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McKeesport City Council is preparing to do something it hasn't done in 25 years --- enact a property tax increase.
At a budget hearing Tuesday night, Mayor Mike Cherepko presented the city's proposed 2017 budget, including tax increases of 2 mills each on buildings and land.
That would take the city's property tax on buildings to 6.26 mills and on land to 18.5 mills.
The increase is expected to generate about $689,000 in additional revenue in 2017. "I don't want to do this," Cherepko said. "What politician wants to raise taxes? But the right choice is not always the popular choice."
The tax increase wasn't popular with the handful of residents who attended the hearing. Ken Thornton of Fawcett Plan questioned whether the administration and council have cut expenses as deeply as they could.
Cherepko said that approximately 90 percent of the city's expenses are fixed or subject to labor contracts.
"Then maybe you need to lay some people off," Thornton said. "That's what happens in the real world ... I think maybe some concessions need to be made. You can't have these unions run you out of business."
The mayor said that each of the city's bargaining units --- representing police, firefighters, public works employees and clerical employees --- has made concessions on health care and hiring practices. And because the city pays for its own unemployment insurance, even a massive layoff would provide little relief in the short term, Cherepko said.
"If we laid off every single employee and crippled the city, you still wouldn't fix the problem, and who's going to want to live here then?" Cherepko said.
As full-time employees retire or leave for other jobs, he said, their positions are going unfilled, or they are being replaced by part-time employees. "We've had three or four guys retire from the public works department," Cherepko said. "There's not a mayor in the world who wouldn't like to hire some people there. Have we hired anyone? No. We're trying to stretch every dollar as far as we can."
Council is expected to adopt the $19.9 million budget when they meet tonight at 7 p.m. at the public safety building (old municipal building), 201 Lysle Blvd. at Market Street.
Although boroughs and townships have one unified tax rate for land and buildings, McKeesport and Allegheny County's two other third-class cities --- Clairton and Duquesne --- have separate tax rates.
Clairton's 2016 property tax rate is 3.5 mills on buildings and 33.0 mills on land, while Duquesne taxes properties at 11.5 mills on buildings and 18.5 mills on land.
One mill represents $1 in taxes paid for every $1,000 for which a property is assessed.
The median home value in McKeesport is $48,000, according to the U.S. Census Bureau. A 2-mill increase on $48,000 represents $98 in additional taxes.
Land is typically assessed at a much smaller value than buildings.
Because the city has separate tax rates on land and buildings, it is difficult to do a direct comparison between McKeesport's property tax rate and those of neighboring municipalities; 2016 property tax rates on the combined value of land and buildings in neighboring communities are 7.4 mills in Port Vue, 7.75 mills in North Versailles Twp., 11.99 mills in Glassport, 7.0 mills in Versailles and 5.16 in White Oak.
Councilwoman Fawn Walker-Montgomery asked the mayor what steps are being done to increase city revenues without a tax increase.
Cherepko said that the city's decision to hire an outside firm to collect business privilege taxes has brought in approximately $1 million that was delinquent. Collectors are also aggressively pursuing delinquent municipal service fees and wage taxes, he said.
"I don't know what else you can do but try to get people to pay," Cherepko said. "We have people who owe us thousands of dollars."
Originally published December 07, 2016.