It will use the revenue to fund its pensions. Like the NIZ, it's a tax grab. But unlike the NIZ, which was just for Allentown, this theft is under legislation that applies to any financially distressed municipality.
Guess what? Since this law went into effect in 1987, twelve cities have enrolled in the program, but not one of them has checked out. Kinda' defeats the purpose, doncha' think? Residents and businesses head would rather head for the hills than be held up for bloated public sector union pensions.
One of these financially distressed cities, Scranton, tried a commuter tax in 1993-4. It led to lawsuits, boycotts and a great deal of evasion by nonresidents who considered the tax unfair.
No taxation without representation.
Scranton Mayor Chris Doherty argues the law should have more teeth when it comes to public sector unions. Supposedly independent arbitrators, who decide union disputes, fail to consider a city's distressed designation in determining arbitration awards.
Doherty, who incidentally favors a commuter tax, has just slashed all city salaries, including his own, to minimum wage. It's the only way the City can meet payroll. Unions have responded with a lawsuit.
If Easton seeks a distressed designation, it will stay distressed, like every other city. Imposing a tax on nonresidents for problems caused by its own mismanagement just prolongs the problem. If Mayor Panto needs money for his pension fund, he should start with the public sector unions, not people who have no voice or vote in Easton government.
Tonight, Northampton County Council will consider a resolution, sponsored by President John Cusick, condemning Easton's proposed commuter tax. Between the Wolf building, jail and courthouse, the County employs at least 800 people in Easton. Most are commuters.
Will the public sector unions, who supposedly represent them, speak against this unfair tax? Don't hold your breath.
34 comments:
To correct some misconceptions. Municipalities can impose higher earned income taxes on commuters if they are 1. financially distressed and have court approval or 2. if they have a financially distressed municipal pension plan and have state approval. It is my understanding that Easton is applying for the relief in 2 for distressed pension plans. Atown has made similar moves and there are over a hundred mumicipal plans in Pa that could make similar moves. Bethlehem could probably avail itself under the act. I don't think that these plans have suffered from mismanagement. They have suffered from bad investment returns due to market conditions and an increase of benefits for current employees due to arbitration awards. We all say that there is a need for legislation to clean up the problem. Unfortunately, the tax increase is the legislation.
From the state:
"Municipalities which have been declared distressed under the Municipalities Financial Recovery Act may be able to increase their earned income taxes above the limit set in the Local Tax Enabling Act.17 The increase must be part of the recovery plan adopted for the municipality. The municipality must petition the court of common pleas for approval to increase tax rates above the limit for a period of one year. Subsequent increases may be granted by the court upon annual petition of the municipality until the termination date of the recovery plan. Unlike the Home Rule Law, Act 47 does not prohibit extension of the earned income tax increase to
nonresidents.
In similar fashion, municipalities which are certified as having financially distressed municipal pension systems under Act 205 of 1984 have access to earned income tax power above the limit set in the Local Tax Enabling Act as one of the remedies of their pension recovery program.18 Determination of municipal pension system financial distress must be made by the Public Employee Retirement Study Commission. After determination is made, the municipal governing body may elect to use any of the available remedies in the Act. To use
the special taxing powers of Act 205, the municipality must already be at the maximum rate of earned income 32 tax set by law. The proceeds from the tax levied above the limit must be used solely to defray additional pension funding costs. Previous levels of pension funding must be maintained. Act 205 does not prohibit extension of the earned income tax increase to nonresidents as well as residents."
So, it's an unfair tax used to fund the pensions of the 800 commuters who should supposedly be upset about it? Shouldn't they be pleased? Or I suppose you are saying they should be upset they are paying for their own pensions on top of their regular contributions? But didn't you say Panto should turn to those unions first?
Your logic is astounding and your opposition to taxes spunky and naive.
If people don't want to be taxed twice, they can just move to Easton. Right now residents have to pay a higher EIT rate than commuters. It's a small disincentive to live in Easton, and the city is smart to take that disincentive away. A better approach, in my view, would be to get rid of the EIT altogether, along with the tax on property improvements, and make up the revenue with a land value tax. Why not just charge people for how much land they use?
