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Mayor: Move necessary to address annual budget deficit
Click to read Mayor Michael Cherepko’s budget message (PDF reader required)
• Listen to the mayor’s message to council (MP3 file)
McKeesport city council has approved a 2-mill increase in property taxes for 2020.
The increase comes despite a nearly $2 million decrease in projected spending for next year.
Mayor Michael Cherepko told council the city must continue to address annual budget deficits that in the past were paid for through asset sales and other one-time fixes.
Selling the sewerage authority in 2017 “bought us time to try to fix things,” and spending cuts have helped, but expenses are still outpacing revenues by about $1 million per year, Cherepko said.
The city has only increased property taxes once since 2001, when council actually lowered the tax rate on vacant land. In retrospect, that may have been a mistake, Cherepko said.
“If we would have incrementally increased taxes over the past 30 years, your tax rate would have been a lot higher, and we would not be in this condition, but that’s neither here nor there,” he said.
“If this administration is going to move McKeesport forward with the hope of preventing future deficits, I believe it would be fiscally irresponsible to maintain our current property tax rates,” Cherepko said.
McKeesport is one of three cities in Allegheny County that uses a two-tier tax system, which levies a lower tax rate on buildings than land.
A “mill” represents $1 in tax for every $1,000 of value.
Under McKeesport’s 2020 budget, the tax rate on buildings will go from 6.26 mills to 8.26 mills, and the rate on land would go from 18.5 mills to 20.5 mills.
A property owner with a house assessed at $100,000 --- $20,000 on land, $80,000 on the building --- could expect their taxes to increase about $200 per year.
“I know what we have here in the city ... (a lot of) people who are on fixed incomes,” Cherepko said. “But if we're going to continue to provide the services that we've been providing, some of our departments are already on skeleton crews.
“With all that’s going on, we’re still trying to provide the same level of services that residents deserve, because how are you going to keep residents here if your services start falling off?” he said. “How are you going to attract new residents? And the same goes for businesses.”
Council voted 6-1 to accept the administration’s budget proposal, with Councilman Jim Barry Jr. casting the only “no.”
“A 25 percent increase on (buildings) is too much,” Barry said. “I admire everything the mayor and his administration have done to hold down costs, but I can’t in good conscience vote for that.”
A review of line items in the 2020 budget versus the 2019 budget indicates that many departments in the city are being trimmed, with the police budget going from $5.5 million in 2019 to $5.3 million in 2020 and the fire budget going from $2.65 million to $2.56 million.
One exception is the street department, where the budget will go from $1.65 million to $1.88 million.
Another exception is the city’s payments toward retiree benefits, which will go from $413,000 in 2019 to $503,000 in 2020.
Pensions and benefits remain among the fastest-growing expenses in the city’s annual spending, Cherepko said.
“Roughly 10 years ago, our pension obligations were about $1 million,” he said. “It's now over $3.2 million --- a $2.2 million increase.” Health insurance costs also have roughly doubled over the same period, Cherepko said.
McKeesport will continue to reduce its workforce through retirements and attrition, he said. “I'm proud of our city employees for taking on more work with fewer hands,” Cherepko said.
McKeesport officials are continuing their efforts to improve tax and fee collections and reduce delinquent payments “by keeping a more accurate record of who is moving in and out, and what businesses are setting up shop here,” he said.
Jason Togyer is the editor of The Tube City Almanac and volunteer executive director of Tube City Community Media Inc. He may be reached at email@example.com.
Originally published December 05, 2019.