For the seventh consecutive year, no tax increase is included in Harrisburg’s 2020 budget, which lays out a plan to increase salaries, pay down debt and cover the costs of infrastructure improvements.
It’s a $74.3 million balanced general fund spending plan that received approval from all but one city council member Tuesday night.
“I’m really pleased that we were able to pass the budget without any amendments,” Harrisburg Mayor Eric Papenfuse said, proud of the approved budget. “We’ve come a long way in the city.”
Councilman Ben Allatt also celebrated the plan, explaining there were no major changes since it was first presented in draft form late last month.
“We had a very good budget hearing,” Allatt said. “I think there is a general agreement about the priorities in the budget moving forward.”
Last month, Papenfuse spoke about the city’s financial success over the course of 2019, highlighting revenue that had exceeded what was originally projected.
It’s that revenue that led to a proposal by Papenfuse to increase the 2020 police budget by about $1 million, which will allow for a new pay scale that includes higher salaries in an effort to increase police recruitment and retention, he said.
That pay scale was included in a new contract with the local police union, which also was approved by council members Tuesday night. Harrisburg police salaries have historically been much lower than those of officers employed by neighboring suburban departments, city official admit.
“That will hopefully provide an improved retention among our law enforcement because that has continued to be a problem over the last few years,” Allatt said. “One thing I always like to point out is that it’s often costlier to replace somebody than to just have somebody with us for the long term.”
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The budget also includes a plan to pay $5 million toward debt they city owes to Ambac Assurance Corp., despite the fact that the money isn’t due for another few years, the mayor said.
Officials at Ambac — which insured the city, providing needed dollars during its financial crisis — have agreed to reward the city if the $5 million is paid early, Papenfuse said.
Ambac officials will provide a multiplier of 1.38 to the $5 million, which means each dollar spent toward the debt would count as $1.38 dollars. That means the $5 million would transform into $6.9 million, Papenfuse said.
Along with that multiplier, Ambac has agreed to decrease the city’s interest rate on the debt from 6.75 to 5 percent for the next three years, according to the mayor, who pointed out that all of that will help to more quickly pay the debt off.
That’s all in addition to costly large-scale capital projects, which include improvements to North Seventh Street, MulDer Square, State Street and North Second Street, among others.
Allatt explained that budgeted spending is necessary, but it will require the use of some reserved money. Currently, they city has about $24 million in its general fund, he said. By the end of 2020, that likely will be decreased to $15.6 million, he said.
That “significant draw-down” is necessary because of the city’s Act 47 status, which classifies it as a “financially distressed” and prohibits it from borrowing money for capital projects, Allatt said.
When it came to a vote, only Councilwoman Shamaine Daniels dissented. After the meeting, she explained that her vote stemmed from frustrations she had about salary discussions that took place during the budgeting process.
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