Taxes at center of Lancaster home rule debate ahead of November election [Voters Guide]

Mayor Danene Sorace wants Lancaster to become a city that can keep taxes flat. A home rule charter, she says, is the way to do that — but getting there will require a few tax hikes first.

A new charter is on the ballot for city voters in November. The document, akin to a constitution, is the product of a monthslong dissection of city government. Nine elected commissioners agree city operations need to be reformed, and like Sorace, most of the commissioners back the charter as an opportunity to raise revenue in a new way.

Home rule gives municipal governments greater control over their own operations by releasing them from some state-level oversight. Local governments typically pursue home rule as a means to raise money, and in Lancaster city, taxation is the crux of the fight for and against home rule.

Sorace said she believes Lancaster would be better off with more revenue-raising options to keep a projected $10 million deficit at bay and maintain essential services including police and fire service and road maintenance. Right now, the city relies on property tax increases when the city needs more money, and Sorace describes that process as burdensome to low-income and senior homeowners.

Sorace is focused on potential earned-income tax increases, which the state won't allow, but home rule would permit.

On its own, income tax revenue can grow naturally over time, without increasing the tax, because inflation and wage increases grow the pot. Sorace also pointed to an analysis from the Pennsylvania Economy League that found home rule municipalities since 1999 have kept income taxes flat or reduced them 90% of the time.

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The home rule charter does not set tax rates; instead, it would open the door for elected officials to explore new tax options. If voters approve the charter on Nov. 5, Sorace has proposed raising income taxes .3% or .5% from the current 1.1%, nearly half of which is earmarked for the School District of Lancaster. The tax increase would generate between $4.8 million and $6.6 million, costing a resident who earns $60,000 a year between $180 and $300 more annually.

Sorace said she wants to find a sweet spot that would keep the city from touching taxes again for at least a decade. Without home rule, she anticipates an 8% property tax increase next year to generate $2.5 million, and property taxes likely would have to climb four more times over the next decade.

Many city Democrats have thrown their support behind the charter. City Council members Amanda Bakay, Jaime Arroyo, Ahmed Ahmed and John Hursh have encouraged people to vote in favor of the charter, branding it as necessary for the city's future financial stability.

The city's Democratic Committee also has endorsed the charter. Committee Chairman Marshall Miller said the party plans a door-knocking campaign to raise awareness about home rule.

"This is going to give you a more direct say over how your community is run, and that's a good thing," Miller said.

What critics say

Lancaster City Gate Keepers, a grassroots citizens group, has come out against home rule and is telling residents to vote against the charter. Its members say home rule would open the floodgates for unbridled taxing power.

Ray Harrison, pastor of In the Light Ministries on South Shippen Street, is a part of the group and believes home rule would hurt poor residents. The city needs to audit its budget to find ways to shave off expenses and target overspending, he said.

"(Home rule) would give local government full reign to tax the people," Harrison said. "It's constantly taking from the poor. ... It's not if, it's when."

Some city officials agree with home rule opponents. Democratic City Council member Janet Diaz says home rule would cost residents financially without giving them much of a say in government. Lisa Colon, chair of the Lancaster City Republican Committee, said the charter missed an opportunity to win support by not ensuring both parties would have a seat at the table on City Council.

Gate Keepers member Susie Gomez said income tax increases would "go after the hard work earned dollar" of poor residents. Gomez questions the city's need for home rule, suggesting city officials have misused public money because many cities have turned to a new charter after hitting bankruptcy.

There is no evidence the city has misused funds.

Financial consultants point to rising pension and health care costs, in addition to the end of post-pandemic American Rescue Plan Act funding, as the root causes of projected deficits. Sorace also blames a lack of state tax reform for sending local governments toward home rule.

Even with a 6% year-to-year cap on tax revenue growth written into the charter, some residents remain skeptical of home rule. Henry Tober, who lives on College Avenue, said he's neither for nor against home rule, and pointed to a two-year period before the taxing restrictions begin that the city could use to its advantage.

Sorace insists the city will focus its new tax revenue on maintaining services, not investing in major projects.

The city, too, plans to make budget cuts with or without home rule. That includes eliminating nearly two dozen vacant positions, consolidating technology and reducing fleet expenses.

The proposed charter is available to view online at lanc.news/HomeRuleFinal . The charter can also be reviewed in person at City Hall, 120 N. Duke St.; Lancaster Public Library, 151 N. Queen St.; and the Lancaster County Law Library, 50 N. Duke St.