City of Allentown Proposed 2013 Budget

Allentown Mayor Ed Pawlowski delivered his proposed 2013 city budget to City Council on November 7th. The budget calls for nearly $88 million in spending and does not require the city to utilize the reserve fund balance.

In his message to City Council, Pawlowski said, “The proposed 2013 Budget and Program of Services will see a continuation of the austere spending and employment practices we have pursued these past seven years. It maintains essential city services while reducing costs where appropriate.”

The administration anticipates finishing 2012 with expenditures $192,000 under budget.

The 2013 budget holds the composite property tax rate at 17.53 mills for a ninth consecutive year. The Earned Income Tax and Business Privilege Tax remain stable, as does the $52 Local Services Tax and user fees.

According to Pawlowski, the next few months are critical to the city’s future. “We are in the midst of confronting Allentown’s most serious financial challenge in its 250 year history. Our city is saddled with over $200 million legally binding full faith and credit general obligation debt in the form of our pension plan’s unfunded liability.  This growing debt not only dictates what we are required to contribute to our pension plan each year (our “MMO”) but just as importantly, it diverts away valuable – but very limited – funds from other much needed services for Allentown residents, taxpayers and business owners.

Our MMO for 2013 – including debt service on outstanding pension bonds is $18 million, which represents a 20% increase over the $15 million we were required to pay in 2012. This $18 million also represents more than 20% of our General Fund budget and will grow significantly to come close to 30% of our General Fund in just a few short years. This is absolutely unsustainable.”

Pawlowski and members of City Council are exploring the long-term leasing of the city’s water treatment and distribution system and the sewer collection, treatment and disposal systems. The purpose is to raise revenues to meet the city’s rising pension obligation payments.

“A minimum pension payment of at least $23 million by 2015 is too great a burden on city taxpayers,” Pawlowski said. “This proposal represents a fantastic opportunity to cover our costs, shore-up our bottom line and avoid tax increases for the foreseeable future.”

Pawlowski praised city department directors and bureau chiefs for their efforts throughout the budget formulation process. “I want to thank them for their time and effort in helping put together a budget that continues to provide outstanding services at reasonable costs to our taxpayers.”