Board of Commissioners Meeting Minutes
Earned Income Tax - Public Hearing, December 2002

The stated meeting of the Board of Commissioners of Abington Township was for the purpose of adopting Ordinance No. 1887 - Earned Income Tax, and the Final Budget for 2003 was held on Wednesday, December 18, 2002 at the Township Administration Building, Abington, PA., with President Barbara C. Ferrara presiding.

CALL TO ORDER: 8:00 p.m.

ROLL CALL: Present: Commissioners AGOSTINE, WACHTER,

LUKER, TURCO, ZAPPONE, RING, GROSS,

O’CONNOR, CARLIN, MYERS, MCGRATH, DEVORE,

GILLESPIE, KRETSCHMAN, FERRARA

Township Manager CONWAY

Township Solicitor HERDER

Finance Director MATIZA

Chief of Police KELLY

Treasurer SOLOMON

Township Engineer POWERS

Director of Public Works MICCIOLO

Director of Code Enforcement MATTEO

Director of Parks & Recreation WENDELL

Superintendent of W.W.T.P. LEBER

PLEDGE OF ALLEGIANCE

Public Hearing - Ordinance No. 1887 - Earned Income Tax

Commissioner Ferrara opened the Public Hearing at 8:01 p.m.. She called on Township Manager Conway for a presentation on the Earned Income Tax Ordinance and the proposed 2003 Budget.

Mr. Conway stated the Budget and Ordinance have been advertised in the newspaper, on Channel 43, and it has had a lot of press coverage. There are handouts and a written version of the slide presentation available for the public to review. Mr. Conway gave a slide presentation on the 2003 Budget and Earned Income Tax Ordinance. See attached.

Commissioner Ferrara asked for public comments in favor of the Ordinance. There were none.

Commissioner Ferrara asked for public comments in disfavor of the Ordinance.

Richard Grass, 613 Tennis Avenue, stated he disagrees with enacting any new taxes. He would rather have a property tax increase instead of an earned income tax.

Victor Krievins, 840 Maple Avenue, commended the Commissioners for maintaining the tax level for 11 years. He suggested a provision be included in the Ordinance stating, if someone has extenuating financial circumstances it should be taken into consideration.

Commissioner Ferrara replied if you lose your job you would not have to pay the earned income tax.

Commissioner DeVore commented in some municipalities, individuals making less than $5000 do not have to pay the earned income tax.

Michael Saresky, 2837 Omega Place, commented how equitable can this be, if one third of the people will be hit with this tax. This will become 1% not a ½ % and it will be a lot of money out of his pocket.

Commissioner Kretschman asked do the commercial entities in the Township subsidize the residential?

Mr. Conway replied that is true with the school taxes and a single family home is not covering true costs.

John Di Primio, 1324 Warner Road, stated he is opposed and the burden will be placed on the middle income wage earners. This will be a 1% earned income tax not a ½ %. We need to find other ways to restore the funding to get it back to the Township.

Joe Gallagher, 732 Fern Road, stated he would rather see an increase in property tax rather than the earned income tax.

Marty Laub, 1162 Ballytore Road, stated the timing is atrocious. If the real estate taxes are increased by 17% and include the $150,000 average assessment, you come up with a $68 a year increase. If the earned income tax is implemented, there will be a 60% increase in taxes and next year it will go up into the hundreds of percents versus the real estate increase. You need to place the burden on the real estate tax this year, vote down the earned income tax, and revisit this again next year after multiple hearings.

Russell Tobias, 1680 Huntingdon Pike, suggested increasing the real estate tax combined with an increase to the refuse fee. The earned income tax only affects the middle man. State Representative Ellen Bard promised to look into getting the legislation for the earned income tax changed, so that the money would come back to the Township.

Albert Sklaroff, 1856 Watson Road, stated Ordinance 1887 will be outdated as a result of the Governor signing House Bill 1700 on December 9, 2002. The House Bill increasing the exemption from $5000 to $10,000, amends the definition of the earned income and net profit. The earned income is defined under the PIT definition of compensation in the statute 72PACS7303 and the regulations. It excludes business expenses. The definition of net profits in 1700 excludes investment income. The Ordinance needs to be redrafted. He asked who administers the tax and what are the costs?

Mr. Conway replied there are a number of companies who provide the service and we will engage in negotiations to find the best deal.

Mr. Sklaroff asked what does Abington Hospital pay in-lieu-of payments?

Mr. Conway replied about $250,000.

Mr. Sklaroff asked has that been going up every year?

