Council weighs dual tax hikes
City Council Tuesday proposed a 2025 budget that would require a property tax increase of 1.5 mills and an earned income tax increase of 0.1% — mainly so the city can begin to put into practice recommendations in its recently completed comprehensive plan.
The real estate tax increase would raise the millage to 7.129, adding $150 a year for a total bill of $713 on properties assessed at $100,000.
The earned income tax increase would bring the rate for city residents to 1.7%, adding $50 for a total of $850 a year on wages of $50,000.
People in Altoona may not be accustomed to such increases, but the additional money will be invested wisely to improve neighborhoods, including streets, sidewalks and curbs, along with recreational facilities, said Councilman Dave Ellis.
Among the 15 largest cities in Pennsylvania, Altoona ranks 14th in the level of taxation per capita, said Councilman Jesse Ickes, citing the comp plan.
Those additional taxes represent merely "a race to average," from a position well below average, Ickes said, crediting fellow Councilman Dave Butterbaugh for the phrase.
The additional property taxes alone will generate $304,000, based on information provided by the city.
The comp plan provides the blueprint for an effort to move beyond the "bare bones" operation that the city has been conducting in recent times, Ickes said.
It's a plan that the community "played a large role in creating," said Mayor Matt Pacifico.
Residents made it clear they would support the effort during the community engagement phase of the comp plan's development, Ickes said.
Council wants to reduce blight, bring its spending on parks and recreation up to par for cities its size, build up a fund for capital projects — so it can "pay as you go" and thus reduce interest costs — and boost employment to catch up with and go beyond pre-COVID levels, to improve the services it provides, according to Interim City Manager Nate Kissell.
The city is looking to increase its workforce by 11 or 12 positions, focusing on the Codes and Inspections and the Community Development departments, Kissell said.
One or two new code officers and a full-time zoning officer are likely new posts, Kissell said.
The new posts could help the city track problem properties owned by people who live out of town or by banks that have foreclosed on those properties, so that the buildings on them don't deteriorate so far they need demolished, Kissell said.
The hope is to stabilize "on-the-bubble" neighborhoods, where there are a few homes that bring down the value of properties nearby, Kissell said.
The increased revenues are also likely to fund new posts for the Public Works, police and fire departments, Kissell said.
The city cut four or five positions during COVID to avoid the need to raise taxes.
The increased revenue would enable the city to put $1 million into the capital reserve fund, Kissell said.
The hope is that a contribution of that size would become annual, he said.
The city has been spending about $1.7 million per year on capital projects, he said.
The capital fund money could cover paving and building maintenance and construction.
Projects the city has done recently with the $39.6 million it received from the American Rescue Plan Act will provide relief from the pressure to spend on capital matters for the next few years, allowing the fund to build quickly, according to Kissell and Finance Director Jim Gehret.
The fund would be similar to an equipment replacement fund established by Interim Manager Peter Marshall several years ago.
Such funds help ensure that municipalities aren't continuing to pay off loans for things that have already outlived their usefulness, Gehret said.
The tax increases will provide money for a recently established fund that provides matches for grants, according to Kissell and Gehret.
Having match money ready can sometimes increase the chances of receiving those grants, Gehret said.
The total 2025 budget is $41.7 million, about $3.5 million more than the budget for this year.
The proposed budget is balanced — meaning that expected revenues would just cover expected expenses, Gehret said.
The city has been maintaining an unreserved fund balance or cushion of about $12.4 million, according to Gehret, which is a little less than 30% of the total budget.
Total assessed value for the city is a little more than $2 billion, according to Gehret.
The city can raise the earned income tax beyond the 0.5% that is the typical limit for municipalities, when coupled with the 0.5% that most school districts levy, because it is a home rule municipality.
Council is expected to adopt the budget at its meeting Dec. 2.
Following the comp plan guidelines ought to help stop "the brain drain" resulting from young people leaving Altoona for better economic opportunities after they grow up, Ickes said.
"We want people to want to live here and call Altoona home," he said.
