Harrisburg resident Loretta Barbee-Dare spoke against a proposed property tax hike at tonight’s Act 47 exit plan public hearing.
Fleeing residents. A ghost town. Greater poverty.
Harrisburg residents spun these dire scenarios–and many others on Tuesday night–if a proposal to double the city’s property tax comes to pass.
An overflow crowd packed Harrisburg city hall, as the state held a public hearing on its proposed plan for Harrisburg to leave Act 47.
Most speakers railed against a suggestion in the plan that Harrisburg may have to boost its property tax by some 105 percent over the next three years if it cannot find other revenue to make up for the extra taxing authority it would lose as it exits the state’s program for distressed municipalities.
“I am terrified,” said resident Emily Frola. “In the face of this potential 100-percent tax increase, I am no longer able to stay in my house.”
Several other residents mentioned that higher taxes will drive people out of the city, further thinning out its already slender tax base.
“We can’t afford to lose any more residents,” said Loretta Barbee-Dare.
The meeting started a half-hour late due to the standing-room-only crowd, which flowed out of City Council chambers and far back into the city hall atrium.
Marita Kelley, the city’s state-appointed Act 47 coordinator, opened the meeting by summarizing the proposed, three-year exit plan.
She praised the city’s progress toward achieving financial stability since it entered the program in 2013. However, she said, “challenges remain.”
Chief among them, she said, was finding a way to make up for the $11.6 million in annual revenue the city will lose as it exits Act 47, which allowed Harrisburg to double its earned income tax (EIT) and triple its local services tax (LST).
“The city will lose the extraordinary taxing revenue,” Kelley explained.
Harrisburg, she said, has three options to make up for that lost revenue.
The city can seek a home rule charter, which could allow it to make up for some of the loss. Secondly, it could petition the state legislature to allow it to continue elevated LST and EIT rates, which, indeed, Harrisburg is trying to do. Or, thirdly, it could slash costs and/or increase property tax rates significantly.
The exit plan says Harrisburg might have to boost its property tax by 105 percent over the next three years if alternatives cannot be found.
In addition to residents, numerous Harrisburg officials spoke against the plan.
Fire Chief Brian Enterline warned of a mass exodus from the city if property taxes are doubled.
“People will leave just like they did after the 1972 flood,” he said.
Mayor Eric Papenfuse handed Kelley 130 comments that came in through the city website, uniformly critical of the plan, he said. He then offered a point-by-point refutation of the exit plan, saying that it does the opposite of what it’s supposed to do.
“Your plan puts us into distressed status,” said Papenfuse, who then asked Kelley and other members of the state-appointed recovery team to join the city in lobbying the state legislature to allow Harrisburg to retain its elevated LST and EIT.
“Your plan is entirely taxing based,” he said. “You suggest taking one form of taxing authority and substituting another.”
Resident Rafiyqa Muhammad said that not only would homeowners suffer if property taxes were to double, but so would renters, as landlords inevitably would pass along increased taxes to their tenants.
“What is going to happen to us?” she said. “We’re going to have a ghost city.”
About two-thirds of Harrisburg’s residents are renters.
Some residents offered rather fanciful ideas, including implementing a city lottery and even selling the state Capitol building. However, most stuck with the city’s wish to retain the current LST and EIT levels.
Like Papenfuse, resident Daniel Stern urged the state Department of Community and Economic Development (DCED) to join the city in getting state law changed so that Harrisburg has options other than a massive property tax increase.
“We need you to persuade the legislature that there’s got to be a different way to do it,” he said.
That sentiment was repeated often, with several speakers pointedly criticizing the core Act 47 team for having no Harrisburg residents as members.
“This is your capital city, and you need to make sure it functions as the jewel it is,” said Melanie Cook.
Resident Andy Isaacs said that a huge property tax hike will just set the city up for repeated failure.
“I think we’ll be coming to another hearing in eight or 10 years, wondering how we can get out of distress again,” he said.
Notably, the 3 1/2-hour meeting concluded not with an adjournment, but with a recess. If the meeting had ended for good, DCED would have had just 10 days to send a final exit plan to the city, which would have had 45 days to act on it.
However, since the meeting did not technically end, the city now has more time to play out its legislative strategy when the state legislature reconvenes in September, or, if that fails, to appeal to the Commonwealth Court for a more acceptable remedy.
“They seemed to agree that more time is not a bad thing,” Papenfuse said after the meeting.
Papenfuse and City Council members already have indicated that they would reject a plan with a substantial increase in property taxes. If the city turns down the state’s Act 47 exit plan, Harrisburg could find itself back in state receivership.
