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Nazareth, Pa., United States

Tuesday, September 01, 2009

LC Comm'rs Get Cunningham's Tax-Hike-Free Budget

On Monday, LC Exec Don Cunningham made it official. The no-tax-increase budget he highlighted last Thursday, was formally presented to Lehigh County Commissioners, headed by Percy Dougherty. For the fourth year in a row, Cunningham has kept taxes steady. The tax rate will remain at 10.25 mills, meaning that the owner of a home assessed $50,000, will continue to pay $512 a year in property taxes.

Three pieces of bad luck have made this year's budget a challenge. First, there's an extra pay period, which happens only once every eleven years. That will cost $4.3 million. Second, a poorly-performing stock market will force a $12 million pension fund contribution as well as a $3 million loss in investment earnings. Third, real estate tax revenues remain stagnant. The slowdown in the real estate market has cost $4 million in increased tax revenues and recording fees.

So how has Cunningham avoided a tax hike? Is it just because his predecessor established a tax relief fund, something that he contributed to himself when times were good? Is he just a lucky man, as Morning Call columnist Bill White suggests? No.

First, he's kept the average growth in spending at under two percent, well below the rate of inflation. Cunningham himself observes, "One would be hard pressed to find another county that has a four year average spending growth of less than two percent.”

Second, his proposed budget has the smallest employee complement the county has had in 20 years. Name any local government that can match that reduction, accomplished without layoffs or hiring freezes.

Third, taking a hint from his Republican friends on the Board of Commissioners, Cunningham is freezing salary steps, proposing smaller wage increases (1.5 - 2.5 %) and requiring a larger contribution for health benefits.

Fourth, he will freeze or cut many entities and programs supported by the county, including LANTA, the Planning Commission and the Conservation District. (LC Comm'rs may want to think twice about riding on LANTA this year).

Fifth, he will use the Tax Relief Fund, created solely to relieve the county from raising taxes during challenging times, to help avoid a tax hike. Cunningham compares this to using "our office supply fund to buy office supplies.”

Cunningham is hoping that the state finally complies with a Pennsylvania Supreme Court decision to fund $26 million in the cost of court services to Lehigh County, but that would require him to be ... lucky.

Where does the money go? Seventy cents of every dollar pays for the back end of crime - the Courts, District Attorney, Coroner, jails and juvenile detention centers and anti-crime and anti-recidivism efforts.

By shaving more than $20 million from the cost of the courthouse renovation and expansion, Cunningham also hopes to pay for bridge maintenance and repair operations at an additional ten bridges. These include the Reading Road Bridge over Cedar Creek, the Basin Street Bridge, the Walnut Street Bridge in Slatington, Rex’s Covered Bridge over Cedar Creek, the Pine Street Bridge over the Lehigh River and Geiger’s Covered Bridge.

Lehigh County Commissioners have until December 1 to adopt or change Cunningham's budget. If they reject it, it's adopted. If they change it and he vetoes those changes, his budget will be adopted unless six commissioners vote to override him. To make any changes that will stick, six of them must agree.

Blogger's Note: Ken Petrini's analysis of Cunningham's budget is located here.


Anonymous said...

I think both John Callahan and Charlie Dent are better looking than Don Cunningham. I read that you think he is pretty. I do not agree that he is as attractive as you think he is.

Anonymous said...

I take issue with your blog post. In 2003, then County Commissioner Jane Ervin increased the real estate tax by a whopping 70%! After the public outcry, she reduced the rate twice to where it is now, 10.25 mills. Since taking over in 2007, Cunningham has not raised the real estate tax, which is commendable, but also understandable given the 2003 massive hike. The problem is that the County has not cut spending and as a result, each Cunningham budget spends more than it takes in, leading to a draw down of the tax "relief" fund. The problem with any such fund is that it is predicated on charging more in taxes than the gov't needs at some point and allows the gov't to avoid cutting programs or reducing costs.

While Cunningham deserves credit for not raising taxes during his term, he should also be judged for not cutting spending or programs so that his successor could enjoy the same revenue "cushion" that he got when he came into office.

Bernie O'Hare said...

Thanks for your different opinion. Is every exec supposed to raise taxes 70% so that the next exec can have a cushion? Is that what Cunningham is supposed to do?

Anonymous said...

"each Cunningham budget spends more than it takes in,"

NOT TRUE! The first two budgets ran massive surpluses and we folded into the relief fund and other reserves. The budget this year used reserves from last year's budget and some of the relief fund. The reserves and the relief fund are being used the way they were intended: in times of troubling economic downturn, use the money to ensure that critical services aren't cut. In good times, fill them back up.

