New city manager urges Jeannette Council to support EIT hike
When Bruce Jamison accepted the new position of city manager in Jeannette, he got right to work drafting several budgets for 2015.
He created five scenarios, so that council members would have options and could see how each option would impact the overall financial picture of the city.
The option council chose to embrace last month — in a 4-1 vote — is the spending plan that calls for a .5 percent increase in the Earned Income Tax (EIT). This move, if approved in the final vote next week, will bring in about $500,000 in additional revenues next year.
Any EIT increase must be spent on pension debt, which is the largest drain on city finances each year. Once the debt is paid up, the EIT must be lowered once again as required by law.
Former council finance chairman Bill Bedont, who resigned last week because his family is relocating out of state, originally sought this increase in September but it was initially voted down. In October, Jamison presented his five draft budgets and council voted in favor of EIT increase, which should enable the city to break even in 2015.
The EIT hike, if approved, would increase the tax from 1.5 percent to 2 percent.
The other options Jamison presented included:
• Increasing the real estate tax by 2.38 mills and increasing the EIT by .5 percent, which would result in a surplus of about $137,000
• Making no changes to the existing revenue streams, which would result in a deficit of at least $500,000
• Eliminating the fire department, which results in a budget deficit of nearly $97,000
• Eliminating 50 percent of the police department, which would result in a surplus of a little less than $100,000
But, Jamison said the surpluses shown in these draft budgets is a little misleading because in none of the spending plans does he expect to pay off the 2015 police pension payment, known as the MMO. In every scenario presented, Jamison anticipates at least some part of that bill carrying over to 2016.
In other words, even the budget drafts that show a surplus won’t actually bring about a surplus until at least 2016 because Jamison anticipates needing to make almost double MMO payments for at least the next two years to get caught up.
And that is why Jamison is urging council to hold fast to it’s decision to approve the EIT increase during next week’s meeting.
“It’s not politically something that anyone wants to do,” Jamison said. “It takes more guts to stand up and get it done. If they decide not to vote for the EIT increase, they need to know the ramifications.”
And that is why Jamison created so many budget options for council to consider as the year draws to a close.
“I’m Mr. Reality. I will crunch the numbers and I’ll be honest. The numbers don’t lie,” Jamison said.
The manager believes that an increased EIT will bring the city’s finances back into line within two years. At that point, the EIT will begin to decrease, which Jamison said is like a safety net for residents because the state requires the city to lower it as the pension debt goes down.
Jamison said the budget has been cut as much as it can be without eliminating services or potentially impacting the safety of equipment used by police and fire department employees.
“Cutting one or two employees will not solve the problem. It might cut $30,000, but we need a half million,” Jamison said. “Council is really sticking its neck out to fix it. They’re taking responsibility and that’s fantastic.”
Kristie Linden is an editor for Trib Total Media. She can be reached at [email protected] or 724-838-5154.