Jeannette City Council voted 4-1 in favor of increasing the Earned Income Tax (EIT) by .5 percent for 2015.
Mayor Richard Jacobelli and Councilman Mark Clark reversed their votes from last month and voted in favor of the increase, along with councilmen Bill Bedont and Mark Levander, who supported the increase all along.
Councilman Gabriel Homan voted against the increase.
“There is no silver bullet. There is no white knight to rescue to city. This community demands local services. We're obligated to meet these expenses and without revenue increases we won't. I think after the obligation is met, the citizens of Jeannette will be proud of council and the city again,” Jacobelli said.
Bedont, council's finance chairman, asked for the increase in September. He said at the time that increasing the EIT was the only way he could imagine paying down the city's pension debt.
At the time, Clark said he had promised he would never vote for a tax increase and wanted to see what new city manager Bruce Jamison could do before voting for more taxes and Jacobelli said he wanted to see a different type of tax increase, other than a tax coming right out of a resident's paycheck.
“I wanted to wait for Jamison to get started and I have to listen to what he says,” Clark said.
This month, Jamison presented council with three budget options — increasing EIT by .5 percent, increasing the EIT and increasing the real estate taxes by 2.38 mills, or doing nothing and entering 2015 with nearly a half-million dollar deficit.
“There are no extras in this budget,” Bedont said. “The only way to balance it right now is to increase revenue. Once the pension is paid down, we can start reinvesting in the city.”
When a municipality increases the EIT in this manner, it can only be used for pension debt and state law requires that the tax continually be lowered as the debt is lowered.
“If I get a pay raise, it's gone in taxes,” said Pat Stikkel, a resident. “If you hit us with an increase, put it in bold print that the tax goes back down after two years.”
Jamison said he believes the increase in EIT will put the city back on solid financial ground within two to three years.
“I'm really proud of council for taking the heat on this,” said Jamison. “If I can drop the EIT sooner, I will. It's the only way to go. Council is taking the responsibility that they have to take on in order to fix this problem.”
Council didn't further discuss a potential real estate tax increase, but Jamison said he doesn't believe the city will make that decision this year.
Council members agreed that increasing the EIT is slightly more palatable if only because it's legally required to decrease as the debt goes down. It would be more difficult to guarantee a decrease in real estate taxes.
“We're sort of asking residents to hang in there and give it a chance to right itself,” Jamison said.
The increased EIT is expected to bring in about $500,000 in additional revenues next year.
Kristie Linden is an editor for Trib Total Media. She can be reached at klinden@tribweb.com or 724-838-5154.
