Allentown Mayor Ray O’Connell presented his proposed 2019 city budget to City Council Monday night. The approximately $115 million spending plan aims to close the city’s multi-year structural deficit and restore the city to fiscal stability.
In his message to City Council, O’Connell said, “In 2015 Allentown’s General Fund faced an annual structural operational deficit of $8 million that was growing over time. Due 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 or 6% 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 budget calls for an effective 1.5-mill increase on the aggregated value of real estate, from 5.81 to 7.31 mills, which 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 $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.
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.
The budget authorizes two additional firefighters and 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. Wage rates for lifeguards and summer recreation program staff are increased to be more competitive with labor market conditions so that the City’s pools can be fully staffed for greater safe usage by our citizens.
Council will conduct a series of budget hearings over the next 45 days. A new budget must be in place by December 15.
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