"I don't think that these plans have suffered from mismanagement. They have suffered from bad investment returns due to market conditions and an increase of benefits for current employees due to arbitration awards. "
I see. That's not mismanagement.
TAXATION without REPRESENTATION
THIS SOUNDS LIKE HARRISBURG and WASHINGTON D.C. in regards to all those who work one or two jobs to pay their own bill's and way in life!
The contracts were negotiated and the pensions are what try are. The real problem here is expecting non-residents to have to pay the taxes and then not able to vote those people out of office.
5:21, You are incorrect. Bethlehem has not availed itself of this bc its pension is not distressed.
This is a tax that is being aimed at, and targeting Northampton County Employees. Northampton County has always bent over backwards to be a good tenant for the City and this is the reward. County employees already pay a minimum of 5% of their gross earnings into their own pension fund. Now they have to pay to build up the pension fund of Easton employees. How ironic is that. You forget to mention Bernie, these people also shop and eat in downtown Easton. You also forget to mention that the Courts "Juries" which total about one thousand a month also come to the City of Easton. How about the sweetheart deal the County gave the City on purchasing their Municipal building. It's time for the County to consider moving out of Easton to a friendlier neighborhood and take most of our employees with us. I understand the Government Center is overcrowded anyway. Panto has been a good Mayor and a very concientous administrator, but he is wrong on this issue. Lets move out of Easton, let the buildings for the courts and court related offices, and bring everything under one roof at a central County location. Hmmmm sounds like Gracedale may be a good location for administrative offices.
I have long advocated that county government should move to Gracedale. The County could try to help Easton in some way, but its workforce should be left alone.
Easton's pension problem is a result of the city mismanaging the fund for at least the past 15 years. I don't think you can pin the problem on Panto. He was elected to fix it. And fleck loves the communter tax.
I see. That's not mismanagement.
Sure but you can accuse just about every entity in the country of mismanagement given that broad criteria.
I have to believe there is a Brookings Report that supports Gettings ideas.
" I don't think you can pin the problem on Panto. He was elected to fix it. And fleck loves the communter tax."
I don't. Sal has been a great Mayor. But he should not fix this problem on the backs on nonresidents and at the risk of driving business away. He should fix it at its source - the public sector union. He should at least give it a whirl before taxing people who have no voice for mismangement caused by others.
Bernie..did anyone vote against this tax scheme? Ruggles vote?
It comes up later this month.
Bernie,are you now praising Bethlehem because you now support Mr. Callahan for County Executive?
No. This post has nothing to do with the exec race. It concerns a commuter tax on nonresidents. In a race between panto and Callahan, I probably would support Panto. But this does not mean thgat I support EVERY idea from him, Callahan or anyone else. Your attempt to inject politics into this issue on a race that is a year off is a little silly.
I praise Sal for this in a way. He is not afraid to bring up issues and propose unpopular decisions. Most politians interested in running for County Exec would have put this off another year or two. He tackled it head on. Respect.
Agreed. The question is not whether this will hurt or help in an election, but whether it is good government, whether it is a tool that will really achieve its stated goal. I do not think the case has been made.
Jon Geeting's claim that "If people don't want to be taxed twice, they can just move to Easton. Right now residents have to pay a higher EIT rate than commuters" is convoluted. Why not simply put it another way..."all Easton residents pay the same tax rate"?
It's amazing to me that anyone can defend the practice of taxing based on employment location, and that the ones who do around here are usually liberals such as Geeting. They seem to have no problem with backroom corporate deals with municipalities determining where taxes are paid.
