24 posts from Economy


Welfare Fraud in Pennsylvania

Stan-Aleknaby Stan Alekna

According to the Pennsylvania Department of Public Welfare, 2013 welfare expenditures were $28 billion -- 44 percent of the state budget -- and are projected to rise to $32 billion in 2015.

Welfare costs will grow for the foreseeable future in both dollars and as a percent of total expenditures. This trend must be reversed.

Former Auditor General, Jack Wagner, estimated that welfare fraud represents ten to fifteen percent of total state expenditures, or $2.8 billion to $4.2 billion of stolen taxpayer funds. $400 million to $675 million annually could be attributed to food stamps and cash assistance program fraud alone.

While there has been some progress over the last three years in reducing welfare fraud, more action is necessary.

The Secretary of DPW stated that $2 billion was eliminated from welfare fraud, waste and abuse since 2011. But that's only 2.5 percent of total welfare expenditures annually. Many serious problems remain:

  • 77% of the DPW's County Assistance Offices (CAO's) do not comply with established procedures when administering food stamp and cash assistance programs.
  • The Auditor General's reports documenting these underperforming CAO's have been ignored by DPW and the state legislature.
  • Auditor General DePasquale's June 24, 2014 interim report on the audit of DPW's administration of Electronic Benefit EBT/ACCESS cards found that more than $200,000 in benefits were provided to 138 deceased recipients. A complete audit of the DPW's EBT program is expected to be completed in 2015.
  • It can take as long as three years for an Office of the Inspector General (OIG) investigator to examine a single suspected case of welfare fraud because they lack adequate police powers to gather evidence.
  • Punishment for welfare fraud is minor and the chance of being caught slim. There is little offset to the potential gain from fraud.
  • There is almost no oversight by the state legislature of DPW and the $28 billion of annual welfare funds.  

The following recommendations, if implemented, would greatly reduce welfare fraud in the Commonwealth and save taxpayers hundreds of millions, if not billions of dollars.


  • Three bills aimed at stiffening the penalties for those convicted of welfare crimes are pending. All require drug testing of welfare applicants. In the past, similar bills have died in committee or been defeated by full House or Senate votes. This should not happen again.
  • After the budget and pension reform, the legislature's highest priority should be to combine the strongest elements of the three bills into one, fast track it through the House and Senate and have the Governor sign it into law, sending a clear sign to the public that the legislature is finally serious about welfare fraud.
  • The leadership should ensure that a House and a Senate standing committee, all fully committed to welfare reform and oversight, is assigned to oversee DPW.
  • A joint hearing of the House and Senate oversight committees should be convened to determine the current magnitude and of welfare fraud in Pennsylvania, and the adequacy of the measures that are in place to control it. Testimony should be heard from persons in DPW, OIG and the Auditor General's office who have first-hand experience in dealing with welfare fraud. Legislative action should then be pursued in support of any welfare reform recommendations that are adopted by the joint hearing.  
  • Recent budget reductions to the Auditor General's office should be reinstated so that the audits of DPW operations can be continued and expanded. Welfare fraud reductions would offset expenditures.
  • Require that DPW field management retrain, reassign to lessor roles or dismiss case workers who fail compliance audits more than once.
  • Provide police powers (search warrant and subpoena powers) to OIG welfare fraud investigators and permit them to be armed in the performance of their duties.  
  • Empower OIG to prosecute welfare fraud cases in criminal court. Currently, only county District Attorneys can try such cases and more serious criminal cases take priority over welfare crime.

If you agree that serious welfare reform is long overdue, call, write or email your state representative and senator. Ask them what they are doing to address this egregious waste of taxpayer money. Greatly reducing welfare fraud will ensure that funds will be available for those who need temporary financial assistance due to circumstances beyond their control, which is all that welfare was ever intended to be.

Stan Alekna is a retired business executive having held senior management positions with computer manufacturing, computer software and managed health care companies.  He and his wife live in Cornwall, PA.


Hamilton Crossings mall TIF

By John Donches - There's rumors that the Lehigh County Commissioners will reconsider their previous 6/3 NO vote on the "Hamilton Crossings mall" TIF (Tax Increment Financing), actually a NO vote for $7,000,000 in "Corporate Welfare" to an out of state developer. This developer, Mr. Tim Harrison, led several closed to the public meetings with select members of the East Penn School District Board, Lehigh County and Lower Macungie Commissioners to determine how much "Corporate Welfare" he would receive. The school district and Lower Mac voted YES to the tax handout.
Mr. Harrison has stated many times that if he doesn't get this corporate welfare he will not be able to build. Essentially he is saying property taxes in Lehigh County are too high and he can't afford them. Can you?