Mr. Conway replied only if they provide new construction.

Commissioner Ferrara commented once that construction is complete; the hospital will be paying higher real estate taxes than the apartment complex paid.

Mr. Sklaroff commented one of Rendell’s priorities will be tax reform and we should wait to implement the earned income tax.

Commissioner Ferrara replied any tax reform that occurs will be for the school districts and not the municipalities.

Mr. Sklaroff commented a business privilege tax and an earned income tax will make it less advantageous for companies to relocate into Abington.

Commissioner Ferrara commented 95% of the municipalities in the State have the earned income tax and it will be increasingly difficult to relocate those businesses.

Patricia McKowsky-Mills, 1307 Rydal Road, asked the Board not to implement the earned income tax. If this is implemented, this additional burden should be borne equally by all Township residents. Please do not punish your productive constituents. If the Township needs additional funding, all of the households and businesses should contribute.

Ken Krawchuk, 117 West Avenue, stated he is opposed and suggested raising the property tax by 17%, or enact a new tax, or a 6% across-the-board cut to balance the budget. We need to cut spending. He stated Senate Bill 425, Article 3 Section 10 of the Pennsylvania Constitution states "All Bills for raising revenue must originate in the House." When was that part of the Constitution changed and by what Court case?

Solicitor Herder replied there is one Court case that addressed that section of the Constitution - Mikell vs. Philadelphia School District, a Pennsylvania Supreme Court Case.

Mr. Krawchuk quoted the case, "It is presently unnecessary to treat the rationale underlying the Constitutional provision that Bills for raising revenue shall originate in the lower or more populated elected constituted House of Legislature." They say it is presently unnecessary to treat that question.

Solicitor Herder stated if you read the whole case, you would know the answer. That provision of the Constitution is a procedural elective and not a substitutive part of the Constitution. Once a Bill is enacted and enrolled it becomes law.

Commissioner Ferrara directed Mr. Krawchuk to take this to another forum.

Anthony Hornack, 110 Roslyn Avenue, stated he choose to live in Abington because of the way the taxes are handled. Everyone should pay their fair share and a property tax increase would be fairer.

Paul Miller, 1373 Birchwood Avenue, stated he is opposed and everyone should pay their fair share. Why should we do it just because everyone else is doing it?

Larry Goulart, 2134 Benezet Road, asked what does his salary have to do with funding the Township services; nothing. He suggested making more cuts from the budget and look into the land value tax and raise the assessments. Do assessments keep up with inflation?

Commissioner Ferrara replied no. The County does assessments.

Commissioner Ferrara asked for comments from the Commissioners.

Commissioner Wachter commented this will impact less than a third of the Township and we will get back millions of dollars if this is enacted.

Commissioner Kretschman stated we have kept a no tax increase for 11 straight years and commented that Mr. Conway gave an excellent presentation.

Commissioner O’Connor asked if we made cuts across the board, what would we need to cut?

Mr. Conway replied 6% of the $29 million budget.

Commissioner Wachter suggested taking away the trash and leaf collection services.

Mr. Conway stated cutting $1.7 million would impact services which would involve layoffs of personnel.

Commissioner Carlin stated it is $1.7 million plus the $2 million from the General Fund balance. He regrets the wage earners that live and work in Abington will have to pay this tax. Our resources are limited and much is needed to be done to ensure our community is safe and properly maintained. We need to devote Abington’s resources to Abington’s needs.

Commissioner Zappone stated he sent a newsletter to the residents in his ward and the response was supportive. He is concerned that $4 million a year is leaving the Township. This money should be kept here for our projects.

Commissioner Ferrara commented there are municipalities who will be re-opening their budgets to give their taxpayers a cut if we fail to vote for this earned income tax.

Commissioner Turco commented if we saw this earned income tax coming, then we should have enacted a property tax increase in the past so it would not be as much as a 17% increase.

Commissioner Kretschman stated he reviewed the minutes from past meetings and he does not remember many Commissioners favoring a property tax increase. We should stand by our votes and not say " I told you so."

Commissioner Agostine commented when the senior citizens leave our Township and the younger residents move in, their children go to our schools, which will cause us an increase in school costs.

Commissioner Ring stated he would like to include the minimum salary in the Ordinance.

Commissioner Ferrara asked can we vote on this and then amend that part of it before April, or can we do it tonight?

Solicitor Herder replied it can be done tonight or anytime before the Ordinance goes into effect.

Commissioner Ring asked does it need to be advertised?

