After council’s budget directives to City Manager Ryan Eggleston on Monday, I’m not sure where we are going with the 2010 budget.
The city manager came to the Monday meeting with a pared down budget/tax proposal as requested by city council at its Nov 23 meeting.
Largely as a result of a 34 percent increase in health insurance costs, the city’s 2010 expenses were greatly inflated even as some revenues dropped. To maintain the status quo required a 1.5-mill hike in real estate taxes. On first reading council approved the budget and accompanying tax hike on a 4-to-1vote. However, council also directed the manager to try to cut costs and pare down the tax increase.
By negotiating some savings in health and other insurance costs Ryan got the tax hike down to 1.25 mills and then gave council two additional options. Cut the money for paving in half, bringing the tax hike needed to balance the budget down to 1 mill and the second option was to do that and not fill a vacancy in the police ranks, which would bring the tax increase to .8 mills.
The majority of council held out for a no-tax-hike budget. So Monday night council on second reading approved a no-tax-hike budget by decreasing the budget’s bottom line. How to achieve that was left up to the city manager.
I went along and voted for it to keep the budget process on schedule. I voiced my concerns, but not as forcefully as I should have. (A long-time friend made the latter comment to me after the meeting and I’ve been reflecting on it ever since).
I know that every member of council is troubled and sincere in believing the position they have taken is best for the city.
I think there are worst things than a tax increase. Among them the further decline of the services and conditions of the city. I fear that will be the outcome if we insist on a no-tax-increase budget –we just dig a deeper hole. Certainly I hope someone finds a magic wand and brings about an easy way to cut costs the necessary additional $232,000, but that is not my expectation.
To me, the mandated no-tax-hike approach we are using is reactionary. We don’t know what the real consequences are since the cuts are not fully vetted, nor can they be over the next three weeks. There is no strategic planning to the process. The lack of strategic planning has long been a weakness of city government.
Any cuts that force a fundamental restructuring, and it is likely some would, are also unfair to the new city manager. We need to give him the opportunity to see how the city operates and make his own recommendations for the long-term. Four weeks on the job does not allow for that.
Councilman Neil McElwee has a good point about our real estate tax rate putting us at a competitive disadvantage, especially against the neighboring townships. Raising our taxes will only make that worse.
Still, if our core services and the conditions of the city continue to decline are we not also becoming less competitive?
I don’t know what I will or will not accept at next Monday’s council meeting either in terms of cuts or tax increase. Right now, I’m favoring a tax increase over further cuts. Right now, that is the minority opinion on council, but things change.
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5 comments:
Is there no alternative to property tax? Indiana, from where we moved, allows counties to implement a small county income tax which is much less regressive. Your property taxes are a real stumbling block to buying a house in OC. (Although, I should have said "our" property taxes as we just concluded a successful contract on an OC house that we really love.)
Tom,
I'm glad you and your wife found your house in the city. I hope to make your acquaintance in the very near future. Introduce yourself if you should run into me somewhere, or give us a call.
To answer your question, Pennsylvania’s cities have limited options when it comes to taxation, and many more things.
In addition to property taxes, municipalities can levy an earned income tax (a limited form of an income tax). However, for most cities, including Oil City it is limited to 0.5 percent (another .05 percent goes to the school district for a total tax of 1 percent). Home Rule communities can levy at a higher rate. Franklin is one example. There are also a handful of other tax options that bring in limited revenues, including a $52 local services tax for anyone employed within the city and making more than $12,000 annually.
The bottom line is that Pennsylvania’s municipalities are reliant on property taxes.
All cities in Pennsylvania face the same difficulties as Oil City to one degree or another. Largely it is a result of the structural issues created by Pennsylvania’s antiquated laws governing municipalities.
For starters, if I recall correctly there is only one state with more municipalities than Pennsylvania, meaning we have far too many government units to be efficient. Secondly, it is virtually impossible for a city to grow in landmass as areas develop. I believe that is much more easily achieved in Indiana and that Indianapolis is an example. I could be wrong about that. And if you take a look at where that has been possible, the entire region has benefited.
Because of how the state developed in the very early years of the nation, its cities are rich in regional assets, but poor in ways to fund them. Cities have an exceptionally high percentage of every county’s tax exempt properties and usually are the providers of such things as pools, parks and playgrounds, athletic fields and libraries that are widely enjoyed, but supported principally by the cities’ taxpayers.
Oil City’s taxes are an issue. I don’t have any answer. We must always be looking for ways to cut and do more with less, but I also strongly believe we need to maintain the services and assets we now have. In some cases, we need to do more, such as paving. That carries a price tag.
But back to your original question; there is a bill in the state legislature that would add a 1 percent sales tax at the county level that would be distributed based on population to the municipalities in the county. It would be very helpful.
I appreciate your interest and participation in these discussions.
Today's Derrick tells the story. Taxpayers will be paying higher real estate taxes to prevent staff cuts in Oil City, and to maintain services.
So while citizens of Oil City can get laid off or fired this doesn't bother the fat cats on the council who are looking out for employees rather than all of the taxpayers who foot the bill for their salaries, health insurance, and pensions.
The total budget for Oil City is in excess of 14 MILLION dollars.
This is just not sustainable.
It is past time for the municipalities in Pennsylvania to merge into fewer governmental units. The current situation is not sustainable.
"It is past time for the municipalities in Pennsylvania to merge into fewer governmental units. The current situation is not sustainable."
Anonymous,
I couldn’t agree more. I only wish Pennsylvania made that a lot easier to accomplish, and that people would grasp that reality.
A year ago I helped put together a public meeting for people of Oil City, Rouseville and Cornplanter to hear what is involved in looking to increased municipal collaboration and cooperation and even possible consolidation. It did not go well.
I don’t think of myself or most other members of council as “fat cats”, although I will say our family has been quite fortunate. It was not without a struggle at times to get to this point. I do understand trying to make ends meet, probably to a much greater degree than most would think.
I truly believe we did what was best for all citizens and taxpayers of the city when we raised taxes by 0.42 mills. It was not protection of city employees, but protection of the city. Even with the increase in taxes there are severe cuts in the budget, and that is not sustainable.
I wish I had the answer.
Unfortunately, our real estate taxes went up while our property values have declined rapidly over the last two years. Appraisers estimate a 20% decline from 2007.
I don't envy your job at all but I do think eventually you will be forced to make cuts. I drove by City hall last night and was surprised to see so many police "cruisers" parked outside. That's puzzling to me. Possibly crime declines during cold weather, however I can't imagine drug use does. I also wonder about the need for two firehouses & equipment. How many fires did we have last year? What was the value of the structures involved and were they saved?
I really don't think people ask about the extent of fire and police coverage when they consider moving to a city, otherwise Cranberry wouldn't be nearly as popular. Have you driven back into that new housing development out there? Obviously folks aren't too concerned or they wouldn't be building $300K and up homes.
Unfortunately, I think O.C. needs their level of police and fire protection due to the amount of typical law breakers moving in and the wide scale deterioration of properties that pose a fire hazard.
I think the answer is to get tough on property owners and relentless in your pursuit to get properties cleaned up. For instance, how long will the Brody's building be permitted to have plywood for a window? Answer: indefinitely. Imagine that in the middle of downtown Franklin. It wouldn't happen.
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