Reading City Hall

READING., Pa. – Reading property owners heard some good news Monday when the city council announced it can now slash in half a proposed tax increase.

The move marks the second time the tax increase has been cut in half since Mayor Eddie Moran introduced the $92.7 million spending plan in early October.

In Moran’s original proposal, taxes would have increased by 10%. After council refinanced debt from 2014 and 2015 bond issues, the recommended tax increase was cut in half.

On Monday night, during a Committee of the Whole meeting, council said it can now cut that amount in half, with a new proposal to raise taxes 2.49%.

If approved as a final budget with the current recommendations, taxes would increase to 18.129 mills, up 0.44 mills from the current 17.689 mills.

The newly proposed rate would mean the owner of a property assessed at $100,000 would have an annual property tax bill of $1,812, an increase of $44 over this year.

Gordon Mann, an outside consultant from PFM Group Consulting LLC of Philadelphia, said the city is doing far better than anticipated with its earned income tax receipts for 2020.

It was originally estimated that the city would see a 12% drop in the EIT because of COVID-19-related job losses.

But after revenues for October and November came in stronger than anticipated, Mann said that number has been reduced to 7%.

“Instead of a $4 million hit to the earned income tax, we will now see a $1.5 million hit,” Mann said. “We expect the EIT numbers to come back to pre-pandemic rates by 2023.”

In addition, Mann said the real estate transfer tax rate has been very strong.

“You have a shot to finish the year with a potentially balanced budget or maybe a small deficit,” Mann said. “It’s a better financial picture overall.”

Mann also said the city had a $3.57 million savings from a reduction in non-personal expenses.

The savings will lower a projected deficit to about $2.4 million, which will be made up from the city’s reserve fund balance.

Council is scheduled to adopt a final budget at its Dec. 14 meeting.

Council President Jeffrey Waltman said having strong accurate numbers puts the city in a strong financial position.

“We are really looking out for the next five years to keep the city in strong financial shape, which will allow us to do other things,” Waltman said.

Councilwoman Johanny Cepeda-Freytiz criticized the spending plan because it includes a 2.5% pay increase for city employees.

“It appears that we are raising property taxes to account for salary increases,” she said. “I don’t think we should be allowing increases for our employees."

Waltman said the less the city pays people, the more it pays in the long run.

“You think not giving people increases could save money, but it can cripple us,” Waltman said. “They [the increases] protect us from other costs.”

Prior to the committee of the whole meeting, council held a brief special meeting for the purpose of approving the introduction of an ordinance that will reauthorize the Reading Downtown Improvement District for another five years.

Waltman said council will be discussing the draft agreement for the reauthorization next week. A vote on the ordinance is scheduled on Dec. 21.

Without a reauthorization, the Downtown Improvement District would end on Dec. 31.

Scroll down for comments if available