As Mayor O'Connell observes, the City's biggest expense is personnel. It would be foolish to reduce the size of the police force or fire department. But every department, including the mayor's office, needs close scrutiny. I also question three per cent raises at a time when taxes are going up. Northampton County, which has proposed no tax hike, is giving two percent raises.
In accordance with the provisions of the Home Rule Charter adopted by the voters of the City of Allentown on April 23, 1996, I, Ray O’Connell, acting in my capacity as Mayor, herewith present to City Council and the residents of the City of Allentown a proposed Budget and Program of Services for the fiscal year 2019. As required by ordinance, I verify the 2006 reserve fund account is on deposit and not impacted by this budget.
The 2019 proposed operating and capital budget for the City of Allentown addresses these service needs and their resulting fiscal realities in a responsible manner by constraining expenditures and enabling sufficient recurring revenue as a foundation for future years.
In 2005, when the City of Allentown last implemented a property tax rate increase, that year’s current real estate tax collection totaled $28.2 million. Adjusted for inflation, taxes on the same properties in 2018 would total $35.8 million, but actual collection was less than $30 million.
Thirteen years without a property tax increase have provided beneficial cost stability for Allentown taxpayers. However, the City’s costs of materials, supplies, wages, benefits and services have continued to rise with inflation while the revenue to support them has not kept pace. Defrayal of costs in subsequent years by means of debt financing and the water/sewer concession lease provided Allentown temporary cash reserves to close this gap. In the last three years, the citizens and workers of Allentown have funded increases in earned income tax rates and stormwater management fees to reduce the recurring operating deficit significantly, and a permanent closure of that gap is within reach.
Allentown’s financial standing has been bolstered by the growth of the Neighborhood Improvement Zone and by the sustained pride and efforts of Allentown citizens. The City and surrounding Lehigh Valley are among Pennsylvania’s fastest-growing population centers. Allentown’s government has responded to these trends by maintaining and improving police protection, fire and emergency medical response, street maintenance, street lighting, bridges, traffic control, solid waste and recycling, parks and recreation, health, community and economic development, code enforcement, building standards and City planning services to ensure that all citizens benefit sufficiently from their provision. These departments and bureaus perform and provide a myriad of services that contribute to the health and well-being of a 21st century city.
THE FISCAL SITUATION
The administration is doing and will continue to do everything possible to restrict spending. The City of Allentown will try to expand its revenue base, as well. A spirit of cooperation between the administration and City Council will work to preserve city services at the lowest possible cost.
In 2015 Allentown’s General Fund faced an annual structural operational deficit of $8 million that was growing over time. Thanks to two increases in the resident earned income tax rate and the imposition of a stormwater management fee, by 2018 the City had reduced much of that deficit. But closing the gap required the use of cash reserves each year. An effective $2 million reserve draw in 2015 was followed by a $4.5 million repayable loan from the Solid Waste Fund in 2016, a $2.5 million budgeted reserve draw in 2017 and a $3.9 million budgeted reserve draw in 2018. Careful expenditure control has minimized these deficits, but these actions effectively reduce the General Fund unrestricted cash reserve to about $6 million by the end of 2018. Bond rating agencies Moody’s and Standard & Poor’s have downgraded the City’s financial outlook, with the latter agency reducing the City’s bond rating by one notch in October 2018. Both agencies have indicated the need for Allentown to match recurring expenditures with recurring revenues in order to stabilize and improve this outlook in the coming years.
The City’s use of debt financing has also reached a near maximum level. In recent years, the City issued millions of dollars in bonds for capital expenditures, but generated no new revenue stream to back these proceeds, resulting in a sizeable increase of General Fund dollars being used to service debt. The City now uses more than 8 percent of its annual General Fund appropriation to pay principal and interest on general obligation and pension obligation debt. This constriction will be critical as additional needs for fleet services, street repair and information technology renewal will require standard operating funds for 2 to 3 years, putting additional stress on the General Fund.
With approximately 800 employees, the City’s operations today have nearly 200 fewer staff than a decade prior, yet employee wages and benefits remain the primary driver of cost increases. Department managers have effectively controlled non-personnel costs in recent years to save money, but cost increases in this sector are now inhibiting essential service provision to an unacceptable extent.
The Neighborhood Improvement Zone has provided growing property tax revenue during the past five years, but the overall impact will remain modest until this Center City development reaches its intended capacity. Meanwhile, City property tax collection outside of the zone has remained nominally flat during the same five years.
