O’Connell tries to keep taxes steady

In his last spending plan, mayor calls for stability in tax rate

For the third year in a row, Allentown residents won’t have property taxes increased, if Mayor Ray O’Connell’s last spending plan is approved.

On Monday, O’Connell delivered his proposed $124.8 million budget. The 2022 spending plan holds the property tax rate stable at 7.31 mills and will not change the business privilege tax, the $52 local services tax or the refuse collection and stormwater management fees.

The city does not anticipate any additional debt this year and does not expect to need to borrow money or tap into the city’s $17 million in cash reserves in 2022.

The city received $57 million from the American Rescue Plan, which will cover many of the city’s expenses, allowing Allentown to keep existing revenue streams the same. City Council held a special meeting last week where O’Connell’s administration presented plans for a separate American Rescue Plan budget.

O’Connell’s administration proposed using that money to invest in water main replacement, storm sewer repairs and filters for the city’s drinking water. The plan also creates a $3 million relief fund for small businesses, $4 million for nonprofits and a $4.7 million housing assistance program. The American Rescue Plan budget, if passed as it is drafted, would put $1.4 million to offset rising public safety costs.

The 2022 budget also adds 12 city positions, nine of which are funded by the general budget. The city would add two firefighters, two EMS workers and three vegetation workers, as well as employees in the city’s community and economic development, public works and parks and recreation departments next year.

“Each department of city government is functionally and safely staffed, to ensure that public safety, health, and infrastructure services are promptly and effectively available to every citizen,” O’Connell said in a news release, adding that each city employee would see a pay raise in 2022 to account for rising inflation.

Despite an overall rosy financial outlook for Allentown, the city’s tax base has suffered due to the pandemic. The value of all city property that will be taxed in 2022 has increased by just 0.5% since the beginning of 2020.

The city brought in less from the business privilege tax, too, because of the pandemic — business receipts decreased by 2.5% in 2020 from 2019. Allentown residents’ wages reported in their earned income tax filings were either stable or slightly down over the last year.

Further, in 2022, the city’s minimum municipal obligation — how much money the city sets aside for employee pensions — for three of its four pension plans will increase by $1.4 million, the majority of which will go toward the police pension plan.

Council members Ce-Ce Gerlach and Josh Siegel, who last year proposed reallocating funds from the police budget to social services, say they will not do the same this year. Gerlach said she hopes that money from the American Rescue Plan will bolster social services in Allentown without cutting into police money.

“My preference is to not touch the police budget,” Gerlach said.

Siegel said he hopes the $200,000 American Rescue Plan allocation toward a crisis intervention program, which would send first responders to mental health and drug incidents instead of police, could act as a pilot program to justify reallocating parts of the police budget in the future.

O’Connell will present the budget to City Council at 5:30 p.m. Wednesday. Council will begin holding a series of budget hearings Oct. 27. The city must adopt a final budget by the end of the year to avoid a government shutdown.

Last year, council approved a $119.5 million spending plan for 2021 that kept the property tax rate stable, as well as the earned income tax rate, business privilege tax rate, trash and stormwater fees and the $52 local services tax.