Would we actually rather give corporate welfare tax handouts to out of state developers, so we can shop at yet another mall? Or fully fund our schools, county and local government services?
Let the elected officials know what you think about a revote on corporate welfare; call or E-mail.

Phone: 610-782-3050       E-Mail -   

School District
Phone: 610-966-8333       E-mail -

Lower Mac.
Phone: 610-966-4343       E-mail --

CC me too

John Donches


PA House Works to Tackle Transportation Issues

By Rep. Julie Harhart (R-Lehigh/Northampton)
Pennsylvania has the fifth largest state-maintained road system in the nation, which includes 32,000 bridges and 120,000 miles of road. Unfortunately, over the years our transportation infrastructure has slowly fallen into disrepair and projects are not proceeding as quickly as we would like. Much of this has been caused by several years of a depressed economy that led to tight transportation budgets, coupled with rising construction costs and a decrease in revenue from the gas tax, mostly due to people driving more fuel efficient vehicles.
As you can imagine, it is a time consuming and costly endeavor to maintain such infrastructure. Due to the lack of progress in making repairs or replacing certain structures, it was recently announced by PennDOT that 1,000 bridges across the state would need to be deemed structurally deficient with new or additional weight restrictions being placed on them.
I realize the term "structurally deficient" raises safety concerns for most individuals; however, as PennDOT has explained, the bridges being posted are still safe for motorists. They are posting the weight restrictions on the bridges in order to extend the longevity of the bridges and preserve safety.
In Lehigh and Northampton counties, 13 bridges are scheduled to be posted with weight restrictions and one bridge (Kromer Road over PA 33 in Plainfield Township, Northampton County) will be closed. These postings should not significantly impact the normal flow of commuter traffic on a daily basis.
The posting of these bridges, however, does bring up the larger issue of funding needed to repair or replace many bridges and sections of roadway. The General Assembly has examined a few plans put forth by the governor, Senate and House; however, we still lack consensus on any one comprehensive plan. The stumbling block is the large amount of funding needed to "do it all," and where that money will come from.
As a member of the House Transportation Committee, I know we will be looking at solutions this fall that will likely be less comprehensive and more targeted to the critical needs of our transportation system with smaller price tags and more doable ways to address funding.
Tending to our transportation system is a priority, as it affects the safety of those using our roads and bridges, as well as impacts our economy through the ability to efficiently transport goods and deliver services. I can assure you this will be at the top of agenda as we reconvene for the fall legislative session.
For more information, including a list of bridges that area scheduled to receive new weight restrictions in Lehigh and Northampton counties, visit my website at and click on the banner in the middle of the page titled "New Weight Restrictions Being Placed on Regional Bridges."


The State Of Lehigh County

Billhansell_editby Bill Hansell, Lehigh County Executive

Under our charter, the Lehigh County executive is required to deliver a "State of the County" message to our Board of Commissioners before the end of February each year.  I decided against an elaborate presentation of this message and instead chose to simply deliver it to you in writing.  I was invited to speak at a Chamber of Commerce luncheon next month and I will also outline the state of our county to the businesses and members there.

Our county is among the largest in Pennsylvania.  More than 350,000 people call Lehigh County home.  Tens of thousands of businesses operate here, countless cultural arts institutions and organizations thrive here, and we assess property taxes on more than 125,000 properties. The sum total of all of those people, institutions and businesses is the essence of Lehigh County.

This message is intended to brief you on the state of Lehigh County's government, not necessarily the state of Lehigh County, which encompasses much more.

Over the past seven years, through Don Cunningham's stewardship and, more recently, mine, Lehigh County's government has been  managed in a fiscally prudent but responsive manner, balancing the need to keep our tax burden low with providing services needed to help the  county's most vulnerable residents.  Despite the increased demand that a recession brings to county services, Lehigh County's government is considerably smaller than it was seven years ago.

The 2013 budget that my administration proposed was the third consecutive year for the County's budget to be lower than the prior year and was a full $50 million lower than in 2010.  The number of employees working for Lehigh County is now 6 percent below our employee compliment of twenty years ago.  As a result of bipartisan collaboration that was carried out in good faith with four commissioners as well as other elected officials, we committed to find another $3.5 million in spending cuts and turn a planned one-year tax credit into a permanent reduction in our millage rate.

