Allentown Mayor Ray O’Connell delivered his proposed 2021 city budget to City Council this afternoon. The just under $119 million spending plan holds the property tax rate stable at 7.31 mills.
In his message to City Council, O’Connell said, “City leadership, department and bureau heads and staff across both the bargaining and non-bargaining units were equal to the challenge posed by the COVID-19 pandemic. I ordered a hiring freeze to find further savings in personnel costs. Departments were ordered to adopt strict spending reductions in all operating budgets, other than personnel.”
The city’s finance team worked with our financial advisor, the rating agencies, our underwriters and our lender to restructure our 2020 debt service, pay back the general fund for capital improvement, rolling stock and IT improvements previously expensed, and to issue 2020 series general obligation bonds for baseline necessary capital funding to maintain the City’s infrastructure in the near term. That hard work resulted in nearly $4 million of additional liquidity in the General Fund.
Despite nearly every Act 32 collector and similar tax bureaus throughout the state predicting 10%-18% lost income tax revenues due to the unprecedented unemployment levels, as of today, the City is looking at less than 3% downturn for EIT taxes in its 2020 year end estimated amount. Even in these difficult times, residents and investors have largely been able to pay their 2020 City Real Estate Tax obligations.
With some assistance from the Business Development Office, which issued relief aid to 124 businesses, most businesses have been able to pay their Business Privilege Tax and other business obligations.
The healthy real estate market is closing the gaps we expected to see in our Deed Transfer Tax revenues, as well as our building permit revenues.
O’Connell wrote, “The blend of austerity measures, bond refunding, better than expected revenue recoveries and the hard work of City staff has reduced our outlook from a multi-million dollar budget deficit and an estimated cash deficit to a much more stable picture. At this stage, we hope to see a modest General Fund budget deficit. Furthermore, our current General Fund cash balance is slightly higher than at the same time in 2019, and our cashflow models point to an end of year general fund cash balance of between $7,000,000 and $9,000,000.”
Beginning in 2021, the City will receive $400,000.00 annually from the Lehigh County Authority, adjusted for inflation to help defray water and sewer administrative and regulatory expenses. Additionally, LCA will provide an additional $306,000.00 a year to the City for the next four years to pay the retiree health care cost of the former City’s Water Resources employees. These funds will provide relief to both the General and Risk funds.
Department managers have effectively controlled non-personnel costs in recent years to save money, and in fact the budget for non-personnel operating costs in 2021 decreased slightly more than $2 million from 2020 levels.
The Business Privilege Tax remains stable, as does the $52 Local Services Tax. The Refuse Collection and Stormwater Management fees remain flat.
O’Connell said, “This budget presents the most fiscally responsible position possible for the benefit of the residents and businesses of the City in line with our 2021 mission. It enables the City to hold the line on taxes and continue to provide our expected scope of municipal services and public health and safety in the context of a global pandemic. We will utilize a portion of budgetary reserves without drawing upon the 2006 Loan Investment account.”
O’Connell will formally present the budget to City Council on Wednesday, October 21 at 5:15 p.m.
Council will conduct a series of budget hearings beginning on Monday, October 26. Final adoption must take place by the end of the year.
The budget will be available soon on the city’s website www.allentownpa.gov