New Castle News

November 29, 2012

Council adopts recovery plan

By Staff
New Castle News

NEW CASTLE — By a 3-2 vote, New Castle City Council adopted a three-year financial recovery plan Wednesday.

Voting in favor were council president MaryAnne Gavrile, Richard Beshero and Ed Yerage. William Panella and Thomas Smith voted no.

Adoption of the plan came just in time as the proposed 2014 budget is being finalized. Mayor Anthony Mastrangelo will introduce the budget Thursday.

The plan, drafted by the city’s Act 47 coordinator, had been debated by council for the last few weeks regarding language dealing with recommended property tax increases. The recommendation called for a one-mill increase for 2013 and another mill hike for 2015.

Council and the administration were able to have the 2013 increase postponed until 2014 by using $500,000 in revenue from Marcellus Shale gas leasing rights.

Gavrile and Beshero subsequently indicated their support for the plan, but Yerage wanted language inserted stating that if the city finds reoccurring sustainable revenue taxes would not have to be increased in 2014 and 2015

The Act 47 coordinator agreed to the language change last week.

Panella said he recognizes the city would lose wage tax revenue from nonresidents by not having a plan.

“But I can’t in good conscience vote for this thing,” Panella said, adding he does not have “any confidence in Act 47” working with the city.

The city “can’t continue to soak the taxpayers forever and ever without finding other ways.”

Increasing the blue bag fee, which is also paid by renters, would cover more people, he said.

Being under Act 47 allows the city, with court approval, to raise the wage tax above the maximum allowed by the state for both residents and nonresidents. The increase provides the city with about $2.2 million in revenue.

Smith said he believes “we’re being led down a path that we’re going to be forced into a corner,” with the possibility of cutting staff and raising taxes.

“I don’t think the citizens of New Castle can withstand a tax increase.”

He expressed criticism of the Act 47 coordinator, saying it receives $235,000 a year from the state for its services but does not give the city ways to recover and provide growth.

Noting the coordinator agreed to his request to amend the plan, Yerage said he believes the coordinator “will work with us to some degree. But it will take some brainstorming by council.”

He and Panella disagreed over the meaning of Wednesday’s vote.

Panella said he believes council is voting to raise taxes in 2014.

Yerage said, “We’re voting for a plan to find solutions” to avoid a tax increase.

Beshero commented, “If we don’t pass the plan, we lose $2 million.”

“We have no plan to make it up.”

He said council still has the option to increase the blue bag fee, now at $2 per bag, to generate revenue.

Saying she reluctantly supports the plan, Gavrile said there is a challenge, “especially to the administration” because council members serve part time.

The city needs to be marketed, neighborhoods “need to be stabilized” to have people buy houses and incentives need to be provided to employees for retirement, and through attrition, people could be hired at lower salaries, she said.