I have been privileged to serve local governments for over half a century, from a small town to a growing suburb to the 1st and 3rd largest cities in our Commonwealth.  I have lead two major associations devoted to improving local government and have advised local governments from Australia to South Africa to the Balkans.

Because of the long career and wealth of experience that I have with government budgets, I know what a well-managed government looks like.  The management and direction of Lehigh County at present and over the past seven years has been a resounding success by any measurable standard.

In that period of time, Lehigh County was able to renovate our county courthouse, saving $20 million in the process, build Coca Cola Park, which is rapidly becoming one of the biggest attractions in our area, and create a plan to significantly enhance the Trexler Nature Preserve.  With the capital funds that were saved through numerous cost-cutting measures on the courthouse, the county was able to undertake the most comprehensive facilities and capital program upgrade in this county's history, ranging from a state of the art 911 dispatch center to more than 20 bridge replacements and repairs. 

Through the federal Neighborhood Stabilization Program we are providing $2.2 million which will be used in neighborhoods that are in danger of decline by purchasing, rehabilitating and selling of distressed properties.  Meanwhile, our Green Future Fund program has pushed the total of farmland acres preserved past the 20,000-acre mark and, most recently, released $1.1 million to six municipalities for important parks and recreation projects.

As a result of the business community and our county government's hard work in the area of economic development, earlier this year, Lehigh County was recognized by the Fourth Economy Community Index as one of the top ten best counties in the nation to attract growth and investment in the future.

The first priority of the county must be to protect the people who live here. Providing a safe environment is the first and most important step to creating economic growth.  Our highest priority over the past seven years has been a commitment to public safety and justice.

More than seventy cents of every Lehigh County tax dollar is spent on people, institutions and systems that combat crime and help to maintain law and order.  Strong efforts in this area have benefits that are twofold.  First, our efforts help to make Lehigh County a safer place to live in the short term, and second, every dollar that we spend today on law and order helps to prevent further spending to pay the costs associated with crime and punishment down the road.
We have fully funded the effort to connect every police department in Lehigh County to police departments in other counties, to each other and to the State Police with "real time" sharing of data records.  We also provided funding to put ten new police officers on the streets of six Lehigh County municipalities, opened a new state-of-the-art 911 center and fully renovated and expanded our work release center with a focus on more effective counseling for both men and women. 

In collaboration with District Attorney Jim Martin, we have opened a Central Booking Unit designed to put officers back on the street quickly after making an arrest, a digital forensic lab in collaboration with DeSales University and a Regional Crime Center, which can pull in data from an extremely wide range of law enforcement sources to determine crime patterns, cross-match information on potential suspects and provide solid leads to the local police.

The overall goal has been simple.  We want Lehigh County to be a safe place to live and a very unfriendly place for lawbreakers.

Just last week, some of you may have attended the groundbreaking of a facility that was the result of a unique partnership between Lehigh County and Cetronia Ambulance Corps.  We sold the land to Cetronia, who built a facility that was big enough to house their own public health and safety operations and include a new medicolegal facility for our coroner as well as space to house our emergency management vehicles.  We were able to save millions on the facility through this partnership.

In a month or so, we will hold a grand opening for our new Lehigh County Detoxification Center in partnership with a private provider, White Deer Run.  This facility was built without the use of Lehigh County tax dollars.

The only way that Lehigh County can enhance services in these crucial areas without putting a burden on taxpayers is to be as frugal  and efficient as possible with what we spend on our basic operations, and I'm proud to report that that's exactly what we've done and what we will continue to do.  Most important, our employees have been committed to that goal and I take particular pride in recognizing the great partnership that we have gotten from our unions.
Total staffing has been reduced by 143 full-time positions and another 28 positions have been converted to critical public safety positions--with the reductions occurring in both our union and non-union units.  All the while, we have successfully avoided having any contract negotiations move to arbitration.

I am also proud to say that the County's healthcare costs have increased an average of only 1.3% annually since this administration took office in 2006, which is something I doubt many private sector companies can say.  We have gotten there by tough negotiating, transferring a significant portion of the costs to all of our employees and increasing the focus on wellness programs to limit the future growth of this very challenging budget line item.

