Council approves budget without property tax rise

Residents petitioned the state to have the city declared financially distressed.
By LAURE CIOFFI
VINDICATOR PENNSYLVANIA BUREAU
NEW CASTLE, Pa. -- A proposed property tax increase for New Castle residents was scrapped by council in anticipation that the city will be declared financially distressed by the state.
Council approved its 12.6 million 2007 spending plan on Friday with little change from the budget submitted in November by Mayor Wayne Alexander.
Residents will pay 20 cents more for garbage bags, upping the price to 1.50 per bag, in the new year under this budget.
Council members had considered a 1.5-mill property tax increase that would have been used to pay back a 2.9 million bank loan that the city would have used to eliminate its growing year-end deficit.
But the bank involved in the deal, First Commonwealth, has delayed its decision on the loan until the city's financial status is determined by state officials, said Tammi Gibson, city business administrator.
The state secretary of community and economic development must decide by Jan. 5 if the city will be declared financially distressed. If found financially distressed the city must then come up with an economic recovery plan and is eligible for state grants and low-interest loans.
But, city officials were legally bound to pass a balanced budget by Dec. 31 -- a week before the state decision is expected.
Tax matter
Council President Rob Ratkovich said they did not want to increase property taxes when they were unsure the city would receive the bank loan.
Some council members expressed anger over the recent turn of events where residents petitioned the state to have the city declared financially distressed, taking the decision out of the hands of the elected officials.
"I really hope the people of the city of New Castle realize what is happening and what's going to happen over the next six months to a year," Councilman Will Quimby said.
Quimby said he believes the city will be declared financially distressed and state officials will push for a drastic increase in taxes.
"We were going to increase taxes gradually over a five-year period. It's our understanding that the state likes to do things in a year or two," Quimby said.
Councilwoman Christine Sands had similar feelings.
"I hope everyone understands what will happen. To say I feel short-changed and angry would be the tip of the iceberg," she said.
The property tax millage rate will remain at 9.9119 for 2007 under this budget.
cioffi@vindy.com