Lehigh Valley

Increasing costs squeezing Easton's 2018 budget

EASTON, Pa. - There are no 2018 tax increases for Easton residents, according to Mayor Sal Panto, but the margin between cost and profit continues to narrow.

Despite these difficulties, Panto said Easton’s answer lies in smarter economic development, not increased taxes, as he introduced a $56 million budget with no tax increases.

“We’ve innovated and we’ve cut,” Panto said.

Easton faces budget concerns in three key areas: increasing labor, pension, and healthcare costs. Adding to the trouble is that revenue sources are stagnant and money can’t be counted on from state and federal agencies.

Additionally, the EPA’s new requirements on combined sewer overflows will lead to a new stormwater fee in the first quarter of 2018.

The Pennsylvania Department of Environmental Protection and the EPA require an MS4 permit to discharge stormwater into the Delaware river.

With 138 outfalls and low water quality in the Lehigh River, Easton has been tasked with reducing sediment content in order to keep its MS4 permit.

The exact cost of sediment reduction being passed to city residents won’t be known until the MS4 study is completed.

Costs keep growing faster than revenue can absorb them, Panto said.

Legacy Pensions

Easton has been absorbing pension costs for eight years without raising taxes.

The city’s minimum municipal obligation continues to increase year over year, from $1.2 million in 2009 to $5.2 million in 2018.

Revenue

Easton’s revenue isn’t enough to keep up with service costs long-term. With the healthcare fund cash balance low, employees are being asked to take on more of the cost.

The capital fund, in turn, only carries the funds to cover half of its estimated 2018 budgeted costs.

A proposed expansion at Lafayette College, which would have brought in millions of dollars in taxes, was struck down by Easton Planning Commission in September. With the project in flux, Panto said he couldn’t expect tax revenue from the project for 2018.

Real estate taxes don’t go as far as they used to, anyway. Only 21.8 percent of the 2018 budget revenue comes from real estate taxes, down from 28.7 percent in 2009.

The city is budgeted to spend $19 million on fire and safety. While many cities operate with the idea that real estate revenue covers the fire and police departments, Easton’s expected real estate revenue in 2018 is $8.6 million – less than half the cost of fire and safety.

Acknowledging the trends were unsustainable, Panto pushed for more creative economic development, calling it a true sign of a city in good financial shape.

“We must grow revenue, not increase taxes,” Panto said.

The Good News

Despite thunderclouds on the horizon, the city is still doing better than it was prior to 2008 when it was operating “in the red.” The millage rate has held steady at 24.95 since 2008, and the city’s bond rating increased to its current A+ rating.

During the same time, the city added 11 police officers, two firefighters and four code inspectors.

Construction projects are springing up in the city, revitalizing neighborhoods and preparing Easton for future economic growth, Panto said.

That growth will come from within the city, from redeveloping existing buildings and land. Since Easton is landlocked, there isn't much space to expand, Panto said.

“We must grow from within,” he said.


DISCLAIMER FOR COMMENTS: The views expressed by public comments are not those of this company or its affiliated companies. Please note by clicking on "Post" you acknowledge that you have read the TERMS OF USE  and the comment you are posting is in compliance with such terms. Your comments may be used on air. Be polite. Inappropriate posts or posts containing offsite links may be removed by the moderator.

This Week's Circulars

STORMCENTER UPDATE

Lehigh Valley News

Latest From The Newsroom