Bethlehem adopts 10 budgets for 2014, honors outgoing mayor

No property tax hike, but increases for sewer rates

BETHLEHEM, Pa. - It was a night of ups and downs for Bethlehem City Council Tuesday, as it honored outgoing Mayor John Callahan and was threatened with a lawsuit by outgoing City Controller Robert Pfenning.

Council also adopted 10 different budgets for 2014, with no property tax increase but an immediate increase of about 15 percent in sewer rates and an eventual increase in water rates that also could be as high as 15 percent.

The proposed water rate increase must be approved by the Pennsylvania Public Utility Commission, which has the authority to reduce it.

"Usually that results in a reduced number," said council president Eric Evans after the meeting.

Evans said Bethlehem's increased water and sewer rates "will put us right about in the middle of all the regional distributors" including private, non-profit and municipal suppliers. He said Bethlehem's rates currently are at the low end of prices charged by those distributors.

"It's still a fair rate," said the council president. He said the increases are needed to pay for eroding infrastructure in the water and sewer systems.

In addition to the $71 millon general fund budget, council also voted on each of the following budgets: water fund, sewer fund, golf course enterprise fund, liquid fuels fund, community development, 911 fund  and capital budgets for non-utilities, water utilities and sewer utilities.

It also voted to "set the tax rate for all city purposes."

Most, but not all, of those votes were unanimous by the six council members at the meeting.

With no explanation during the meeting, council member David DiGiacinto voted no on the general fund budget, setting the 2014 tax rate and a golf enterprise fund budget.

After the meeting, he said some projected revenues in the general fund budget are "a little bit high. They are higher than what I believe is achievable, based on current performance this year, which is going to make it difficult for us at the end of next year."

DiGiacinto said those high revenue projections are part of the reason why a .75-mill tax  imposed three years ago was not reduced or eliminated in 2014, although that tax was only supposed to be temporary

"They knew it was going to be needed."

He said when that tax was established, it was supposed to fill a specific need – help pay for capital expenditures to improve public safety.

"That has been fulfilled. It has done what it was supposed to do. When council established that tax, the hope was that we would be able to take it out at some point."

DiGiacinto said that's why he voted no on the 2014 tax rate. He was hoping all or some of that .75-mill tax would have been removed for next year.

He said he voted no on the golf enterprise fund because those projected revenues also are high based on prior performance.

Staff pay debate

As part of the 2014 budget discussion, a few council members debated whether increases and decreases should be made in salaries of some city staffers -- and when those changes should be made.

Mayor-elect Robert Donchez, who now is a member of council, seemed to end the debate when he said he will present his appointees and their proposed salaries to council before he is sworn in on Jan. 6.

Donchez promised salary reductions will be recommended "for a good number" of department heads – but not all of them

The mayor-elect stressed all those positions and their salaries will be reviewed.

Council member Karen Dolan said council had a responsibility set the salaries now, as part of the 2014 budget.

After the meeting, Evans indicated council can make changes to the budget for up to 30 days after it has been approved.

Only one resident speaks

Only one of the city's more than 75,000 residents addressed any budget issues before council adopted the budgets.

Resident Dana Grubb said he was amazed that he had heard no discussion by council about reducing thethree-quarter-mill tax implemented three years ago to fill a gap "on capital funds that had been misused."

"Seems to me the priorities are not where they need to be," said Grubb. He said there is more concern on council about upgrading salaries for city employees than there is "with giving something back to the taxpayers in this community."

Grubb suggested salary upgrades are being used as rewards for employees who have special status within city government and that the salary structure is broken.

He also said it is "incredulous" that the nominees to become the city's new police and fire chiefs, both with 25 years of experience, would be paid less than nominees to head some other city departments.

"This budget process in some ways is disrespectful of the community in which we live," said Grubb. He said the debate seems to be over which employees will get pay upgrades "when the real debate should be the taxpayers getting a break."

Dolan later responded to Grubb's remarks: "To say that those positions were rewards for people with special status, that's an accusation of corruption and probably should have been gaveled down."

Grubb later again took the podium to say he did not use the term "special status" to suggest corruption, but only favoritism.

