Adoption of a 2015 city budget with no tax increase might have spurred a celebration at Wednesday night’s Allentown City Council meeting.
But rather than fanfare, speeches or congratulatory pats on the back, the meeting was marred by an intense verbal clash between Mayor Ed Pawlowski and City Council member Jeanette Eichenwald.
Before and after that hostile exchange, council’s six members approved the $96.87 million budget in a series of unanimous votes that seemed almost anti-climactic in light of all the work that preceded the adoption.
Eichenwald made an unsuccessful 11th hour proposal to give Allentown residents who work in the city a slight reduction in their earned income taxes —EIT.
The administration successfully proposed reducing that EIT by .05 percent for non-residents, which Eichenwald called a commuter tax reduction.
She argued that only reducing the EIT for commuters is unfair to city residents who also work in Allentown and pay that tax.
With all the new office buildings opening in the redeveloped center of Allentown, Eichenwald suggested more commuters working in the city would make up for any deficit created by also reducing the EIT by .05 percent for city residents.
Pawlowski accused Eichenwald of “grandstanding” for the news media and said if she wanted to reduce the EIT for residents, she would have to raise property taxes or cut police or firefighters.
No one else on City Council spoke in support of Eichenwald’s proposal or joined in the argument.
But, because she and Pawlowski sometimes loudly were talking at the same time, council president Julio Guridy had to act as referee.
“One at a time, please, one at a time,” said Guridy.
Eichenwald planned to introduce a motion to lower the EIT for residents at Wednesday’s meeting, but Pawlowski interrupted her, saying: “If you do that, you will have an $850,000 gap in your budget."
The mayor said property taxes would have to be raised to close that gap.
He said he even had a resolution prepared for Eichenwald, suggesting she could introduce it to raise those property taxes.
“We’d be more than happy to share this with you, so you can introduce it and put your name on it,” he told her.
Pawlowski repeatedly said raising property taxes would hurt senior citizens living in Allentown. “Senior citizens will suffer as a result of this,” he predicted, adding seniors have the hardest time paying their real estate taxes.
He said Eichenwald’s other two options to reduce the residential EIT and still balance the budget would be to cut 10 city police officers or 10 firefighters.
“Which option would you like?” he repeatedly pressed her. “Which one do you choose?
“I’m giving you a balanced budget. What is your alternative to balance the budget?”
“Keep it cool"
Eichenwald said she wanted to introduce and discuss her proposal because she had not heard it raised during city budget meetings she attended over the last several weeks.
“In the budgetary discussions, there could have been consideration to give some reduction to the residents in the same fashion as to the commuters,” she said.
The mayor said that was considered and that Eichenwald would be involved in those discussions about the EIT “if you would actually sit down and have a discussion.
“You don’t. You’d rather come to this council meeting and grandstand and throw out lines to the press than actually have an honest discussion.”
Advised Guridy: “Mr. Mayor, let’s keep it cool.”
But Pawlowski charged ahead, telling Eichenwald: “You never once called me and asked me about this at all. You never asked me or any of my administration about this until today.”
But Eichenwald said she repeatedly did try to get legal advice on her proposal from the city solicitor’s office.
She said she hoped to have a discussion about reducing the EIT for both commuters and residents “in such a fashion that it would not impact the budget to this degree.”
But she said it wasn’t possible to have that discussion because she never got an answer from the city solicitor’s office about the legality of reducing the EIT for both city residents and non-residents.
After repeated unsuccessful attempts to get that legal opinion, she said, on Tuesday she reached City Solicitor Jeffrey Snyder, who told her that it “absolutely” would be legal to reduce the residential tax as well as the commuter tax.
So she decided to put forward her amendment that would reduce the EIT for residents and commuters by the same amount.
“The reason for this is obvious,” said Eichenwald. “As an elected official, elected by the citizens of Allentown, I feel that it’s my primary responsibility to be concerned about the residents.
“If we were going to reduce the commuter tax, we should also consider reducing the resident tax as well.”
“If there was a way to do that, I would do that,” responded Pawlowski. “But I’m telling you there is not.”