This has happened not in spite of, but because of, our union contracts. Without arbitration, we have negotiated agreements with all our unions to keep wage growth under control and for all workers -- union and non-union -- to pay about 20 percent of the cost of their healthcare.

We are emerging from the recent recession in sound financial condition, and in better shape than many other municipal and county governments in America.  Any way that you choose to measure it, the state of our county finances is sound.

Thanks to the spirit of cooperation that has prevailed on the Board of Commissioners, especially through the early years of the administration, we have been able to accomplish a great deal in just seven short years--and we have been able to do what we have done in a cost-effective manner.  But I am a strong believer in continuous improvement.

When I was appointed County Executive, I made a commitment to focus on continuous improvement and we are following through on that commitment.  I have tapped into my old rolodex and sought out resources and former associates from the professional association that I used to lead, the ICMA, to begin the implementation of a performance management process for all departments.  This performance management initiative will sharpen the focus on the goals that we hope to achieve and it will increase efficiency in the processes we use to get to those goals.

We have also launched a major priority-based budget initiative which could have a dramatic impact on the way we approach our budget process and on how we analyze the things we do with our taxpayers' money.  We plan to explore several possible and examine different scenarios for changes or reductions in functions and services.  Over the coming months, we will undertake a new way of looking at how we choose what is important and what ends up in our budget.

Despite the County Executive's veto and the administration's advice against reassessing last year, we were able to make the best of the situation and follow the Board of Commissioner's direction to reassess, and the process went smoothly.

We have come through the reassessment process and the required appeals period with very good results from a County financial perspective, if not to the delight of almost half of our property owners.  As we have experienced, reassessment can be a very controversial issue and one which can be seriously flawed if left in the hands of politicians.  Barring unexpected action by the State to make the process occur at regular intervals, this administration recommends that the Board of Commissioners press for a charter change via referendum to ensure that it happens.

Lehigh County is home to all of us, and the decisions that we make will have an impact not just today, but far into the future.  I believe that government has a place in our lives; it has a role to play in the provision of basic services and that it must be properly funded in order to fulfill its mandates.

Overall, the state of Lehigh County government is strong and our county is steadily recovering from the devastation of the recession.  Reports from the housing market are encouraging, salaries are beginning to rise again and we are seeing more companies opt to move from outside the area to within our borders, which should work positively on the stalled job market.

However, we're certainly not out of the difficult times yet and there is a greater need than ever to demonstrate the spirit of cooperation that has always been the hallmark of Lehigh County government.  This is a time when we have to put political party differences and ideology aside, as we did in crafting a bipartisan 2013 Budget, and work together toward the common good, and in the best interests of our county's taxpayers.  That's what I committed to do when I was appointed County Executive and what I continue to hope can be forged with our Board of Commissioners, despite the fact that it is an election year.

We've weathered an extremely difficult economic stretch but were still able to get many important things accomplished.  We need to do even more together now that we see a light at the end of the tunnel.


Allentown's Fiscal Cliff

Gary_Strathearn_smBy City of Allentown Finance Director Garret Strathearn

There's been much said recently about the recommendation to use a concession lease of the City's water and sewer utilities to address Allentown's pressing unfunded pension liability.  There has not been much said about the consequences of not doing it. As the City's Director of Finance, it is my responsibility to inform all of our residents, taxpayers and business owners of the very serious nature of these consequences.

Allentown's unfunded liability represents a $200 million and growing legally binding full faith and credit general obligation debt of the City.  If no action is taken, the City's finances will be precarious for decades to come.  Our state-mandated annual payments on this debt, our Minimal Municipal Obligation (MMO), have risen enormously.  Those payments will soon consume close to $30 million of our $90 million General Fund budget.  In short, Allentown is facing a financial tsunami of seismic proportions. 

The amount of our MMO is directly driven by the size of our unfunded liability.  We must either eliminate - or at the very least - significantly reduce it.  Without this relief, the city's ability to provide the breadth and quality of services Allentown residents have come to expect and deserve will be drastically reduced.

Unfortunately, our situation only gets worse with time.  A series of intricate actuarial changes in the way pension obligations are calculated and measured by standard setting and rating authorities will soon compound the seriousness of our situation. 

The significant savings initiatives the city has put into place over the past six years have been very beneficial.  Yet these steps are equivalent to repairing a house room-by-room.  It's now time to permanently strengthen the foundation.  Without that, the whole place will collapse under its own weight.         

