Local Services Tax?

One of the biggest problems facing boroughs in Pennsylvania is revenue. Sayre collects tax revenue from Earned Income Tax and property taxes. And those are limited sources. The Commonwealth legislature is “working” on the problem, but no solution is in sight.

Our borough, as mentioned in an earlier post, is facing serious infrastructure issues. As an example, we began working on upgrading our sanitary sewers in late 2006. This was phase 1. It ended in late Summer 2007 and cost us around $3.2 million. The estimate for the rest of the borough is around $40 million – this is a generational project!

The big question: how are we going to fund it? There are grants and there are certainly loans available. I’m not too sure about grants as we are not the only community facing this issue; we have lots of competition. As for loans, there is a statutory limit on the amount of debt we can carry. I don’t know what that number is – it is based on a formula, but we haven’t calculated it as I write this.

So, given the challenge of funding, what are we to do. One possibility might the be Local Services Tax (Act 7 of 2007). This is a revamping of the Emergency and Municipal Services Tax (Act 222 of 2004). Act 7 fixed some issues with Act 222’s policies and procedures and changed the name. Under this Act, Council can enact a tax on individuals who work in our borough. The maximum amount we can levy is $52.00 annually. Under the law, 25% must be used for police, fire and emergency services. The other authorized uses are road construction and maintenance, and property tax reduction through the homestead and farmstead programs. (I don’t know how those work exactly – needs more research on my part).

The interesting thing about this tax, although it would hit residents who work within the borough, it also tags nonresidents. According to information provided by the tax office last year, about 4000 people work within the borough. Most of them are from out of town/state. These people benefit from the protection afforded by our police and fire departments, and they contribute to the wear and tear of the roadways. How many of them are eligible for this tax hasn’t been determined. There are exemptions, e.g., disabled vets, active duty military, and folks who earn less than $12,000.

It’s unfortunate that the tax would hit our residents, but perhaps we might be able to offset it with a decrease in a property tax increase dollar-for-dollar. The key question: how many people who do not pay taxes to the borough are affected and what would the amount of revenue be? Who collects it? Who handles all the paperwork? Do we share with the Sayre Area School District? How much should we designate? $10, $20, or $52? Can we bank it in Capital Reserve until we need it?

More info on the subject is at the Department of Community and Economic Development’s web site covering the topic.

September 2007 Council Meeting Highlights.

I do not have the draft minutes from the meeting but I can report on what was listed on the agenda. After the usual housekeeping chores (approval of the minutes of our August meeting and the financial report; approval of the bills list, and reviewing the various reports from appointed officials, committees, commissions, etc.

• Council approved advertising an ordinance amending our local code that would require food vendors on borough property to have a food license and to comply with Department of Agriculture rules.
• Authorized payment of Pay Request #1 for $101,736.90 to Devincentis and Sons Construction for our West Street infrastructure project.
• Approved promotion of Mr. Justin Potter, our newest hire, from probationary status to Laborer Class 1.
• And approved a resolution supporting the National Incident Management System (NIMS) and requiring all borough departments and agencies to abide by its regulations.

There was other activity, but I don’t have it in my notes. I’ll need a copy of the draft minutes before I can report on them. I can report the Council engaged in a long and unnecessary (for this meeting) discussion about sewer lines that would have been more appropriate for a committee, not Council.

Infrastructure issues….

Infrastructure maintenance in the history of the Borough of Sayre seems to have been based on either the principle of benign neglect, or “if it ain’t broken, don’t fix it.” Beginning in the early 1990’s, our Public Works personnel warned the Council of that day of serious issues with certain segments of our sewer system. The warnings were reissued in 2002, and finally, this year, the Council acted on the warning and initiated a long overdue sewer infrastructure program. Phase 1 concluded this past summer and cost us around $3.2 million. The overall project, or the entire system, will cost around $45 million in 2006 dollars according to our engineers.

If that were not more than enough, the Valley Joint Sewer Authority must upgrade their facility to reduce phosphorus and nitrogen input to the Susquehanna River. The upgrades must be in place by 2012, per the Chesapeake Bag Agreement 2000 and the Clean Water Act. Upgrades are estimated at around $10 million, 53% of which must be borne by Sayre Borough. Ouch.

We also have serious problems with our Public Works building, which in the eyes of a couple of building contractors who have look at it, needs to be torn down. Indeed, one contractor report reads more like a letter of condemnation. The roof leaks so badly that it’s easier and more efficient to replace the entire thing. But, the walls that support the roof sit on either nonexistent or illegal footers that sit well above the frost line. Which explains why a section of wall is slowly falling outward. The electrical system is beyond dangerous: no GFI circuits or explosion proof outlets. The earthen floor is contaminated by vehicle fluids over the many decades of use. Et cetera, et cetera, et cetera.

I don’t think we will be able to secure a building permit for any repairs.

The best, most logical solution is demolition of the existing building and construction of a more efficient steel building. The problem: money. I think the early estimates range from $500,000 to $800,000. The other problem, some of my colleagues think a power wash and paint will fix the issue. Sigh…..

Budget Time!

Council received the first draft of the proposed budgets for the General Fund and the Sewer Fund. There is a tax increase and a sewer rate increase. I will not identify the proposed increases at this time since Council has not had the opportunity to review it. That will happen next week. Sayre Borough’s tax rate for 2007 was 9.92 mills, a rate set two years ago. Some people claim we (the Council) are taxing the people “to death,” but the fact is borough taxes have risen only 1.92 mills since 1998. Our record is better than that of the county and the Sayre Area School District(4.422 and 13.5, respectively. The main reasons for the increases in the 2008 budget are the usual suspects: salaries, wages, and benefits for the General Fund, and the sewer infrastructure debt incurred by the recently completed Phases construction. My first inspection of the draft didn’t reveal anyplace we could make any significant cuts. However, my colleagues have yet to weigh in on this matter – stay tuned.

Just a test

This a test of Microsoft’s Live Writer tool.