The mayor stressed the city is serving its residents by not raising property taxes in 10 years. “We are holding the line for our residents for an unprecedented amount of time for a city our size.”
He said the Allentown School District has raised its taxes by nearly 24 percent in those same 10 years.
At one point, Eichenwald and Pawlowski even briefly argued about which one of them was making their argument personal.
Guridy suggested the issue had been discussed to death, adding: “Let’s not get personal and let’s not insult anybody.”
“I came here with the best of intentions,” said Eichenwald, adding: “I’m enough of realist to understand that I’m not going to be able to provide the residents with a reduction in the EIT tax, so I withdraw the amendment.
“I don’t want to engage in an exercise in futility.”
She ultimately joined her colleagues in voting to reduce the EIT for non-residents from 1.33 percent to 1.28 percent.
City required to reduce non-resident EIT
Pawlowski said the city is required to start reducing the non-residential EIT under state law, as revenue from the city’s 50-year water/sewer lease with Lehigh County Authority “starts hitting the books” to pay off Allentown’s pension liability.
He explained the non-residential EIT had been increased because the city faced rapidly rising pension costs before the water/sewer lease.
He said the city now is required by the state to decrease that EIT as its pension liability decreases.
“Next year it will have to go down a little bit more,” he said, adding that tax will have to be completely eliminated for non-residents within four to six years.
He said as revenue from that non-residential EIT declines, increased property tax revenue from new center-city buildings will fill in that gap.
But he added that new revenue is not enough to also reduce the EIT for city residents.
Resident says city charter violated
City resident Lou Hershman, who is a former member of City Council and a former Allentown city controller, said using earned income tax to balance the city’s general fund is a violation of Allentown’s city charter.
Hershman indicated the city charter requires going to the voters of Allentown to raise the wage tax.
Atty. John Marchetto, associate city solicitor at the meeting, said Hershman is correct about what the city charter states, but added state law prohibits a home rule charter from limiting a governing body from raising taxes on its residents.
He told Hershman: “The provision you cite in the charter is not enforceable.”
Added Pawlowski: “State law supersedes the charter.”
Police debate
Eichenwald and Pawlowski also argued about the size of Allentown’s police force.
He said the city has hired 20 additional police officers, which everyone on City Council wants to see on the streets.
She said the city received a $1 million federal grant to hire 10 police officers at a time when it had about 206 police officers.
“We actually had less than that,” said the mayor. “When we originally got the grant, we may have been budgeted for 206, but we did not have 206 on the police force.”
“We did not hire 10 additional police officers,” said Eichenwald. “When I asked if we could lose the grant, you told all of us that we could ask for extensions.”
“Which we have and we’ve gotten,” said Pawlowski.
He said that original $1-million grant has been used to hire more police, but explained they were not all hired immediately.
“Where are the 10 additional police officers?” she asked.
“They are on our police force,” he said.
“I don’t see 10 additional police officers,” she said.
“They are there,” he said.
Allentown currently has 211 police officers, five short of its full complement of 216, according to Amy Trapp, head of the city’s human resources department.
Pawlowski explained as those federal grants run out, after three years, the city is legally required to keep those officers on its payroll.
He indicated eight or nine officers were hired with the original $1 million federal grant, which is now depleted.
He said the city has received another federal grant to hire 10 more officers, “which hopefully we will fill this year.” He said the city also got an extension on that second grant.
And he said the city just got another federal grant to hire five school resource officers.
“We’ve been pretty fortunate,” said Pawlowski. “Philadelphia only got 50 officers. We got 25 and we’re one-tenth the size of Philadelphia. We got more than Pittsburgh.
“We’ve been very good at getting the grants. But now the grants are running out and we’re going to have to pay for those police officers.”
He said accepting those grants was the right thing to do: “We’ve seen eight straight years of decreases in crime because of it.”
He explained each police officer costs the city about $100,000 a year and that 70 percent of the city’s budget goes to fire and police.
“It still is a puzzlement,” said Eichenwald.
“I don’t understand why it’s so difficult to understand,” said Pawlowski.
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