We cannot save, borrow, tax or invest our way out of this problem.  For example, it would require close to a 100% real estate tax increase to just keep pace with our growing minimal pension payments.  Yet, this would have no impact at all on eliminating the problem; the debt caused by our pension plan's unfunded liability.  It's equal to making a minimum payment on a huge credit card balance; it gets you nowhere.  Taking this approach is irresponsible financial management and will lead to crippling long-term consequences for all Allentown stakeholders.  

After much research, study and evaluation of several options, it was decided the most prudent, cost-effective financing tool for the City to address this formidable problem is a concession lease that leverages the equity of our water and sewer operations in order to receive a sizeable upfront payment to reduce or eliminate our unfunded liability. 

This is the best option we have to address the City's fiscal crisis. If this option is not implemented, in less than 24 months Allentown will be another PA city making ugly headlines about bankruptcy and a lack of political will to address its obligations. We will not allow Allentown to become another Harrisburg, Scranton or worse yet Stockton, California.

We fully understand the enormous responsibility that comes with this recommendation.  A team of the country's most respected and experienced legal, financial, engineering and technical professionals has been assembled to help the City meet this challenge.  This team has been laser-focused on preserving the excellence and dependability of Allentown's water supply; including compliance with environmental standards and technical expertise; conducting thorough due diligence; and carefully crafting a concession agreement which includes a structured rate schedule and provisions for monitoring and enforcing water quality and performance standards. 

Allentown is on the road to sustained economic recovery and stability. With this option, and working with City Council and the City Controller, we can eliminate or substantially reduce our unfunded pension liability debt, stabilize our tax rate for years, and keep our important water and sewer assets in good order, condition and repair for decades to come.

I encourage you to review the information on the city's website. and click on the Water/Sewer Concession icon. 

Also, please watch the following video outlining the details of both our pension crisis and our proposed solution.   

While we did not create the pension liability problem, it is our responsibility to resolve it.  Lyndon Johnson said it best, "Yesterday is not ours to recover but tomorrow is ours to win or lose." We truly believe the proposed concession lease is the best solution to preserve and protect Allentown's future.  This is a fiscal cliff we CAN -- and MUST avoid.


Easton's Proposed Commuter Tax Not The Answer To Solving A Decades-Old Problem

Jeff_WarrenBy Jeff Warren, Member of Easton City Council

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.


State Education Subsidy In Pennsylvania's Budget

Senator_Bob_Menschby Senator Bob Mensch, 24th Senatorial District

Within the next several days it is likely the Pennsylvania legislature will have finalized the operating budget for the fiscal year July 1, 2012 to June 30, 2013. This will be the second year in a row, and only the second in the last decade, where the budget is on-time and only spends existing state revenues.

But to accomplish a balanced budget there has been some rearranging of the state's spending priorities - purposeful efforts to make our state spending and delivery of funds more efficient. One of the areas of continuing discussion in the budget is education funding, and specifically the state education subsidy for K-12. It is instructive for all of us to take a look at the facts, so let's look at the last decade of the state education subsidy for K-12 (all numbers are rounded).

  • 2002 --$4 billion
  • 2003 - $4.2 billion
  • 2004 - $4.36 billion
  • 2005 - $4.49 billion
  • 2006 - $4.78 billion
  • 2007 - $4.95 billion
  • 2008 - $5.2 billion
  • 2009 - $4.8 billion
  • 2010 - $4.75 billion
  • 2011 - $5.35 billion
  • And proposed for 2012 - $5.42 billion

A review of data shows the subsidy was actually reduced in the years 2009 and 2010, but the subsidy was fully restored and increased to its highest level ever in 2011, and the 2012 amount is fully expected to become the highest level of funding ever for the K-12 subsidy! Equally important, student enrollment has been decreasing across the state during this same ten year period, which means the funding per student has been increasing.

So then, why do some complain that the subsidy is being cut? The federally provided stimulus dollars have gone away, plain and simple. Actually, the stimulus funds were added to the subsidy in 2009 and 2010 to create an illusion that the subsidy had been increased to $5.5 billion in 2009 and to $5.77 billion in 2010. But everyone in our nation realized the stimulus was a two-year cash infusion. Yet there are those who argue that we have cut funding, simply because the federal stimulus dollars have disappeared.

You take a look at the data and you decide.

Remember, last year, with no new taxes, and with an inherited deficit of $4.5 billion, we were able to balance the budget and still deliver the highest K-12 subsidy in the state's history. So next time sometime tries to tell you the legislature cut school funding; just show them the data above, and ask them "what cut?"

