New Castle News

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March 2, 2013

Officials consider reforming city government

(Continued)

NEW CASTLE — PERMITTED REFORMS

Foreman said there are other possibilities the city could write into a home rule charter.

They include changing the form of government, changing the number of council members and eliminating the treasurer and controller and putting those functions under the supervision of the chief financial officer, he said.

The charter could also provide for initiatives and referendums, allowing residents to place questions regarding city matters on the ballot.

The main thrust for looking into home rule, though, is taxes.

New Castle, like all municipalities in Pennsylvania, can impose a 1 percent wage tax, but only on its residents. Half of the city’s revenue goes to the New Castle Area School District.

However, Act 47 gives the city the authority to impose a wage tax on non-residents who work in New Castle. So, beginning in 2008, the first year under Act 47 oversight, the city imposed a 2.1 percent wage tax on non-residents to help pay for pension costs. The tax on residents was increased to 2.2 percent at the same time.

Council reduced the tax on non-residents to 2.05 percent and on city residents to 2.15 percent beginning in 2012.

The tax on non-residents generates approximately $2.5 million a year. As a result, the city has ended with budget surpluses the last couple of years.

Without Act 47 oversight, the city would lose the $2.5 million and the ability to fund the services it currently provides. Thus, the city would have to find a way to make up that lost revenue.

Currently, if the city needs to collect more revenue through taxes, its only option is to increase the property tax. The problem with that, Mann noted, is that the tax “is borne by a specific portion of the population, including residents on a fixed income.”

Home rule could make it easier for the city to eventually exit Act 47 oversight, Mann said. He added that a municipality can have home rule and still be in Act 47.

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