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ALLENTOWN, Pa. – Allentown City Council received a presentation on Mayor Ray O'Connell's final budget of his term during a special meeting held Wednesday night at City Hall.

The $124.8 million proposed spending plan seeks no tax increase from property owners, holding the millage rate at 7.31.

O'Connell described the city's financial position in the last year as "strengthened." This increased power, O'Connell said, was based on two main factors: First, the 27% tax increase the city imposed in 2019, and second, "cost containment" measures which mitigated spending.

"It had to be done; it was a very proper decision. I don't regret it," the mayor said of the tax increase. "We are no longer on the verge of bankruptcy. I'm feeling pretty comfortable about 2022."

The city started this year with about $17 million in liquid capital, O'Connell told council. He added that amount should hold as the year ends, and 2021 revenues should equal or exceed expenditures of about $120 million.

"We have frozen more than $800,000 in unspent 2021 expenditures to ensure our cash position is steady going into 2022," O'Connell said.

Another measure of how financially stable an organization is would be their reserves. Once again, the mayor described this situation favorably, saying Allentown has "positive momentum" in other city accounts.

In the fourth quarter of 2021 and heading into 2022, the city is cutting the risk fund balance. At one point, this fund reached a high of $11.6 million at the end of last month.

"This will help stabilize the general fund while leaving the risk fund in healthy condition in 2022," O'Connell said in the presentation.

To illustrate his point, he cited the golf fund and the stormwater fund. The former is expected to carry a positive balance throughout next year. The latter has capital to make substantial investments in the city's storm sewer infrastructure.

The presentation to the legislative body also offered prognostications for 2022. During the remaining months of his leadership, O'Connell said he wanted to improve the city's bond rating going into 2022. A realistic appraisal of the situation could be to just discard the city's negative outlook, if nothing else.

The mayor also said he's anticipating earned income, business privilege taxes and the casino fee — all impacted by the pandemic — should show signs of recovery.

O'Connell described residential and commercial development trends as "positive." He cited the completion or current construction of various apartment complexes, along with office and industrial projects underway or proposed, as evidence.

"That's really positive for our city," said council President Julio Guridy. "Congratulations."

The business privilege tax will remain unchanged during 2022 in the proposed budget, as will the $52 local services tax. The refuse collection and stormwater management fees will also remain unchanged.

However, Councilwoman Cynthia Mota and Councilman Ed Zucal expressed concerns about how the budget administered the "step program," which governs how city employees receive pay raises.

"The reality of the step (pay raise) issue is confusing," said Mota. "We have some issues with this … We're going to have to fix this."

O'Connell said the administration is not attempting to implement the step program outside of legislation previously approved by city council.

"It was never said that non-bargaining would get 2.5 (percent)," O'Connell said. "I never said it. Finance department never said it."

Council's budget hearings are scheduled to begin at 5:30 p.m. Oct. 27 and run through Dec. 8 with the budget's adoption.

Following the special meeting Wednesday night, council held its regular meeting, during which it accepted the 2021 American Rescue Plan funding, approved a resolution adding plain English statements on mail-in ballots, OK'd a bill amending the penalty for tampering with car "boots," and moved forward an ordinance providing for the expenditure to purchase a building to be used as a homeless shelter.

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