Jeannette wage tax may rise
Jeannette is on its way to raising the earned-income tax to catch up on its pension obligations for the second consecutive year, despite several residents' pleas to find other revenue sources.
“We will keep you apprised of how it's working out,” City Manager Bruce Jamison told about a dozen residents present for Wednesday's council meeting. “It's really the only way to go.”
Council decided in a 4-1 vote to advertise an ordinance that would raise the tax from 1.5 percent to 2 percent. The ordinance likely will come up for a final vote during November's meeting. Councilman Gabriel Homan voted against the measure.
The half-percent increase is projected to bring in about $600,000 extra for 2015, Jamison said.
“It's time Jeannette picks itself up and does what it needs to do and move forward,” Jamison said.
It was the second time the proposed hike came before city council.
The proposal was rejected during September's meeting when it was introduced by Councilman Bill Bedont, who received support from Councilman Mark Levander. Jamison reintroduced it during council's Monday work session as part of a budget presentation.
Mayor Richard Jacobelli and Councilman Mark Clark voted against it in September and reversed course to support it Monday.
The city is required to make about $1 million in annual pension payments for police, fire and municipal employees. Payments from 2013 are overdue and if the city is unable to fully fund its 2014 obligation, the outstanding figure will be rolled over until 2015.
“These costs weigh heavy on our budget to the point where just them alone can sink us,” Jacobelli said.
Several residents asked council to examine other revenue streams, such as freezing wages or a per capita tax that would be levied on renters.
“This way, everybody in the city's contributing,” said Clyde Clemens.
Pat Stikkel asked council to ensure residents that the hike will be reversed once the pension funds are caught up.
“The taxpayers, we run short on cash, we suffer,” he said.
Council increased the earned-income tax from 1.15 percent to 1.5 percent in 2014 with the plan of using the added funds exclusively to pay off outstanding pension obligations.
Solicitor Scott Avolio said that the city is legally obligated to stop collecting the added taxes once the pension funds are no longer considered distressed.
Jamison said that it would take about two to three years to catch up on pension obligations by raising the earned-income tax to 2 percent.
In outlining various budget scenarios for those in attendance, Jamison said that a real estate tax increase of 2.38 mills, plus the proposed wage tax hike, would help the city get caught up sooner, in about two years. Doing nothing would result in a $488,000 deficit, he said.
Renatta Signorini is a staff writer for Trib Total Media.
