The Harrisburg City Council last month reversed course, agreeing to a temporary hike in the resident earned income tax rate.
The council voted 5-2 to raise the EIT by 1 percent for one year after several council members, who previously had opposed the hike, switched positions.
Council President Wanda Williams said she reluctantly changed her mind because the city desperately needs the money.
“Where do the resources come from to continue services, to pay employees?” asked Williams.
The city is expected to run out of cash next month, which may necessitate a bridge loan or sale of delinquent tax liens to make it through the end of the year. The EIT hike, from 1 percent to 2 percent, will take effect Jan. 1.
The council’s change of heart came after three meetings between members and receiver William Lynch. To urge support, Lynch provided members with certain assurances, which remain confidential.
Lynch previously told council members that the increase would show labor unions and creditors that the council is willing to make hard choices to help retire the city’s enormous debts, helping to convince them to do the same. He also said a bankruptcy judge would look favorably upon the move, in case Harrisburg takes that step.
Several council members said the sunset provision would let them, a year from now, judge for themselves if their action helped prompt other stakeholders to make concessions.
Councilwoman Patty Kim said the receiver’s office promised two important items: to not ask for an EIT increase extension after one year and to request no more tax hikes for city residents.
Council members Susan Brown-Wilson and Brad Koplinski voted no to the increase.
Brown-Wilson said she did not trust the receiver’s promises, adding that the estimated $5.1 million raised by the hike would not be enough to balance Harrisburg’s budget, which this year is expected to have a shortfall of more than $12 million.
MID Put on Hold
A planned Midtown Improvement District has been placed on indefinite hold after the cost of hiring off-duty police officers rose excessively.
In September, Harrisburg Mayor Linda Thompson revised a proposed agreement to hire off-duty city police, upping the per-hour cost from $35.45 to $46.27.
The expense was too great to ask Midtown property owners to foot, said MID organizer Eric Papenfuse.
Papenfuse said the concept might be revived after next year’s mayoral primary, once it is clearer who will be the city’s next leader.
In addition, a separate group may be formed early next year to apply for Elm Street designation for Midtown, which would make the area eligible to receive funding for neighborhood improvement and revival.
Finalist Named for Parking System
A New York-based financial company has been selected as the bidder for Harrisburg’s most valuable asset–its parking system.
Receiver William Lynch last month announced that his office will enter into negotiations for a long-term lease of the system with Harrisburg First LLC, an arm of the multinational investment services firm Guggenheim Partners.
Lynch said he expects talks to conclude and a deal to be signed by year-end.
Former receiver David Unkovid put the system up for bid in February, originally receiving interest from a dozen companies. That list was whittled down in several stages until the selection of Harrisburg First.
Proceeds of the long-term lease will go to pay down some of the estimated $340 million that Harrisburg owes after backing bonds used for repeated upgrades, some botched, to the city incinerator.
Another chunk of that debt will be settled with the sale of the incinerator itself. Lynch’s office currently is negotiating with the Lancaster County Solid Waste Management Authority, which was selected as the finalist to purchase the troubled facility.
Harrisburg’s parking system consists of 10 parking garages located downtown and one on City Island with a total of 7,813 spaces. It also includes several surface parking lots.
