City development committee hosts Home Rule information session

Vieen Leung, a senior managing consultant with PFM Group Consulting of Philadelphia, gave a presentation Tuesday morning to attendees of the City Development Corporation meeting about Home Rule and what it would mean for New Castle.

New Castle's Act 47 coordinator described the details and procedures of Home Rule to attendees during Tuesday's Citywide Development Corporation's regular monthly meeting.

"From our perspective, Home Rule is the best and only shot New Castle has in exiting Act 47," said Vieen Leung, the Act 47 coordinator.

The earned income tax (EIT) has been raised since the city entered Act 47 in 2007 in order to create more revenue. Once the city exits the act in 2022, the tax must come back down creating a $2 million "revenue hole." 

In order to make up for the loss, the city would potentially raise property taxes as it's the only tax revenue source they can manipulate as the EIT is capped at 1 percent under the third class city code of which the city must abide. The real estate tax would need to be raised from 14.226 mills to 19.226 mills over the next five years to offset the loss, Leung said. The EIT tax on commuters who work in the city, but live elsewhere, will go away as long as the city exits the act.

Leung projects this as another loss of revenue the city must also offset.

"That's undesirable for many reasons," said Leung. "We don't think it's sustainable frankly to keep increasing real estate tax year after year with the tax base shrinking, and it would just cause the population to continue to shrink at a more dramatic rate. We really don't believe that's a viable path for the city.

"The only way city government can keep that $2 million is if you go Home Rule. What Home Rule does is it allows you to set your own charter, and, amongst many things, you can gain the flexibility to set your EIT rate to whatever rate you want."

Tim Fulkerson, New Castle councilman and chairman of the CDC, reiterated the importance of dispelling misconceptions about Home Rule especially with the elderly population.

"A lot of the elderly are scared of Home Rule because they say, 'Oh this is just another way that they're going to get into my back pocket.' And I say, 'No, no, no, no. You're misunderstanding,'" said Fulkerson.

The EIT would only effect city residents who had a job, therefore, retired residents on social security or pensions would not have an EIT.

"We have to raise revenue for us to survive, but to scare the elderly out of this is not fair either," said Fulkerson.

In four weeks, constituents entering the voting booth will be faced with two questions in relation to the possibility of adopting a Home Rule Charter.

"You're not voting for Home Rule in November," said Leung. "You're only voting on whether you think a government study commission should be formed and who should be on that committee." 

If constituents vote to approve the government study commission, the group will have nine months to research and conclude whether they recommend a Home Rule Charter. The group will have another nine months to draft the document before it goes back to a to vote in May 2021 on whether or not voters want to adopt the proposed charter. Only if the charter is accepted will the city be under Home Rule.

Under the law, the commission is not mandated to change the structure of government from a council and mayor system, but can elect to do so.

State law requires the commission to meet in public meetings to maximize participation from the public.

If the government study commission does not pass this November, the city will go into receivership.

"Any hope the city has in (exiting) Act 47 is pretty much gone at that point," said Leung.

Harrisburg has been the only city in Pennsylvania to fall into receivership. Leung says she wouldn't have any idea the implication this would cause in New Castle because the two cities are different.

The next information secession will be on Oct. 16 from 6 p.m. to 8 p.m. at The Confluence. The last secession will be held during a New Castle City Council caucus meeting on Oct. 22 at 6:30 p.m.

mbasileo@ncnewsonline.com

Reporter

Maria Basileo is a news reporter. She covers Laurel and Shenango school boards and municipal government.

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