The Mayor of Harrisburg waived a tax hike for the seventh straight year and tabled a budget proposal for 2020 that aims to raise salaries, reduce debt and cover the cost of infrastructure improvements.
This was the message Mayor Eric Papenfuse conveyed to councilors on Tuesday evening as he revealed the budget details he was happy to put forward.
The budget, which does not include a tax increase, is in balance and forecasts general income and expenses for the fund of $ 74.3 million
And those projections also included news about the 2019 budget – in particular, that revenues have exceeded those planned.
This was due to levies, including city income tax, local service tax and business tax, the mayor said.
"We are up several million dollars," he said. "Basically, everything is indicative of business growth, and activity and profit growth in relation to the people who work in the city."
This type of revenue growth is important as Harrisburg officials plan to soon get out of Pennsylvania Act 47 status, which classifies it as a "financially troubled" city and gives it an additional tax authority.
"We are trying to become less dependent on the extraordinary tax authority, and over time, that may be the case if we can continue to grow revenue at a rate that is above forecast," Papenfuse said.
Adding to this revenue stream is a new agreement with UPMC Pinnacle Hospital, the city's largest non-governmental employer, which has agreed to pay an additional $ 150,000 through the agreement to pay taxes instead of taxes. The hospital, which is considered a nonprofit, doesn't have to pay taxes but is willing to pay instead, Papenfuse said.
The agreed increase likely shows the hospital is also seeing growing financial success, he said.
Additional revenue led to a proposal by Papenfuse to increase the police budget by about $ 1 million for 2020, which would enable a new pay scale that includes higher salaries to improve police officer recruitment and retention, he said.
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And that's on top of the plan to pay $ 5 million on debt the city of Ambac Assurance Corp. owes, although the money will not be due for a few years, said the mayor.
Ambac officials, who insured the city and provided the dollars it needed during the financial crisis, have agreed to reward the city if the $ 5 million is paid out early, Papenfuse said.
Ambac officials will provide a multiplier of 1.38 for the $ 5 million, meaning every dollar spent on the debt will count as $ 1.38. That means the $ 5 million would turn into $ 6.9 million, Papenfuse said.
Along with that multiplier, Ambac has agreed to cut the city's interest rate on the debt from 6.75 percent to 5 percent for the next three years, according to the mayor, who pointed out that all of this will help pay off the debt faster.
Papenfuse said he would also like to look into hiring an insurer to take a look at whether debt could be refinanced, which will further cut interest rates.
All of these discussions were in addition to an overview of upcoming big business projects, which included improvements to North Seventh Street, MulDer Square, State Street, and North Second Street, among others.
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And it all depends on the city council's approval of the 2020 budget, which will be discussed at the upcoming budget hearings.
The public budget hearings are scheduled for December 10th and 12th. The vote on a final budget is scheduled for December 17th.
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