Thursday, August 28, 2014
Inquirer Daily News

Small city mayors want sales tax increase

Mayors from Lancaster, York, Reading, Easton and Bethlehem Link: Gray, other mayors seek sales tax power [Lancaster Online]

Small city mayors want sales tax increase

Mayors from Lancaster, York, Reading, Easton and Bethlehem
 

Mayors of five Pennsylvania cities — Lancaster, York, Reading, Easton and Bethlehem — announced Tuesday they've formed a coalition to meet the challenge of paying for municipal government.

The cities had been the subject of a study earlier this year by the Pennsylvania Economy League. The report said what many in Lancaster have known for some time: The cost of firefighters, police and public works is going up, but cities' ability to raise revenue isn't.

What became apparent during a news conference in the Lancaster County Convention Center on Penn Square — held two days before the Pennsylvania League of Cities' 110th annual conference opens here — is the mayors' determination to lobby state government for a specific tax reform proposal.

House Bill 1682, authored by state Rep. Mike Sturla of Lancaster, would allow individual counties to impose a 1 percent sales tax and share about half of that revenue with local municipalities.

The only tax cities of the third class, like Lancaster, can raise now is the property tax. Income or business taxes can't be raised, and new taxes such as a per-alcoholic-drink levy can't be imposed.

"We have great restaurants and businesses and historic attributes and architecture," said Sal Panto, mayor of Easton. "We put on a great show, but the reality is we are putting on a great show on a budget that could crash at any time."

A "crash" would come in the form of municipal bankruptcy, in which the state would step in to fix a city's finances, wrenching municipal budgets away from local control.

The mayors said such a scenario is increasingly possible because of skyrocketing health care costs, overburdened pension systems and salary increases for union employees mandated by arbitration (cities cannot legally refuse an arbitration ruling).

But they're mandated to provide public services.

"It's not that we have too many police, firefighters and public works people," Lancaster Mayor Rick Gray said. "We can't pay for what we have."

But if the mayors are hoping House Bill 1682 can get passed, the political reality may be harsh. Any such tax reform must come through the powerful Senate Republican caucus, which has prided itself on rejecting every tax increase proposal thrown its way for the last 2½ years.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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