EASTON, Pa. – Growth in the city is leading to growth of the municipal budget. But one councilman is pumping the brakes on the latest projections.
Easton City Council last week voted 4-1 to approve a $72.2 million budget that holds the line on taxes – Easton hasn’t raised real estate taxes since 2009 but still has the highest property tax rates in Northampton County.
- Easton City Council approved a 2023 budget that doesn't raise property taxes
- Councilman Peter Melan raised concerns about some of the revenue projections
- City Administrator Louis Campos said it's a reflection of increased population and higher wages paid
Councilman Peter Melan was the lone dissenter in the budget vote. He was skeptical of revenue projections made by the city administration for earned income tax.
The budget forecasts $10 million in earned income tax revenue next year – over 40% more than the $6.9 million budgeted this year.
“I felt the administration presented numbers to us for earned income tax that I felt were not aligned with prior trends,” Melan said.
Voting for the budget were council members Roger Ruggles, Kenneth Brown, David O’Connell and Mayor Sal Panto Jr. Council members Taiba Sultana and James Edinger were not present for the vote.
“My fear is that with recessions, inflation – I have some serious concerns about how we prepared this budget,” said Melan, a Democrat who recently announced he'll run for mayor. “I mean they did a good job but I don’t think we’re going to hit.”
City Administrator Louis Campos said the projections are a 6 to7% increase in earned income tax revenue from what will actually be received this year.
He said the city would typically see a 2 to 3% increase in earned income tax. But times are changing.
The projections are growing for a couple of reasons, he said. The first is population growth – more people are moving to Easton, according to the 2020 Census. There’s also been a change in the earning profile of residents. More high-earners are moving into Easton, and inflation has resulted in many employers payroll raising employee wages even for entry-level positions, Campos said.
“To summarize putting the budget together in ‘20, which is a COVID year, to ‘22 we know that the demand for rentals is attracting higher wage-earners to pay for the rent but we didn’t expect this to go up aggressively,” Campos said.
“What caught us by surprise in the EIT the last two years – EIT has been under-budgeted. In 2023 it’s caught up to the actual tax amount that will be collected.”
American Rescue Plan funds
Melan also raised concerns about federal American Rescue Plan (ARPA) funds that are budgeted for 2023. ARPA funds must be used by 2026 and budgets after that won’t include them.
A budget proposal using ARPA funds could impact future positions and services that could one day be unfunded, according to Melan. There’s a $1.6 million ARPA line item in the approved budget.
“We’re replacing lost revenue, I respect that. But to place that in the budget you have to fill that up in a couple of years then,” Melan said. “You can use it today, 2024, 2025 but at some point it goes away and if you don't have replacement revenue that also creates a deficit. That’s why I voted against it.”
Campos said that the ARPA funds are budgeted to replace revenue loss attributable to the COVID-19 pandemic. The money would also be used, Campos said, for one-time expenses and for positions that are temporary.
“If the revenues do not come back, those positions would be eliminated,” Campos said.
Campos said that ARPA funds are being applied to short-term expenses.
In cases where it is necessary to keep a position, Campos gave the example of a grant writer. He said the administration could look into finding ways to paying for the expense from the general fund budget, or seeing if it could be subsidized with grant-writing fees.
