SUNBURY - In what's become year-end routine, a Northumberland County judge approved Shamokin City Council's request to raise its general fund tax 5 mills above the maximum limit.
President Judge William H. Wiest's ruling Tuesday marks the seventh consecutive year that Shamokin received the extra tax. It's estimated to generate an additional $112,000. Without it, Shamokin Clerk Robert M. Slaby told the judge layoffs were likely among Shamokin's 10 police officers or six street department employees.
Wiest asked during the hearing if city officials expected to seek the additional millage next year. That depends, said Ryan Hottenstein, of Financial Solutions, the city's state-approved financial consultant.
City council is also planning to double the earned income tax. A county judge is expected to rule on that in January. The move should generate more than $500,000. If estimates are exceeded, Hottenstein said it may rule out an eighth-straight tax petition.
Mayor William D. Milbrand wasn't as optimistic. Although he believes Shamokin will make a successful financial recovery through the state's Act 47 program, he doesn't expect it to happen so quickly.
"I really think we will," Milbrand said after the hearing when asked if he thought city council would petition the court in 2015.
Hottenstein's thoughts on the EIT apply only to next year. He offered that future cost increases for pension and health care would wipe out any new revenue.
No one from the public attended Tuesday's hearing at the Northumberland County Courthouse, and there was no opposition expressed.
Tax impact
Here's what the ruling means for taxpayers. Shamokin's total real estate tax levy for 2015 is 58.1 mills, a near 20 percent increase over the 2014 levy of 47.35 mills. A single mill represents $1. Taxpayers must now pay $58.10 on each $1,000 of assessed value of their property. If a property is assessed at $10,000, the tax bill would total $581 next year.
City council must give formal approval to the tax levy at a special meeting later this month.
The general fund is the city's main operational fund. It's used for day-to-day expenses, along with items like payroll and insurance costs. The fund is among the taxes that make up Shamokin's real estate tax bill (2014 figures in parentheses): general fund, 35 mills (30 mills); debt service, 14.25 (13.5); recreation, 6.75 (3); street lighting, 1.25 (0); public library, 0.75; shade tree, 0.1.
State law sets the maximum general fund tax at 30 mills for Third Class Cities, but allows municipalities to petition the court for up to an additional 5 mills. It must be proven that without the additional millage, the municipality's budget would collapse and its taxpayers would be met with even greater burden. Wiest concluded that was the case for Shamokin.
Not happy
Shamokin's total budget is $3.7 million, including $2.8 million for its general fund - $550,000 more than the 2014 budget. Slaby cited increases in pension payments and health insurance.
The pension payment totaled $205,769 in 2014 and $319,714 in 2015
"I was told that if I thought this year's (pension costs) were high, be prepared because next year will be even higher," Slaby told Wiest.
Hottenstein worked with city officials, including department supervisors, on the creation of the 2015 budget. Slaby described the figures as "legitimate" compared to past spending plans.
Everything identified by city officials as expendable was cut from the budget, Hottenstein said. Personnel costs make up nearly 70 percent of the budget. There's likely room to make slight adjustments, but nothing close to what's needed to erase a $621,000 deficit in next year's budget. That's what the tax increases are for.
Milbrand called the city's petition a "necessary evil."
"It's not embarrassing to me to keep the city afloat. I'll do whatever I have to do for the city," Milbrand said.
Solicitor Frank Konopka was tasked to prompt testimony from Hottenstein and Slaby in support of the city's request. Afterward, he hardly seemed enthused about the successful petition.
"This is a shame. As a (Shamokin) taxpayer, I don't like it. My taxes are going up just like everyone else's. What is the alternative? My understanding is if the city files bankruptcy, the state takes over, and I don't think anyone would like that," Konopka said.