Grubb praised two members of council he had known for most of his life.
He said he graduated from Liberty High School with Donchez and played sports with DiGiacinto on the sandlots and ballfields when they grew up in northeast Bethlehem. DiGiacinto will become the new city controller next month.

Dolan tried to change salaries

Amendments Dolan proposed to change salaries for a number of city employees died for a lack of a second on council, which surprised her because she thought her colleagues supported the proposals.

Dolan charged that they made a decision before Tuesday's meeting to not consider the salary changes.

"This is a shocker," she declared.

She said some city employees have been given promotions but never received the pay that went with those promotions, which is against the city's employee handbook.

"That's a 2013 council issue," said Dolan. "I don't see how that's not your job – to make right what's wrong.

"What's proper is for the 2013 council to do its job on the 2014 budget."

Dolan had recommended decreasing other salaries "to bring equity to our middle management. That's important for morale."

Council member Michael Recchiuti said it was not proper for council to consider department head salaries being proposed by Mayor-elect Donchez "in this budget at this time because they are not really before us."

Recchiuti said council can consider those positions after Donchez is sworn in as mayor and submits names, along with proposed salaries.

Said Donchez: "I will submit to council the nominees, with their salaries, prior to Jan. 6, so all members of council, and the new members of council, have the opportunity to review the nominees and also the salaries I'll propose."

Pfenning threatens suit

Pfenning, the city controller, said the deputy controller improperly has been classified in relation to the duties of the position, so he had recommended a salary increase for that position. He said council previously voted to approve that reclassification, "but tonight it was not brought up again."

Pfenning said the office of city controller is independent and the controller should have the flexibility to manage the staff in that office.

"City Council today interfered with the independent administration of that office," maintained Pfenning. "If I am as angry as I am tonight, tomorrow morning I'm going to be seeking to find counsel someplace in the city who will represent my opinion that independence of the office has been interfered with.

"I'm very, very angry. Perhaps council members after the meeting should talk to their solicitor about what a mandamus lawsuit is."

Callahan's last council meeting

City Council and people in the audience stood to applaud Mayor John Callahan, who was attending his final council meeting.

The applause came after Evans thanked Callahan for all he has done, saying Bethlehem is a better city than it was before Callahan became mayor 10 years ago. "You certainly have left quite a legacy on the city, for all of us. We do appreciate that."

Callahan said it was a tremendous honor, not only to be mayor, but first to serve six years on City Council.

He said his years as mayor were marked by "transformation, growth and transition. I'm very proud of what we've been able to achieve over the last 10 years. In every way you can measure the strength of a community, we're better today than we were 10 years ago,

"Very few communities have lost what Bethlehem has lost, as a result of the loss of Bethlehem Steel, and even fewer communities can say they came back from such a loss. It's been a wonderful opportunity."

While "I get to make the speeches," Callahan indicated council, city employees and Bethlehem residents all contributed to that success.

Other business

Also during the council meeting:

• Evans updated plans to appoint a new council member to serve the
last two years of Donchez's term. He said several people already have applied and expects more to do so. The council president said applications are being collected until Dec. 31. Council member agreed with his plan to interview candidates on Jan. 27, then attempt to select one of the applicants on Jan. 30. Evans said council also will schedule a meeting for Feb. 3, in case it cannot agree on a candidate on Jan. 30. He said the new council member will be sworn in to participate in the regularly-scheduled council meeting on Feb. 4. The position must be filled by Feb. 5.

• Council made changes to the structure of the Bethlehem Environmental
Advisory Council, so a member of City Council is one of the seven residents serving on the EAC. The person who chairs the EAC will be picked by City Council, but the council member who serving on the EAC will not be allowed to be its chairman. A member of the Bethlehem Planning Commission no longer will serve as a non-voting liaison to the EAC.

• Anthony J. Bauer was recognized by council for his 43-year career
working in the city's engineering department. He began that career in
1970 as an engineering aide in the public works department and worked his way up to project engineer before retiring.

• Council approved a lease for a food concession stand, called Alozie's Frosty Delights, which will operate at the Schaffer Municipal Ice Skating Rink along Illicks Mill Road. The stand will operate only during ice skating season.

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