Daily Local News (West Chester, PA)
MAYOR: EIT INCREASE WILL PAY DOWN PENSION DEFICIT
WEST CHESTER >> Sixty Ward 1 residents attended a recent town hall meeting led by Mayor Dianne Herrin to discuss the increase of the Earned Income Tax.
Herrin presented a PowerPoint demonstration, with Borough Manager Mike Perrone, Police Chief Scott Bohn, and Ward 1 representative Bill Scott seated at the podium.
Herrin explained that the increased EIT levy will pay 85 percent of the borough’s nearly $20 million pension deficit within approximately 12 years.
“For people who don’t come to the meetings, we’re explaining why the borough is in position to increase the EIT,” Perrone said. “We’re informing the public what the numbers are and the tax liability.”
On Jan. 1, the EIT jumped to 1.25 percent from 1.0 percent. Half a percent still goes to the West Chester Area School District. Until recently, the borough received a similar amount.
Now, .75 percent fills borough coffers.
Herrin commented on the town hall afterwards.
“Our Ward 1 Town Hall was a great success,” Herrin said. “The room was full, residents were very engaged, and we came to understand that Borough Coun-
cil passed the 0.25% earned income tax increase justifiably.
“This small increase will go a long way to help ensure greater fiscal stability for the Borough. I ran for mayor to help unify our community and make progress together, and these neighborhood town halls are a reflection of my commitment to doing so. I’m incredibly inspired by our caring and thoughtful citizens.”
A $25,000 per year wage earner now pays $250 annually. With the higher tax, that number will increase to $313 per year, or $1.20 per week, for an additional $63 annually.
Herrin said there are few ways to collect borough income. If the deficit was collected at a similar amount, property taxes would have increased on average $200 per homeowner. This would have hit seniors and those with fixed incomes, Herrin said.
Current revenue sources include: user fees; EIT; property tax; local service tax of $52 annually, and a $150 business privilege tax.
Herrin blamed a 2013, 4-3 council vote to not raise taxes.
“There wasn’t a will to raise taxes,” Herrin said. “The can was kicked down the road.” In December, council voted 6-1 to raise the EIT.
According to borough consultant PA Economy League, pensions are 72 percent funded and considered “minimally distressed,” Herrin told the large audience. She also said that the auditor general was “extremely concerned” and that the borough’s credit rating decline could increase the cost of borrowing.
She said this would have impacted both those on fixed incomes and the retired.
Perrone said the police pension liability is growing faster than for non-uniformed employees due to higher police salaries and overtime pay, with pensions based on total income.
Herrin said the police force is doing a great job with the lowest crime rate in 22 years, a 50 percent reduction since 2000 and a 23 percent reduction since 2015, while answering 7,600 calls last year.
“Police protect our quality of life,” Herrin said. “They keep our community safe and preserve our property values.”
Herrin talked about challenges facing the borough.
State law severely restricts local fees and taxes, with pension programs defined by law. State law places limits on revenueraising authority, with a statewide municipal pension liability at $8 billion.
“There is no legal authority to require contributions from non-profit institutions that create demand for uniformed services,” Herrin said.
She also noted that half of the borough’s assessed value properties (last assessed in 1998, according to a PA Economy League report) are tax exempt, including West Chester University, county offices, a portion of Chester County Hospital, churches and other non-profits.
The borough has no authority to tax business revenue or levy a pour tax on drinks.
Audience members asked many questions and listened intently to the answers.
One person asked Bohn if more citations might be issued. The police chief said that the department already writes 2,000 citations per year and citations are not considered a revenue source.
Another resident asked whether a head tax might be levied on WCU students.
Borough progress includes a change in the pension plan for non-uniformed employees, the transfer of three parking garages to the university and the abandonment in 2015 of seven borough positions. The borough is also considering selling the waste water treatment plant.
“The borough has done a lot to reduce costs without reducing services,” Herrin said.
The Ward 1 Town Hall was the first of seven. All meetings start at 7 p.m. at Borough Hall. Monday 2/11 – Ward 2 Monday 2/25 – Ward 4 Tuesday 2/26 – Ward 6 Thursday 2/28 – Ward 7 Tuesday 3/5 – Ward 3 Wednesday 3/6 –Ward 5