2019 BUDGET HIGHLIGHTS
This proposed 2019 operating and capital budget for the City of Allentown establishes a genuine balance between recurring revenues and expenditures, avoiding further reserve draws while maintaining and improving the quality of the City’s public services. Significant provisions of the General Fund budget include the following:
• An effective 1.5-mill increase on the aggregated value of real estate, from 5.81 to 7.31 mills, will generate an additional $7.6 million in recurring annual revenue. The separate millage rates for land and improvements are increased by the same percentage so that all taxpayers are affected equally regardless of the type of property owned. As an example, an Allentown home with an improvement value of $150,000 and a land value of $20,000 would see its annual City property tax increase from $903 to $1,139, or about $20 more per month. These increases would be smaller for lower-value properties and greater for more expensive properties.
• The Business Privilege Tax remains stable, as does the Earned Income Tax, and the $52 Local Services Tax. The Refuse Collection Fee remains flat.
• Cash reserves are not utilized and are in fact slightly supplemented, demonstrating the City’s commitment to fiscal responsibility going forward. The $4.8 million last-resort Stabilization Fund remains fully funded and unutilized. Additionally, new capital and equipment expenses will be paid from operating funds in 2019, avoiding additional debt service obligations.
• Two additional fire fighters are authorized, increasing total fire staff to 124, and efforts to reduce the backlog in building inspections will continue in 2019. Most positions remain essentially the same as in 2018 in advance of the findings of a City compensation study. Three percent wage increases are provided to all bargaining unit and non-bargaining positions, and a pool of money is provided for non-bargaining positions upon completion of the compensation study to ensure market-competitive pay rates.
• The City will expand its winter aquatics program both to provide recreational opportunities for youth and to establish a reserve of trained lifeguards that will enable full utilization of City pools next summer. Additionally, wage rates for lifeguards and summer recreation program staff are increased to be more competitive with labor market conditions.
• The City’s 911 system management responsibilities will be transferred fully to Lehigh County in early 2019, and the City will no longer coordinate emergency dispatch thereafter.
• Additional technical support is provided in the information technology budget to bolster protection against future malware attacks on the City’s computer system. Significant increases are also provided to the Risk Management Fund to address health insurance costs and potential liability and legal matters. All other major City activities are provided at or above 2018 service levels.
• General Fund repayment of the 2016 loan from the Solid Waste Fund loan will be suspended for one year in order to support the available cash balance in the General Fund. Five years of repayment remain on the loan and continuation of repayment is anticipated in 2020.
All special purpose and enterprise funds, including Trexler, Liquid Fuels, Solid Waste and Stormwater, will either have revenues exceeding expenditures in 2019 or will have sufficient cash reserves to cover excess expenditures.
Relations between the Mayor’s office and City Council have improved significantly this year with a greater focus on policy and fiscal transparency. Just as Allentown looks forward by updating its comprehensive plan in the coming year, I similarly look forward to building with you a positive future vision for the City beginning with this budget.
About a dozen Lehigh County municipalities have raised property tax rates since the last county property assessment in 2013. Allentown’s 13-year rate consistency has lasted far longer, but cannot credibly continue. The opportunity to stop the continued depletion of cash reserves will be costly at first, but it establishes a dependable fiscal foundation for coming years. The citizens of Allentown deserve nothing less.
31 comments:
Pawlowski Lite!
what do you expect from the democrats look at armstrong or any democrat tax tax tax spend spend spend that's the way it is always was and always will be next up Whitehall township where they voted harakle out years ago but like allentown the old boys system put him right back in the people did not want them but that did not matter.
This is outrageous! Not only do you NOT give out 3% raises if you're saying you have to raise taxes, you DON'T give out raises AT ALL!
Allentown taxpayers have been overtaxed for years. That over-taxation has allowed above average raises, wild overspending on leaking pools and trash-to-energy schemes. But instead of cutting that spending now that Pawlowski is gone, the answer is to hike property taxes?
Think about that - despite a decade of corruption, Ray O'Connell doesn't think there's anything that could be cut. Nothing that could be reduced? And only property tax payers should feel the pain.
Funny, I don't remember Ray O'Connell mentioning a tax hike when he was running for Mayor last year. He was on the inside when most of the overspending was approved, and happily rubber-stamped every ridiculous Pawlowski proposal along the way. Of course, that assumes that he knows anything about the city budget, other than that it's kind of heavy.
If his "solution" was hiking property taxes, he should have mentioned that last November. This is the price Allentown residents pay for having O'Connell on last year's ballot. The whole reason O'Connell ran was for his own ego and to keep the status quo in City Hall. Mission accomplished. And now we get to pay for it. Thanks Ray!
Now the only hope for Allentown residents is that the idiots on City Council take an example from the Lehigh Commissioners and are able to prevent the tax hike from happening. You have a better chance of winning the Powerball while getting struck by lightning.
Vote them all out next year!
Oh, and by the way, the "loan" that Ray O'Connell and his cronies approved from the Trash Fund is not getting repaid again this year.
Even worse, the trash fee isn't being reduced either.
