Easton's Proposed Commuter Tax Not The Answer To Solving A Decades-Old Problem
When it comes to government finances, we hear the catchphrase all the time -- we need to do more with less. These words are uttered from public officials in the federal government to our local school board members. This is also painfully true in millions of households across America as we continue to see costs rise and wages plateau. Settling for the same ol', same ol' just isn't working anymore when darker financial pictures are on the horizon, especially when it comes to local government's public pensions.
Earlier this year, my City Council colleagues and I were presented with a proposal that would raise the commuter tax on all non-residents that work in the city from 1 to 1.75 percent. City Council has been advised that the tax is needed to cover $1.35 million of a projected $1.85 million shortfall in the city's pension obligations. Raising the commuter tax would soften that blow.
First, there is genuine concern within our business community that this tax will be a deterrent for commuters and patrons to support our city and for employers to want to stay and keep operating their businesses. Will small business owners living outside our borders want to pick up and relocate their businesses to Easton? Will we witness merchants taking their business elsewhere? What will happen to our local economy?
Second, there is a concern that we will hurt and deter regional cooperation by targeting other's paychecks and wallets. Will our neighboring local governments be discouraged to embark on inter-municipal agreements down the road? Will we begin an alienation process that lasts for decades as we strive to enhance cooperation? Do we balloon and manifest the "city vs. suburb" mentality that is already prevalent here in the Lehigh Valley?
These are all valid questions that have no easy answers, but they contribute greatly to the debate. The overall question as we move forward is: why is this happening and why is the commuter tax even an option?
Laws mandating defined benefit plans for municipal workers' pensions are the issue. Investment losses affect contribution requirements instead of the benefits. Further, state law currently prevents municipalities from making the changes they might want to make to their pension system.
Accordingly, our state government then graciously allows local governments to institute a commuter tax to specifically help fund pensions. If one looks at the overall picture, this is a mechanism for the state to continue passing the buck onto our local municipal governments.
Harrisburg needs to step up to the plate for every taxpayer, worker and local government in the Commonwealth and address the pension issues that truly affect us all. While the General Assembly worked on the public pension issue in November 2010, the end result did not go far enough. In essence, the state legislature continues to push costs down to local governments and ultimately, the taxpayer. They need to come to the aid of local governments and they need to do it now without hurting Pennsylvania's workforce in the process.
City Council, in the meantime, still needs to find a solution to the gap in our pension obligation. I, along with other City Council colleagues, have been a proponent of instituting a PILOT (payment in lieu of taxes) on properties within Easton that are tax exempt. If one were to look at the dozens and dozens of properties in the city that have received tax exempt status over the years, one would be shocked. The PILOT option would generate significant revenue for the city, since over 40% of the property in Easton is tax exempt.
Finding solutions and mechanisms to cut costs within local government budgets is increasingly difficult. It is the main reason the concept of regionalism must remain at the forefront of the Lehigh Valley's public agenda for the long-term. Municipal governments like Easton must have the opportunity to enhance our ability to enter into inter-municipal cooperative agreements with our neighboring municipalities in order to cut costs.
From my seat on City Council, a commuter tax doesn't seem to be the best solution to a decades-old problem. In the end, it's just not good government, which is perpetrated by the Commonwealth. While it is never a good time to place an added tax on individuals, at this point in our economic recovery it's certainly not ideal. It penalizes middle-class working families who are lucky enough to be employed, isolates our neighbors, and may very well hurt Easton's local economy for many years to come.