It's important for all of us to be involved in this debate, but it is just as important that real, factual and credible data be the basis for that debate.


Region's Choice: Reap the Beneļ¬ts or Bear the Burden?


By Ed Pawlowski, Mayor of Allentown

"A rising tide lifts all boats." This was spoken by John F. Kennedy in a 1963 speech at the dedication of a dam in Heber Springs, Arkansas.  He explained that the Greers Ferry project, and others like it, were investments not only in Arkansas, but in the nation's future.   After the dam was built and the lake filled, tourism boomed, businesses opened, and Greers Ferry Lake became one of Arkansas' leading destinations creating a broad economic impact in that region for decades to follow.

I tell this story because as was the case in 1963, I feel that we in the Lehigh Valley are at a similar turning point in the development of our region. 

Allentown's Neighborhood Improvement Zone (NIZ), provides a tremendous opportunity for the entire Lehigh Valley.  Some see this legislation in a positive light, others in a negative.  Some Lehigh Valley municipalities are concerned about the effects of this new program. While we are trying to attend to those concerns quickly and fairly, I don't want us to lose sight of the big picture.  The Commonwealth of Pennsylvania has given the Lehigh Valley a chance to reinvigorate our largest urban core.  As a region, we can either reap the benefits of this opportunity to renew Allentown or we can bear the burden of squandering it.

Will everyone reap the benefits?  My answer is yes, because Allentown's success is critical to the entire region. It is estimated that over 55,000 people work in the city every day and more than ONE BILLION dollars of annual earned income is generated by individuals who work in Allentown and live elsewhere. Allentown is an economic driver for our regional economy. If Allentown prospers, the entire region prospers, if it declines, the region will decline and our economy will stagnate.   

Allentown officials have presented a plan ensuring that our surrounding municipalities and school districts will not lose their current Earned Income Tax (EIT) from their residents working within the NIZ area. The City's latest proposal not only addresses concerns about current tax income but also shares the city's success with the surrounding municipalities and school districts. The City will develop a Baseline Payment Fund to assure that every taxing body in the region receives its current EIT payments for the life of the NIZ. 

In addition, to make sure the surrounding municipalities share in the upside of future development projects within the zone, all NIZ developers of commercial office projects will be charged $1 per square foot for occupied office space created in the zone. This fee will be assessed on a yearly basis to create a Regional Development Fund. That fund will share revenue with municipalities and school districts annually (much like the casino-revenue-sharing arrangement in Northampton County) and will be distributed according to the percentage of each municipality's residents working within the NIZ area. The creation of this fund will also help address the concern that there would be an unusual movement of office tenants from neighboring communities. It will apply to all of the municipalities, regardless of their position in or outside of any lawsuit.

Finally, let us remember the main intent of the Neighborhood Improvement Zone is to generate new economic development and increase regional employment opportunities.  It is estimated that the arena project alone will create more than 1750 construction jobs and 240 permanent jobs upon completion. Kevin Lott, a construction worker from Hellertown representing 470 Lehigh Valley carpenters, told the Salisbury Township Board of Commissioners last week: "It's been three years that have been very, very difficult. We really need this work...I have guys losing their homes. It destroys families." The NIZ offers a tremendous opportunity to help reverse this trend.  If we as a region can collaborate and strike a mutually beneficial agreement, we can get down to the business of offering thousands of desperately needed construction jobs to the Valley's unemployed workers.

Beyond job creation, there are other economic benefits to the Valley if this project succeeds: new commerce, increased tourism, and the ability to attract educated workers as well as new companies to the area.  An 8,500 seat multi-purpose arena will improve the quality of life in the region by increasing our options for leisure activities, our pride in the Lehigh Valley and, ultimately all of our property values.

Will the city's offer of collaboration to share in the benefits of the NIZ be accepted or will the redevelopment of Allentown be delayed indefinitely and the benefits of the NIZ wasted?  No one wins if no one is talking. If Allentown declines, many of the downtown jobs held by non-City residents will cease to exist.

If this region is to succeed, we must come together, pursue our common interests, and invoke the necessary changes that will benefit us now and for generations to come.

The Valley's tide has come in, let us not cling to the shore and miss our opportunity to rise to greater heights as a region.


Kamran Afshar, 2012 Economic Outlook


Car Sales Revving Up

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