Chester OKs first property tax increase since 1996
CHESTER >> Council approved the city’s final budget for 2020 at its regular meeting last Wednesday. Chief Financial Officer Nafis Nichols presented the $55,466,840 budget to council at a hearing immediately preceding the meeting.
The city’s fourth consecutive balanced budget was trimmed by about 0.5 percent in its final form from its first reading on Nov. 27. The year-over-year increase stands at about 1.8 percent over 2019.
After rolling back some expenditures, the city’s financial team elected to make adjustments in revenues to maintain a balanced budget rather than project a small surplus. “We made some areas more conservative. With revenues it’s always good to under-project,” Nichols said following the meeting.
The final budget was down 0.44 percent from its initial $55,712,914 total. The city’s department budgets for 2020 are set at $19.9 million for public affairs; $22.3 million for accounts and finance; $6.7 million for public safety; $3 million for streets and highways; and $2 for parks and public property.
Public safety saw the largest percentage change in trimming expenditures, down 3.2 percent overall as a 5.7 percent drop in fire uniformed salaries and wages more than offset a 2.2 percent increase in health department salaries and wages. Public affairs saw the next largest reduction at 0.9 percent, led by a drop 2.1 percent drop in directors office salaries and wages. Streets and highways was down 0.4 percent, led by a 9.5 percent reduction in city engineer salaries and wages.
“A lot of this has to do with finding ways to cut expenses. We’re trying to do that internally, if we can do that without affecting city services we’re going to do that. The goal is and has always been to exit Act 47,” city spokeswoman Aigner Cleveland said Monday.
On the revenue side, the largest sources were Act 511 taxes were $17.5 million, real estate taxes at $10.6 million, intergovernmental revenues at $9.9 million, and charges for services at $7.2 million. Reimbursements led reductions at 6 percent, led by an 11 percent drop in its other category, followed by charges for services at 1.4 percent, led by a 23 percent reduction in Chester Upland School District past due charges, and licenses and permits at 1.1 percent, led by a 10 percent drop in the other contractors category of licensing.
Cleveland said financial officials likely the more conservative reimbursement and charges for services numbers, specifically the school district line item, based on declining obligations from outside institutions to the city.
The budget was achieved with the city’s first real estate tax increase since 1996. The tax increase came on the recommendation of the city’s Act 47 recovery coordinators, headed by Philadelphia-based Econsult Solutions, according to Nichols.
“The mayor and council have been in discussions for years about the potential of raising real estate taxes, but also taking into account that we didn’t want to put a burden on our constituency,” Nichols said earlier this month.
“It was what we needed to do in an effort to comply with our Act 47 recovery plan so that we can exit in a timely faction,” he said. The city is currently in an exit plan to emerge from financially distressed status under Act 47 by 2021 or face potential state receivership.
Real estate taxes for
2020 are now 32.7712 mills – a 10 percent increase – or $32.77 per $1,000 of assessed value. The library tax stay is flat at 1.5 mills. The
2020 budget marks Chester’s final millage rate based off its assessment ratio of
25 percent of fair market value. The city will adopt Delaware County’s Common Level Ratio beginning Jan. 1, 2021, with millage rates set to change accordingly when the 2021 budget planning gets underway next year.
Residential earned income tax remains 2.75 percent and non-residential EIT remains 2 percent. As the city is working to exit its Financially Distressed Municipality status under Pensylvania Act 47, the city’s exit team recommended last year that the non-residential EIT increase from 1- to 2 percent. The city is able to exceed the state cap of 1 percent on non-residential EIT under provisions of Act 47 and the state Municipal Pension Plan Funding Standard and Recovery Act with the stipulation that the difference be used solely to pay down the police pension fund liability. Business privilege taxes are set to stay flat at 3.0 mills for retail businesses (reduced from 3.3 last year) and 2.0 mills for wholesale (reduced from 2.5 last year), with local services tax flat at $52 per year.