Solicitor Herder replied only the change has to be advertised.

Commissioner Carlin stated he is concerned about the minimum amount and the ramifications to the other Townships.

Commissioner Kretschman suggested amending the Ordinance at another time.

Commissioner Ferrara made a MOTION, seconded by Commissioner Gross to close the Public Hearing.

MOTION was PASSED 15-0. The Hearing was closed at 10:05 p.m.

Commissioner Ferrara made a MOTION, seconded by Commissioner Luker to adopt Ordinance No. 1887 amending Chapter 152 entitled, "Taxation" of the Code of the Township of Abington by adding Article VII entitled, "Earned Income Tax."

MOTION was ADOPTED 12-3. Commissioners DeVore, McGrath, and Turco opposed.

Ordinance 1887

Annual Budget for Year 2003

Commissioner Ferrara called on Township Manager Conway who announced that the Board of Commissioners this evening is conducting a Public Hearing on the proposed Budget for 2003. Each Commissioner has been furnished with the proposed Preliminary Budget for the year 2003.

Submitted herein is a summary of the proposed Municipal Budget for 2003.

The General Budget of $28,981,984 represents a 3.5% increase over the 2002 Budget of $27,993,260. In summary, this is basically a maintenance budget with no new programs or personnel with the exception of a new property maintenance position in the Code Enforcement Department. The $998,000 increase addresses salary increases (+4.5%), employee health insurance cost increases (+6.6%), liability insurance (+12%), and a $95,000 increase in debt service reflecting the impact of your decision earlier this year to bond for additional flood control projects.

Although, the 3.5% Budget increase is smaller than last year’s 4.4% increase, the $988,000 increase in appropriations is complicated by a $232,000 decrease in revenues, for a Budget gap of $1.22 million, as well as the fact that our Fund Balance will be taken below where you wanted it to be by an additional $872,000.

The various aspects of our Budget are supported by the following:

The property tax which supports 34% of the Municipal Budget has not increased for the past 11 years (with the exception of the Fire Tax which was increased in 1997 by public referendum). Whether or not we can continue to hold the line on property taxes for 2003 will depend upon our ability over the next several weeks to close the Budget gap of $1.22 million as well as deal with the dwindling Fund Balance situation. The current tax rate is 3.07 mills (excluding Fire). One mill is worth $3.3 million. A house assessed at $150,000 currently pays $461 in property tax for municipal services.

 

The residential refuse fee is currently $169 per household per year, which covers only 64% of the cost of providing this service. Although the County Waste Authority recently announced a 8.5% decrease in the waste disposal fee for 2003, a number of policy options are addressed later in this report that will need your consideration during the next several weeks.

The Wastewater utility budget of $6,508,248 represents a 2.1% increase over 2002 and will not require a rate increase in our sewer fees. Our last sewer fee increase was 12 years ago in 1991.

Changes to Preliminary Budget

Commissioner Ferrara made a MOTION, seconded by Commissioner Kretschman to adopt recommended administration changes to the year 2003 Preliminary Budget as delineated in the memo from Susan W. Matiza to the Board of Commissioners dated December 9, 2002.

MOTION was ADOPTED 15-0.

Memorandum

Resolution No. 02-025 - Establishment of Swimming Pool Fees for Year 2003

Commissioner Ferrara made a MOTION, seconded by Commissioner Gross to adopt Resolution No. 02-025 authorizing the Bureau of Parks and Recreation to increase its pool fees according to the attached schedule.

MOTION was ADOPTED 15-0.

Resolution 02-025

2003 Pool Fee Schedule

Public Hearing - Ordinance No.1888 - 2003 Tax Millage and Budget Appropriation

Commissioner Ferrara opened the Public Hearing at 10:10 p.m. She asked for comments from the Commissioners. There were none.

Commissioner Ferrara asked for public comment in favor of the Ordinance. There were none.

Commissioner Ferrara asked for public comment in disfavor of the Ordinance. There were none.

Commissioner Ferrara made a MOTION, seconded by Commissioner Gross to close the Hearing.

MOTION was PASSED 15-0. The Hearing was closed at 10:11 p.m.

Commissioner Ferrara made a MOTION, seconded by Commissioner Agostine to adopt Ordinance #1888 establishing the tax levy and appropriation for various Township funds.

MOTION was ADOPTED 15-0.

Commissioner Ferrara read aloud Ordinance #1888 for the record.

Ordinance 1888

ADJOURNMENT: 10:15 p.m.

Respectfully submitted,

Burton T. Conway, Secretary

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