The "loan" was only possible because the City has been overcharging you for trash fees, which created the surplus in the fund. Not only is that wrong, it's also illegal.
ray has a very large ego he was a leader for years in the schools look how that turned out --after he turned to the city and is part of allentowns decline and to top it off the people voted him out not once but twice his buddies on the council will not vote against his budget they are all democrats
With Allentowns humaman calculating miscalculator council still hasn't got a handle of how much monies has been misappropriated by the indicted ones administrative spending of public funds with the pay to play scheems.
Amazing how much the NIZ helped City tax payers. One big joke on the citizens of PA.
Nat Hyman predicted this. He told City Council that Ray would raise taxes and he pledged that he wouldn't. Although, I wonder if even he imagined Ray would propose a 25% tax increase! Someone wrote on Facebook last night that Mr. Hyman has renegotiated Ray's $1.25 million contract to tear down the fire damaged warehouse to a not to exceed contract of $150,000 ! That's a savings of $1,100,000 !! And that's just one contract...can you imagine how much Ray is costing the taxpayers every day that he is in office? If it's true, they should kick Ray out today for a shameful waste of taxpayer dollars. He is in way over his head. Let's just hope that Hyman runs again!
Anon 7:43:
"...council still hasn't got a handle of how much monies has been misappropriated"
I think that was the whole point of why O'Connell ran last November, and why all of City Council was supportive of him running. It guaranteed that Nat Hyman wouldn't win, and nobody would find out anything beyond what the FBI brought forward. Once Hyman was eliminated, the only argument Council had was who was going to manage the cover-up: O'Connell or Thiel.
While the FBI cases against Pawlowski and others in City Hall may have shed some light on the corruption problem, it was by no means a complete list. The undercover probe was not ended by the FBI - it only came to an end because Pawlowski discovered Fleck was wearing a wire. Had that not happened, the undercover probe would have continued, and would have surely brought more wrongdoing to light.
And that doesn't even include the general incompetence and resulting overpayments on contracts that come from a lack of proper oversight by the Interim Mayor and council.
The current budget would have been a dream for someone like Hyman, who has real-world knowledge about what things should cost. Instead, we're saddled with an incompetent Mayor and Council, neither of which has the knowledge to challenge the numbers they've been given. And we'll be paying (again) for that incompetence.
Hyman For Mayor !
Anon 8:52 AM
That's a very good insight. I wondered why, after the Pawlowski fiasco, City Council would ignore the City Solicitor's legal opinion that Ray was not allowed to be appointed Mayor. It was clearly to continue the cover up.
From O'Connell's tax hike statement:
"Defrayal of costs in subsequent years by means of debt financing and the water/sewer concession lease provided Allentown temporary cash reserves to close this gap. In the last three years, the citizens and workers of Allentown have funded increases in earned income tax rates and stormwater management fees to reduce the recurring operating deficit significantly, and a permanent closure of that gap is within reach."
It's funny, because I remember when every one of those "solutions" - the LCA water lease; three EIT increases to double the original rate; and the stormwater fee were touted as the ONE that would solve Allentown's financial woes. And each time, a complicit Council (including O'Connell) dutifully cast their votes in favor of the "solutions".
Yet here we are again, with another tax hike proposal and another claim that our problems will be solved if only City Hall gets more revenue.
NEWS FLASH: The problem isn't the revenue, it's the SPENDING. City Hall is receiving record revenue, and has used that to dig a bigger hole.
This is not a budget of a city that doesn't have enough revenue. It's the budget of a city government that can't control it's own spending.
Instead of looking to buy votes as they have in the past with expensive dog parks and bike paths (both nice things, by the way), or every year with continual raises for those in City Hall, how about cutting all but the truly necessary out of the budget? And that includes un-necessary positions.
For example, we know that Pawlowski padded the payroll with his flunkies and put many into do-nothing jobs. Weed them out. Ruthlessly. Council should go back to the Heydt budgets for guidance if necessary.
And does anybody else find it interesting that since we've added a Managing Director to do the Mayor's job (so the previous Mayor could campaign on city time), we've gotten worse results? Under the previous Managing Director we got the three EIT increases, a new stormwater tax, and a water/sewer lease that's turned out to be bad for both the City and the LCA. And he got indicted with the previous Mayor. With the new Managing Director we're quickly getting a property tax hike. So tell me again why we're paying for that position. What the hell is he managing, other than to not get fired? We don't need a Managing Director to give us a tax hike.
Council needs to step up, or they are similarly useless.
Allentown already has the highest property taxes and Earned Income Taxes in the area; a stormwater fee that no other nearby municipality has; and a myriad of fees that raise the cost of living or doing business here. The school district is similarly mismanaged. Outside of the state-designated NIZ, there is no reason for anybody to move or put their business here. Not when you can have lower taxes by only taking a ten-minute drive from City Hall.
