Lower Macungie commissioner Ryan Conrad takes stand against proposed township real estate tax
Lower Macungie commissioner Ryan Conrad isn’t giving up without a fight.
He wants to stop the township from imposing a property tax for the first time in 12 years.
Commissioner Roger C. Reis also opposes the tax, but he and Conrad will have to convince one of the other three commissioners to join up on their side.
The showdown will come at the Dec. 5 township meeting.
Township manager Bruce Fosselman hopes the proposed 2014 budget imposing the tax will be adopted at that meeting.
At their Nov. 7 meeting, Commissioners Douglas Brown, Ron Eichenberg and Jim Lancsek voted to advertise the $18.5-million budget so it can be adopted Dec. 5.
Conrad was not at that meeting, but Reis voted against advertising, because he opposes the tax.
On Thursday night, Conrad said the commissioners have two weeks before the budget comes before them for approval, but added: “We don’t have to adopt it on Dec. 5.”
He suggested commissioners wait until Dec. 19 to vote on the budget. He also suggested that, until then, they should consider his proposals for both short-term and long-term alternatives to a property tax, which he called regressive.
The other three commissioners at the meeting had no response to Conrad’s suggestions.
Eichenberg, the board president, said he will have “significant comment” on Conrad’s proposals, “but I’ll reserve that to the next meeting.”
Eichenberg did tangle with former township commissioner Joseph Pugliese when Pugliese stood to support Conrad’s recommendations.
Reis was absent Thursday night.
The .33-mill property tax proposed by the township’s administration would generate $1.05 million, which will only be used for capital improvement projects.
But Conrad recommended Lower Macungie should use $400,000 of the township’s general fund reserves to pay for only some of the capital improvements that the administration proposes funding with a property tax.
He said that will require cutting out $646,000 worth of capital improvements in the proposed budget. He indicated he is prepared to recommend which capital projects should be cut.
“While I don’t want to put them off, I think they can put off in the short-term, as we explore a long-term solution,” he said. “And that still allows us to spend $400,000 on capital fund projects.”
Conrad said the township has about $4.25 million in its general fund reserves. He said it must maintain a minimum of $3.8 million, which is why he suggested reducing it by only $400,000.
Previously, Fosselman has said the township wants to maintain a reserve fund balance of at least $3.9 million – 20 percent of its total budget.
The township manager said Lower Macungie had a $5 million fund balance at the start of this year, down from $8.6 million in 2008. He said it has been dipping into that reserve fund over the last 5-10 years to pay for capital projects.
Property tax ‘regressive’
Conrad told the other three commissioners: “I’m not necessarily expecting any feedback right now, but it’s certainly something to ponder over the next two weeks before we actually act on it.”
Beyond 2014, he said the township needs a long-term and sustainable financial solution, but he does not believe a property tax is that solution.
“A property tax is regressive, it’s based on the value of your home, which you have little or no control over, and it has nothing to do with your ability to pay,” said Conrad. He said as property values go up, so do property taxes, but fixed incomes of many seniors do not increase. He added those rising taxes can threaten the ability of seniors to remain in their homes.
Conrad said implementing a property tax for the first time in 12 years “is a really big decision that warrants further discussion.”
Both Eichenberg and Reis are reaching the end of their terms as township commissioners, because they did not win re-election. In January, they will be replaced by commissioners-elect Ron Beitler and Brian Higgins.
Conrad said those two new commissioners will have to deal with the consequences of implementing a property tax, “yet they did not have the ability to weigh in as commissioners.”
Home rule charter needed?
In addition to recommending taking money from the township’s capital reserves for the 2014 budget, Conrad suggested increasing Lower Macungie’s earned income tax as a long-term alternative to re-instituting a property tax.
But he acknowledged there’s a big catch: “We have a 1 percent limit on our earned income tax. The first class township code prohibits us from raising it above 1 percent.”
He said Lower Macungie could raise that tax if it adopts a home rule charter. He recommended the township explore doing that in 2014.
“Right now we’re severely limited in our ability to raise any revenue outside the property tax,” explained Conrad.
Pugliese said moving toward a home rule charter is a good move and predicted many township residents will support it. Township officials said adopting a home rule charter can take 18-24 months.
“We need the money now,” said Eichenberg.
Eichenberg vs. Pugliese
Pugliese stood to support Conrad, urging the commissioners to hold off and find some other solution to a property tax.
Pugliese indicated that once the township has a property tax it will not only remain, “but there’s a very good chance that it will creep up every year.”
Fosselman first publicly proposed the property tax in September. Since then, township officials wrestled practically line by line with the proposed budget, during a recent series of public budget meetings.
But Pugliese said he’s not seen any “selling points” from the township explaining why he should have to pay a new tax for capital projects.
He admitted: “I haven’t attended all the meetings” but suggested the township should have done more to explain to its residents why the capital projects are needed and why a property tax is needed to pay for them.
Countered Lancsek: “We’ve had numerous budget meetings, but no one shows up. If anybody is that interested, they should attend some of the meetings and look at the numbers.”
Eichenberg told Pugliese: “I didn’t see you at a single budget meeting. And now you’re here questioning what we did.”
Fosselman repeatedly has said the proposed tax will cost Lower Macungie residents whose homes are worth $100,000 just $33 next year. Those whose homes are worth $200,000 will pay $66 and those whose homes are worth $300,000 will pay $99.
But Pugliese maintained very few properties are worth only $100,000 in the township. “Most are $300,000 and above.”
An angry Eichenberg suggested Pugliese’s remarks are contrary to his position when he was a township commissioner.
“As a commissioner, you were an advocate of a tax, because you did not want the [reserve] fund reduced,” said Eichenberg. “Now you’re taking an exact opposite position. I question your motivation.”
When Eichenberg advised Pugliese his time to speak was up, another man in the audience loudly growled: “He’s not done.”
“I don’t understand what it is that you’re going to tax me to fund,” complained Pugliese before returning to his seat.
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