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November 14, 2012

City Council: Recommendation to hike tax deferred a year

NEW CASTLE — A recommendation to increase New Castle’s property tax has been deferred until 2014.

City council, however, would like to see the 2014 tax hike postponed as well, if enough revenue is found to offset the increase.

A one-mill tax increase scheduled for 2014 and another one-mill increase set for 2015 are part of an amended financial recovery plan drafted by the city’s Act 47 coordinator.

The amended three-year plan replaces the current five-year recovery plan which will expire at the end of this year.

The coordinator was appointed by the state in 2007 after it declared the city to be financially distressed.

In its original amended plan presented in August, the coordinator recommended that the first one-mill increase take effect next year. However, city officials were able to postpone the increase by finding enough revenue to offset the hike.

City officials plan to use a portion of approximately $2 million from gas leasing rights in next year’s budget to avoid the tax increase. One mill generates approximately $400,000.

Council has scheduled a vote on the plan tonight. However, some council members said at their work session last night that they would like to see language inserted in the document regarding the 2014 tax increase before a vote is taken.

“I’m not in favor of a tax hike,” Councilman Ed Yerage said.

He suggested language be included stating that if the city comes up with the necessary revenue that a tax increase for 2014 be postponed.

“I would like to see that elasticity in the plan.”

Councilman William Panella said he agreed with Yerage, that the plan have some “covenant.”

“All we need is a simple sentence,” Yerage said.

Councilman Richard Beshero, however, said “the longer we keep turning down the plan, the longer we don’t have a budget.”

Mayor Anthony Mastrangelo plans to present a proposed 2013 budget to council on Nov. 29.

Council president MaryAnne Gavrile expressed criticism of the Act 47 team, saying council was initially told it couldn’t use any of the money the city is receiving from gas leasing rights.

“All of a sudden, the new plan says we can use the gas lease money,” she said.

She said nothing council discussed at its workshops, with the exception of retaining a police clerk, is in the plan.

“It’s choking me to vote yes on this plan,” she continued. “But I’m going to do it.”

Gavrile and Beshero noted that without the plan the city would have to come up with $2.2 million. That’s the amount the city receives from the wage tax.

Act 47 allows the city, with court approval, to increase the wage tax above the maximum allowed by the state. The city has to seek court approval every year, and solicitor Jason Medure said he plans to do so the first week of December.

Business administrator Stephanie Dean said she would contact the Act 47 coordinator today to see whether it will agree on inserting the language into the plan.

Councilman Thomas Smith was absent from last night’s meeting.

(Email: jmanna@ncnewsonline.com)

 

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