlehem to go the way of the other two crap cities in the valley. So if we have to pay a dollar or two extra a week in taxes ( which was proposed) we'll deal with it. By the way, if you dont live in the city, shut up..If you do and you dont like the tax increase move to that shithole Allentown..

Anonymous said...

To Anonymous 9:39 AM:

Does that mean you're sending in a dollar or two?

You must be one of those special people that gets free meals at the Appolo or Mamma Nina's. Not like the rest of us scum that should not only "pay a dollar or two more", but pay it with a smile on our faces!


The citizen's eyes are beginning to open, and while on the surface Bethlehem is a pretty city with a lot of nice things underneath it all is an ugly truth that is being exposed.

THE CITY IS BROKE, multiple members of council have stated that fact and people like you go on through your day with blinders on.

Maybe YOU should be the one who leaves this city and goes off to the magical land of CA where everything you want is provided for you by the government!

Anonymous said...


How incredbily stupid are you and the rest of your "no taxes at any cost people" Thanks for making my argument..The city is a financial mess. There are two ways to sanely get out of the mess, cut spending and raise revenues..If you dont do both the mess will continue. Period..Obviously , you never served in public office and most likely never will. Either that or you are Michele Bachman? Are you?

Anonymous said...

'How incredbily stupid are you and the rest of your "no taxes at any cost people"'

It is pretty obvious when a person loses an argument...when they attack someone else as 'stupid'.

Anonymous said...

8:40 AM --

You're saying that you're an elected official? What's your name?

If you're a publicly elected official you should at least identify yourself. You should be proud of where you stand on these issues.

Raise revenue? Do you think the people are stupid? Or are you in belief that none of us have basic math skills or calculators?

The city takes in more than enough revenue to cover any basic needs like fire, police, fixing pot holes, etc. So, there really is no need to raise taxes. Did the price of plowing snow go up? How about police and fire. Did those costs go up by 2000%?

The fact remains that the money was spent on green ways and skateparks and fancy street lights and tearing up 378, and tearing up curbs that are more of a danger than helpful for the handicap and on anything else that the mayor could run to cut a ribbon.

The money you keep claiming is for basic city functions never goes to these functions. In fact some of the expenditures in that area were decreased.

You're nothing more than a typical politician who wants to get fat off of my hard earned money. But I have another plan for you, to get you the hell out of office and fast!

Anonymous said...

Dear 925

Im sorry I meant ignorant, not stupid. With your last couple of posts you have again shown your ignorance..However, if you really believe this crap you peddle is true then maybe you should identify yourself and run for office and see how far you get spouting such pathetic garbage..You might want to learn to read first.

Anonymous said...

Well, I will ease your worried mind. I am not running for office, but I know someone who is. Michael Recchiuti is going to beat you like a red headed step child! (at the polls of course)

"learn how to read"??

For a teacher you sure do come up with idiotic statements.

Anonymous said...


A Michael Recchiuti supporter and someone who appears to be Reynolds arguing on Bernie's blog.


Anonymous said...

It's true in your own case (your checkbook) and it's true in the school district, the city etc... It is not a revenue problem, it's a SPENDING problem.