Council to consider increase in wage tax

City officials said increasing the wage tax would generate about 800,000.
By VIRGINIA ROSS
VINDICATOR CORRESPONDENT
NEW CASTLE, Pa. -- Council President Rob Ratkovich said he intends to propose an increase in the wage tax at a budget work session Dec. 5.
The work session is to begin immediately after council's caucus, which is scheduled to start at 6:30 p.m. in council chambers at the city building.
Ratkovich has suggested increasing the wage tax, also known as the earned income tax, from 1.6 percent to 1.8 percent to help the deficit in the city's pension funds. City officials said an additional two-tenths of a percentage point would generate about 800,000.
The wage tax is paid by employees where they live. The increase allowed for pension purposes, however, is levied on all people who work in New Castle. The city is permitted under state law to increase the wage tax above the standard 1 percent level for pension purposes.
The move would be one of several steps council is exploring to generate income for the financially strapped city and shave some of its expenses.
Mayor Wayne Alexander has introduced a 13 million spending plan for 2007 that calls for no tax increase. But the mayor said he expects the proposed budget could change as lawmakers begin weeding through the spending plan over the next several weeks.
Projected deficit
The city's budget deficit at the end of this year is projected to be 2.8 million. Meanwhile, council members have said they intend to exhaust every possible option to avoid being determined financially distressed through the state' s Municipalities Financial Recovery Act, or Act 47.
The Pennsylvania Department of Community and Economic Development will conduct a public meeting on the matter at 7 p.m. Dec. 6 at the New Castle High School auditorium. City officials said they intend to work together to develop and initiate a recovery plan before that hearing.
A few weeks ago council adopted two ordinances to impose new fees: 100 to be charged when a property is sold and 20 for each firefighter responding to an accident, along with a 100-an-hour-fee for each piece of rescue apparatus used.
Additionally, the proposed 2007 budget calls for a 20-cent price increase for the blue garbage bags residents use, which officials said is expected to generate 100,000.
Union negotiations
Lawmakers have also been working with several unions representing city personnel to renegotiate contracts, essentially calling on those employees to accept pay freezes and make various contributions toward their health benefits.
The Dec. 6 work session is one of several budget meetings to be scheduled by council. These meetings are public. The proposed 2007 spending plan is available for review at the city building.