Jeannette could tap savings to balance budget, avoid tax increase

Jeannette taxpayers could see a small decrease in their earned income tax and no property tax increase next year.

However, city officials plan to use $340,000 from a reserve account to balance the proposed 2018 budget, City Manager Michael Nestico said.

Council approved a preliminary version of the budget this month that calls for 3 percent pay raises for four nonunion managerial employees and reducing the earned income tax from 1.85 percent to 1.75 percent.

Officials raised the tax for a second consecutive year in 2015 to 2 percent in an effort catch up on overdue employee pension obligations. It dropped to 1.85 percent in 2016.

“We're starting to address the pension funding issues, and we're on track,” Nestico said.

The $340,000 will come out of money set aside from the 2015 sale of the city's sewage authority.

In addition to rising operational and employee costs, other factors contributing to the deficit include:

• A reapportionment of proceeds from a local services tax for the police and fire departments to include funding for Jeannette EMS. The move, approved by council in June, left a $44,000 hole.

• Increased payments for a $1.5 million bond that was refinanced last year. The city will contribute about $60,000 more toward the repayment in 2018.

• Years of declining property tax revenue. Officials are expecting a $30,000 decrease in 2018.

“Since 2013, collections have decreased every year,” Nestico said. “The tax base continues to see a decline in property taxes and residency.”

An initial budget proposal included a small property tax increase and no pay raises, he said.

The plan will be available for review at city hall and on the city's website. Council could approve it at a Dec. 19 special meeting.

Renatta Signorini is a Tribune-Review staff writer. Reach her at 724-837-5374, rsignorini@tribweb.com or via Twitter @byrenatta.