It's a simple fact - people have pretty much full control over where they live, but do not have nearly the same level of control over where they are able to find work, especially in the current economy. To argue that taxes should be based on employment location is to argue that corporations should have greater control over our lives, and that people should just bend over and take whatever the elected officers that the corporations choose decide to do to them. Is this really a philosophy that anyone, especially a liberal, can argue in favor of and remain at all consistent?
no. Liberals want to drive our behavior in the direction they, given their intellectual and moral superiority, believe we should go in spite of our crude and inferior impulses.
And they believe in using any and all powers of government to accomplish this.
And if you believe this is wrong you are a racist.
I believe lower mac is a simpleton. Does that count?
No.
Next question.
Bernie,just who are these independent arbetrayers, as I call them,who dictate funding mandates to municipal govs.Are they lawyers/judges?Its been said in here that the problem comes from bad investments tied to market conditions.Again a good argument against privitizing social security,no?So it seems the local govs are between a rock and hard place,a no win situation for local leaders as well.Just a thought.
When does Big Government figure out it is just going to have to stop spending money like drug-crazed lunatics and learn to live within their means --- just like the rest of us?
WE THE TAXED ENOUGH ALREADY PEOPLE
Bernie, this issue is far to complex to answer tonight. I was not aware of this article until today and I just don't have the time to respond to this issue right now. And given that county council passed a resolution this evening I will wait to respond to the issue as a whole. You know I don't back away from an issue but there will be time later.
As for the run for CE. I have stated all along that I am honored to have so many people from all over the county pressure me to run but that decision is months away and I don't make decisions based on political campaigns. The commuter tax issue is real. It is a statewide issue that state legislators and the governor refuse rto address. We have real issues in this state and nation and they don't get it. They just keep putting off the tough decisions for someone else and some other day. Governor Rendell is right -- they are Wusses. No one can give me that title. I will be fiscally prudent, I have taken on the public unions in Easton and they have cooperated. I took office in 2008 with a pension payment of $600,000. Today it is $1.5 million and next year it goes to $3.7 million. Our budget as absorbed, without a property tax increase, old lawsuit payments, legacy pension costs and post retirement benefits, etc.
The chambers of commerce have joined our fight with the state for pension reform and Act 111 reform. Will the legislators still stick their heads ion the sand that these are real issues?
And I also look forward to reposnding to the resolution. If I was worried about the CE campaign and Cusick thought this would scare me -- 1. it won't, 2. there are a lot more private employees working in the city than public employees. Why sis he only loko to protect county workers?
Enough for tonight,
Bernie I forgot to sign in, the above 10:01 PM is me.
Sal Panto, Jr.
Sal,
Thanks for checking in. I will have a report later about Council's action, and am sure you will read accounts of it in the newspapers and on Patch as well. When you do have time to weigh in (I understand you were away today), I will be more than happy to post your remarks as a separate blog.
"who are these independent arbetrayers, as I call them,who dictate funding mandates to municipal govs.Are they lawyers/judges?"
They are almost always lawyers, and almost always screw the municipality.
Panto you forget that the county is your city's second-largest employer and you are about to unfairly force a tax down their throats. Easton is not even the county's second-largest municipality yet it benefits from collecting payroll taxes on half of its workforce. Employees who live outside the city did not elect the irresponsible officials who set up a bloated pension system that has crashed and burned. Those who elected them should suffer the consequences. Raise taxes on those who benefit the most from city services- its residents!
Sal, at least you are upfront about your funding needs. In Bethlehem they are hiding it in increased parking fees. Bernie is deleting these comparisons because Callahan is his new bff.
I did not delete any comments critical of Callahan but you are OT and will be deleted unless you confine your discussion to the commuter tax and its merits.
Mayor Panto,
Your Ga King Guy is a complete fake, but my FB friends from Ghana and I thank you for the sincere belly laughs all the same!
You really should have listened to the Ghana Ambassador to the United States. Go ahead and try and label me a Racist, Mr. Mayor. I know how the Democrat Party likes to roll.
Nevertheless, the Ghana Ambassadors at my Embassay think you look silly enough as it is!
(Of course, they can't vote --- so what do you care, right?)
Pleasant day.
ROLF OELER
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