Mayor nominates internal candidate for finance chief

Allentown Mayor Ray O’Connell has tapped an internal candidate for the city’s finance director position, which has been vacant for almost a year.

Seth O’Neill, operations manager in the city revenue and audit bureau, was formally nominated Friday. City Council will vote on his confirmation 5:30 p.m. Wednesday.

The finance director oversees long-term strategic financial planning and provides city departments and the public with timely and accurate financial information, while assuring clarity and accountability. The director also plays a key role in contract negotiations with labor unions.

O’Neill, 40, has worked for the city for 13 years. He oversees tax revenue estimates and budgeting as well as tax policy for the finance department. He was responsible for the department’s recent update of its business privilege tax regulations, spearheading creative ways to broaden the tax base and bring in more revenue.

For example, the city this year will begin more aggressively taxing online retailers like Amazon and other large companies that do not have a physical presence in the city but do considerable business there.

Effective Jan. 1, online sellers are for the first time subject to the city’s business privilege tax in most cases if they have completed at least 15 transactions to city locations totaling at least $500,000 in the calendar year. The only other cities that have implemented an “economic nexus standard” for business gross receipts taxes are Philadelphia and San Francisco.

O’Neill also oversaw the effort to levy the business privilege tax on “business activity” of certain nonprofits, specifically health care companies. The city continues to fight a handful of lawsuits challenging the legality of such efforts. A victory for the city would result in a few million more in revenue each year.

O’Neill oversees 14 employees in his current position. He manages all tax compliance audits, enforcement actions and litigation for the bureau. In recent years, the city has taken greater steps to collect business privilege tax from delinquent taxpayers and ensure businesses operating in the city secure a city license. Without hiking the tax rate, the city saw a 25% increase in business privilege tax revenue from 2016 to 2018.

Last year, O’Neill and other department officials repeatedly adjusted the city’s budget deficit and projected cash shortfall amid the pandemic. And he helped coordinate a bond refunding to help alleviate the short-term financial hits. A 2020 budget deficit once feared to exceed $10 million ultimately came in under $500,000.

An Allentown native, O’Neill earned a bachelor’s degree from Penn State and is attending Kutztown University in pursuit of a Master of Public Administration.

O’Connell said O’Neill has shown “remarkable leadership skills” and has “a firm grasp of the intricate workings of the finance department.”

The city advertised the position to external candidates multiple times but was unsatisfied with the applicants. The pandemic slowed the hiring process, and it also wasn’t clear whether O’Connell would be able to fill the position ahead of a competitive mayoral election this year (a successor could clean house). As of Friday, O’Connell faces at least five challengers in the Democratic primary.

If confirmed, O’Neill would succeed Brent Hartzell, who left in early February for a job in Galveston, Texas. During Hartzell’s 4½ tenure, Allentown realized two consecutive budget surpluses — something that hadn’t happened in a while.

In a letter dated June 10, Hartzell endorsed O’Neill as his successor, highlighting O’Neill’s experience not only with revenue law but also with labor relations issues. O’Neill, he added, is “insatiably curious about the workings of public administration.”

“Seth utilized his autonomy to make bold yet prudent decisions that significantly benefited the financial position of the city,” Hartzell wrote. “Amidst the challenges of the coronavirus, the positivity and creative approach to solutions that I hope were obvious during my time as finance director will continue to grow.”

Reached Friday, Hartzell added that O’Neill’s tenacity is matched by his desire to ensure all taxpayers are treated equally — and fairly.

“He tries harder than just about anyone I’ve ever met to get it right,” Hartzell said.

Allentown faces financial challenges in the years to come.

The city’s latest five-year plan projects annual deficits of $2.2 million to $3.2 million through 2025, depleting cash reserves in the absence of tax hikes or spending cuts.

An independent audit completed in 2019 offered a more pessimistic outlook, predicting annual deficits of more than $10 million in the years ahead if the city doesn’t find new revenue sources and mitigate the growth of health care and pension costs.

Reached Friday, O’Neill said one of his first priorities will be enhancing the customer service experience for taxpayers so that they are able to conduct more business, including license and permit applications, online.

He cited rising health care costs as one of the primary challenges facing the city in the longer term, and said he would work with the mayor on tackling the recommendations in the 2019 independent audit.

Allentown recently adopted one of the recommendations by creating a deputy finance director position to oversee the department’s day-to-day operations, giving the finance director more time to focus on strategic planning. O’Connell said earlier this week that he would proceed with filling that position once the department has a lead director. According to sources, interim Finance Director Jessica Baraket is a front-runner for the deputy position.

The finance director’s salary is budgeted at $121,810. The deputy salary is budgeted at $97,864.

Allentown requires department heads to establish residency in the city within one year of being appointed, though voters will be asked in May to loosen the requirement to within five miles of city limits.

O’Neill lives about five miles from the city in Upper Macungie Township, but said he intends to move into the city if confirmed.

O’Neill said he’s been asked several times in recent days about accepting the job not knowing who will be in the mayor’s office next January.

“I’m willing to risk that for the opportunity to accomplish some objectives I see as being achievable,” he said. “All I can do is convince whoever’s the next mayor that I’m the best person for the job.”