Lancaster Mayor Danene Sorace on Tuesday said an 8% hike in city property taxes would be needed next year if voters don’t approve a home rule charter expected to be on the ballot this November.
Home rule would allow the city to raise the income tax, which is currently capped at just .6% and raises just 12% of the city’s current $73 million budget.
Sorace, speaking at Tuesday’s city council meeting, said a budget passed under a new home rule charter would promise much easier terms for taxpayers, raising the city’s income tax to .9% to generate $4.8 million without requiring a property tax hike.
The 8% property tax increase required if home rule isn’t passed would raise just $2.5 million, Sorace said.
Spending cuts would be required in either budget scenario, the mayor said. The city projects $1.7 million in cuts under a home rule budget, she said, while a budget that relies on a property tax increase would require $3.8 million in cuts. Sorace said the city does not plan to use reserve funds to balance the budget in either case.
“All of these are scenarios,” Sorace said, noting details are subject to change.
Last month, the mayor said officials are considering budget cuts across all departments.
READ: Home rule commissioners urge public to vote 'yes' on new charter in November
READ: Residents would have more control around city decisions, laws under home rule charter
READ: What tax breaks are on the table for low-income Lancaster city residents under home rule?
Both budgets presented Tuesday assume the city would retain $3.4 million of American Rescue Plan Act funding to be used to fill in revenue gaps. The money was originally slated to pay off the city’s water pump facility, but that use was deemed ineligible under federal rules. Those rules require city leaders to allocate the funds by the end of this year.
Sorace and other city officials continue to campaign for home rule as a way to combat a growing financial shortfall. Philadelphia-based Public Financial Management in May projected the city would face a $10 million budget deficit in 2025, caused in part by growing employee medical costs and the spending of the city’s remaining ARPA funds balance.
The city’s Home Rule Study Commission expects to complete the first draft of the charter by the end of the month. Residents will have the chance to weigh in on the document to suggest changes at meetings and public hearings throughout August.
Council President Amanda Bakay urged residents to become involved in the home rule process, starting with attending the commission’s July 18 meeting.
“If what Mayor Sorace just outlined in a potential home rule scenario budget sounds preferable versus increased property taxes and a potential reduction in services, it would be really important to make your voices heard at the upcoming meetings,” Bakay said.
2023 spending on track
The city is in a solid place financially at this point in the year, Sorace said. Revenue is on track and expenses are mostly under budget, with the exceptions of medical costs for retirees and overtime pay for the Bureau of Fire. Sorace said the fire department is 32% over budget.
The mayor reiterated her stance that recent staffing changes for the city’s fire bureau were a necessary step to cut expenses. Firefighters last week moved from 13 on-duty staffers to 11 because of high costs associated with overtime pay. The city’s fire union criticized the move in a Facebook post, raising concerns about staff changes and public safety.
Councilmember Janet Diaz on Tuesday also criticized the decision, questioning why staffing changes were necessary for the department before higher level positions in other parts of city government were eliminated.
“I want to be clear, there have been no reductions in staff in the fire bureau,” Sorace said. “We have 69 fire suppression staff, including four new hires, a number that has remained consistent during my time as mayor.”
Want the latest headlines sent to your inbox each evening? Sign up for our free daily P.M. newsletter here.
TOM LISI | Staff Writer 