City Hall is making Allentown even more undesirable with this property tax proposal, and approving it means they are contributing to the city's death spiral.
8:52 -
You have a point about the legal opinion, but even that was irrelevant.
There was no way council would appoint Hyman, who received the second-highest number of votes in the election, since he would have certainly done some digging of his own.
If the legal opinion would have gone the other way, Council would have simply put Thiel in there, for the same reason. And we'd be at the same place we are today, only with Thiel's younger smiling face telling us that he was raising our property taxes.
They were flip sides of the same coin.
Allentown must get rid of the democrats in all offices the democrats are known to tax and spend ray and his buddies on council must go Hyman would have done a much better job than the liberal o'connell vote republican or for a business man like trump or hyman the politicians have been in charge for way too long
Anon 8;40
If that's true that Hyman got the contract done for $150,000 instead of the $1,250,000 Ray asked City Council for, then we have to get Ray out and Hyman in!!!!!! Bernie, please investigate if that is accurate.
Let's hope that no one on The School Board runs for Mayor (especially President Thiel!) after the disastrous performance they have given with their budgets.
LYING WILD = LYING PAWLOWSKI = BIG TIME PA SWAMPFEST
If Hyman doesn't step up and pay for the demolition of his building which he agreed to do with the city to just take it down and he will take it from there--the base demolition only, nothing else. Then he will never be elected Mayor .He speaks out of both sides of his mouth.
He is definitely FAST NAT !!!!!!!!
To be somewhat fair to Ray, he left the ASD in 2007 and it was really not doing to bad at that point.(11 YEARS AGO).
After that then came Zahorchak who really screwed it up and then Mayo who was no better.
It is not necessarily the leadership, look at the resource the ASD deals with day in and day out.
Anon 12:14
You clearly don't know Nat. I worked for him for 6 years and, while I sometimes found him to be a tough businesman, he was always a man of his word. If he told you he would do something, it was done. He NEVER spoke out of both sides of his mouth, as you claim. I left for a better opportunity but he was always fair with me and a straight shooter. And the city has stopped working on the site and Nat's crew has taken over the job. Also, didn't he show up to City Council with a check for $250,000?!
O'Connell is far more honest than Fed Ed and Hyman.
Hyman and Pawlowski were tied at the hip for years.
Hyman got everything from building and standards and zoning for the last 12 years.
When someone went to check on Hyman's properties ,Fed Ed or Fran would call them and tell them to come back to city hall and let Hyman alone.
Money talks and you know what walks???????
Anon 2:28 is "Crazy" Betsy Levin. She has been pushing her wild conspiracy theories for years.
12:31 lets be honest in 2007 Allentown schools were already at the bottom of the state very close to a state take over
2:58 & 3:18 are both 100% correct.
Betsy Levin and Eric Weiss are 100% ACCURATE IN WHAT THEY STATE.
Fran Dougherty stated the same thing.
Ramsey Haddad is the NEW Hyman and he might go to jail.
You figure it out.
A tax hike? Really?
That's like predicting winter.
Ten years of "I didn't raise your taxes", from a Federal convict who had intended to be serving in Washington or Harrisburg by now. He'd was assuming that he would be out of town by the time the chickens came home to roost.
Oh yeah...he is out of town.
This can happen in a city of 120,000 where only 4,000 actually vote. Allentown can now revel in its fancy "rich investor zone", while lamenting the fact soon enough that they sold their water asset, and while they prepare to pay a fee for storm water runoff.
But he did "hold the line on taxes".
The payroll could be cut by furloughing those managers and staff who are guilty as hell but escaped indictment due to FBI or prosecutorial overload. Start on the 5th floor and work down.
Why are criminals being protected let alone paid?
Betsey Levin and Eric Weiss ARE absolutely correct.
And the current mayor voted every time to let Fat Eddie spend the seed corn! Total BS move by O'Connell.
the current mayor voted every time to let Fat Eddie spend the seed corn!
This is the same bullshit over and over again and it's still false. When Michael Donovan was alive and on council he expressed frustration because the way Allentown's charter is set up.
In short no matter what council objects to in the annual budget they must reach a compromise the mayor agrees to. If the mayor (Pawlowski in that case) rejects council's "recommendations" (and they are just that) the mayor's original full budget goes into effect. There's nothing council can do abut it.
It doesn't matter whether it was Ray O'Connell then on council or any other present council member now. The mayor controls the budget and gets the last word on each of Allentown's annual budgets period!
I didn't say it is right but if you don't like it.. Change the freaking charter.
LVCI...I understand but why did no one sing to the press about what he was doing all these years? Council is complicit if they remain silent and thus O'Connell also is complicit.
Post a Comment