New Castle Mayor Wayne Alexander has proposed a budget that increases spending by $2 million over this year.

The $14,674,975 budget for 2008 reflects the recovery plan developed by a state-appointed coordinator under Act 47 and approved by city council in August. The lawmakers received and introduced the proposed budget last night at their regular meeting.

Council president Rob Ratkovich said after the meeting he would comment on the budget “once I get a chance to review it.”

However, he said that during an executive session following regular business, council discussed personnel relative to the new budget.

As outlined previously in the recovery plan, the budget requires increases in the property and wage taxes, the garbage bag fee and sewer bills. The latter is a new fee for water usage by the fire department.

The property tax will go up by 0.426 mills — an increase of 4.3 percent — and the wage tax will be raised from the current 1.6 percent to 2.2 percent for residents and 2.1 percent for nonresidents.

Included in the increase is 0.1 percent for the employee pension funds, raising that portion of the wage tax to 0.7 percent. For the additional 0.6 percent for residents and 0.5 percent for nonresidents, the city must petition the Lawrence County common pleas court for approval.

The budget was introduced earlier than usual because the city needs a spending plan as evidence that the tax increase is necessary.

A big chunk of the spending increase will go toward payments totaling $715,000 on two loans. One is a $750,000 tax-free loan from the state and the other a $5 million unfunded debt loan from First Commonwealth Bank.

The city must obtain county court approval on the $5 million loan. The court has set a hearing for Nov. 16.

The $750,000 loan is being used to cover current expenses while the other loan is being used to pay off the deficiency in the city’s minimum obligation it must pay to the pension funds and to cover the $4.4 million tax anticipation note borrowed this year.

Business administrator Tammi Gibson said the goal with the $5 million loan is to have “a clean slate in January.”

With the exception of firefighters, who will receive a 2 percent pay increase in the second year of a seven-year contract, wages for employees are frozen for next year.

Gibson said a large portion of the spending will go for “things we needed to do.”

The spending includes a $185,000 more for health insurance and significant increases in overtime for the police and fire departments. Police overtime will go from $80,000 this year to $125,000 for next year and fire overtime will go from $40,000 to $140,000.