Bernie, the opinion from 7:26 has one underlying assumption: gov't should always be cutting programs and safety nets. There is no interest in effective gov't, only in eliminating the positive things gov't can do to help people and communities.

Anonymous said...

oh, and the sentiment would be more noble if Don's opposition hadn't actually added more spending to the 2009 budget... spend Don didn't ask for.

Anonymous said...

(Anon 7:26)

I stand corrected. If the Cty. experienced budget surpluses for the 1st 2 yrs, then that's my mistake. I support Cunningham and think he has done a good job as Commissioner. The fact remains that the tax rate has reamained unchanged as a result of the tax relief fund which resulted, at least in part, from a significant tax hike earlier in the decade. It remains to be seen whether that surplus will be totally drawn down in the next few years. At which point, taxes will have to increase, or spending will have to be cut.

A more disturbing possibility, and one that I have thought a lot about recently, is that the Cty (or any governmnt) will be unable to limit or control costs to a sustainable level. Long term costs / obligations may require significant tax increases in the future, pension funding obligations being an example.

Anonymous said...

That is easy anon 3:10. Callahan is the best looking then Dent then Cunningham. Dent and Cunningham are somewhat close. But Callahan wins. Ask Bernie about the poster in his apartment.

Anonymous said...

"If the Cty. experienced budget surpluses for the 1st 2 yrs, then that's my mistake. I support Cunningham and think he has done a good job as Commissioner."

Yeah, it is your mistake and I'll point out that Cunningham is the County Executive, not commissioner. I'm questioning your ability to even offer effective commentary when you prove over and over an inability to get the facts correct.

Anonymous said...

doesn't it depend if you're a leg man or not, anon 3:10.

Bill Leiner Jr. said...


The first time I saw you I said "Wow!" ....... If it were possible for all to eliminate all the party prejudice and negativity, one would look at the Don Cunningham Administration's performance his first four years as "promises made; promises kept." And, completed in a difficult "trickle down" failed federal economic policies 2001-2008. I do not envy "Scrappleface" as it seems to me only right wing partisans will support his candidacy. While I certainly admire any one, including "the ...face, who gets into the political fray seeking elected office, I think many will not part with their bacon to support "Scrappleface."

Speaking of financial support ... Support the Coplay Scholarship Fund Committee ... send a check to - CFSC, 19 N. 5th Street, Coplay, PA 18037. As CSFC founder and Chair we are always trying to raise dollars to provide scholarships to Coplay kids planning to attend university, college, the Police Academy, or technical school. Since 2001 we have awarded thousands of dollars to Coplay kids. Bernie, Help out. Send a check. CSFC is a registered 501(c)3 non profit .... contributions are fully tax deductible.


Anonymous said...

Cutting funding for LANTA is short sighted and counter productive. At a time when communities ought to be encouraging alternative transportation modes, Lehigh County taking steps to discourage growth of the system is mind boggling. And Northampton County follows Lehigh's lead so the impact is double damning.

The State's Act 44 which promised a good deal more funding for transportation including public transit, also requires that local share investments grow to 15% over several years. The local share that Lehigh and Northampton Counties contribute combined only equal 6%. While that is a good deal for the Counties to leverage all that state (and federal) funding, staying at that percentage and indeed reducing the local investment, could lead to service cuts and fare increases at a time when we should be expecting government to grow such services. And the local investment is minor in the grand scheme of things.

You can call the County Exec frugal for cutting funds for these public services, but it is not at all shrewd. Higher investment would yield additional state and federal dollars spent in the community providing people with access to jobs and essential services. How dumb is it to cap that? And this is a fiscally responsible leadership?

You can chuckle about it, but each percentage increase in local share could potentially yield hundreds of thousands of dollars.

Bernie O'Hare said...

"And this is a fiscally responsible leadership?"

Yes. I would agree w/ everything you saig if LANTA were well-administered, but it's not. Changes are needed. The problems there go way beyong the way administrators thumbed their noses at Hamilton Street merchants whose businesses suffered when that new hub was built. This outfit thinks nothing of just grabbing a historic bus stadium and eliminating routes that force seniors on fixed incomes to do too much walking. It is possibly the worst public transportation system I've ever seen.

Bernie O'Hare said...

I apologize for my poor spelling, and hope you get my point. Perhaps this is just what LANTA needs to shed some backward thinking. During the attempt to appoint Schmitt to LANTA, it became painfully obvious that the leadership there is divided. I've had personal experience with Armand Greco refusing to reply to emails. I'd argue for changes at the top and a new schedule, together w/ a capital plan that calls for smaller buses.

Anonymous said...

I think both Counties should hold back Lanta funding until Greco resigns from Lanta.

The guy is a tool of the Chamber and has been warming the seat for over 20 years.

Lanta is about as innovative as the horse and buggy.