Proposed Bethlehem budget has a stealth property tax hike, two council members say

Posted: 10:40 PM EST Dec 03, 2013   Updated: 9:17 AM EST Dec 04, 2013

Bethlehem's proposed 2014 budget officially contains no increase in property taxes, but at least two council members say that's just a matter of semantics.

Council members David DiGiacinto and J. William Reynolds said at Monday night's budget hearing that the continued inclusion of a .75 mill assessment for public safety spending is just a property tax increase by another name.

"I thought the .75 mill [tax] could end this year," said DiGiacinto, who will take over as city controller in January after four years on council. "My thought was, it had a life span, it served its purpose and could come off [in 2014].

"Now it's not a public safety tax. It's a real estate tax that goes right into the general fund," where it can be spent on most anything, DiGiacinto added.

Reynolds echoed DiGiacinto's sentiments, saying that while the tax will pay for more than half of the budget for public safety personnel, it's still a real estate tax "if we're being honest."

The tax will raise about $1.2 million, according to 2014 budget projections.

Mark Sivak, the city's director of budget and finance, said the Callahan administration "looked hard and long to reduce or eliminate" the tax, but if it wasn't included in the 2014 budget, "we would have problems meeting our obligations at the end of 2014."

After the hearing, DiGiacinto said the tax was instituted in 2010 to deal with "a serious structural deficit" facing the city. Instead of borrowing $20 million, by instituting the tax, the borrowing was held to $16 million. (DiGiacinto said both he and Reynolds voted against the tax.)

Now that the crisis has passed, the tax should go away too, DiGiacinto said at the hearing.

Public safety spending is increased by $945,000 in the proposed 2014 budget, DiGiacinto noted, "almost all of it [for] negotiated salary increases."

But, as council member Michael Recchiuti pointed out during a discussion on general fund expenditures, there is no appetite on council to cut spending on public safety.

DiGiacinto also questioned administration projections of revenue expected from first responders fees paid by organizations that present ticketed events and host fees from the Sands casino.

Sivak said the former would bring in $375,000, which DiGiacinto called "a little aggressive," saying $325,000 would be a more realistic figure.

On the latter, DiGiacinto said Sivak's $9.75 million projection for 2014 was "a little high," given that the host fee produced $9.51 million this year. "I don't know where the extra $250,000 is coming from. ... I might have been a little more conservative."

Sivak said after talking with casino officials, he expects the addition of table games to bring in more money.

Council will hold a fourth and final hearing on the proposed 2014 budget at 7 p.m. Dec. 12. Council has scheduled a vote for Dec. 17 on adopting the $71 million spending plan, which includes hikes in water and sewer rates.