Mayor Danene Sorace is encouraging Lancaster voters to vote “yes” in the Tuesday, May 16, primary on establishing a home rule study commission.
Let the commission form and do its work, she said Tuesday evening, and let’s “see what we learn together.”
The mayor was speaking at Ebenezer Baptist Church at the first of five community meetings the city is organizing in advance of the May 16 referendum vote.
Upcoming home rule meetings
Lancaster officials will hold four more community meetings on home rule in coming weeks. All of them will start at 6 p.m. The dates and locations are as follows:
- Thursday, Feb. 23, Bethel AME Church, 512 E. Strawberry St.
- Monday, Feb. 27, Lancaster Theological Seminary Library, 555 W. James St.
- Wednesday, March 1, Lafayette Elementary, 1000 Fremont St.
- Thursday, March 2, Calvary Baptist Church, 530 Milton Road
For more information on home rule and the May 16 referendum, visit the home rule page on the Lancaster city website.
The sessions offer an overview of home rule and the process, give residents a chance to ask questions and to meet prospective home rule commission members and sign their nominating petitions.
A “yes” vote doesn’t commit Lancaster to home rule, only to studying it. If the home rule commission drafts a charter, that will go before voters for an up-or-down vote, which would take place in November 2024 according to the city’s timeline.
“Ultimately, and this is very important, the voters will decide if there is a change,” Sorace said.
Enacting home rule would not amount to “opening Pandora’s box,” the mayor said: City government would still be subject to many of the constraints it operates under now. However, it would obtain the ability to set rates for all four of the taxes it levies, not just property taxes.
The other three are the earned income tax, or EIT, currently fixed at 0.6%; the realty transfer tax, 1%; and the local services tax, a flat $52 imposed on individuals working in the city, of which $5 goes to City Hall and $47 goes to the School District of Lancaster.
The city has a structural deficit: Its expenses are rising with inflation, whereas its real estate tax base is flat. Since personal incomes typically rise over time, shifting some of the tax burden from property taxes to the EIT would make it easier for the city to bridge its structural deficit, and would do so in a more fair and equitable way that wouldn’t rely on constant rate increases, Sorace says.
Residents attending the meeting quizzed the mayor on what the proposed changes would mean for landlords and renters. The mayor agreed that property taxes are a major burden for them, not just homeowners, and said the tax flexibility available under home rule would help to alleviate their burden.
What about young people? Because the EIT is proportional to income, affluent individuals would pay more, shifting the burden away from lower-income workers, including individuals early in their careers, Sorace said.
How much revenue would a higher EIT generate? In 2023, at 0.6%, it is contributing $8.4 million toward projected revenues of $71.9 million — 12% of the total. Raising it to 1% would bring in another $5.6 million, for a total of $14 million, Director of Administrative Services Patrick Hopkins said.
Lately, EIT revenues have grown about 5.5% annually, suggesting that $14 million could grow to $14.77 million, $15.6 million, and so on year by year.
Other residents asked about tax-exempt properties. Changing to home rule would not change their status. That said, the city would see $12.9 million in additional revenue if all those properties were taxable, Hopkins told One United Lancaster. Each year, the administration asks all tax-exempt entities to make voluntary payments in lieu of taxes, and many do, bringing in about $2.2 million a year.
Other reforms being sought
Home rule is common in Pennsylvania, the mayor said: More than half of the commonwealth’s cities, 26 in all, operate under a home rule charter, as do seven counties and 56 other municipalities.
Sorace acknowledged that any reform accomplished under home rule would still leave the city’s tax burden squarely on city residents, the highest-taxed, lowest-income municipality in Lancaster County. That’s why city officials have been advocating for more far-reaching reform, and will continue to do so, she said.
In particular, the city would like to be able to derive more revenue from users of city services who live elsewhere, through mechanisms such as a higher local services tax or a liquor tax.
Existing precedent suggests that the city could raise the local services tax under home rule, but only on city residents, a limitation that makes that option a “non-starter,” Sorace told One United Lancaster.
If approved, the commission would be sworn in within 10 days and would have nine months to study city government with City Hall’s help. It would need to hold at least one public hearing, and probably more, and would want to study other home rule jurisdictions, she said.
If residents vote against forming the commission, the city will continue as before, status quo. But the challenge of maintaining existing levels of service without punitive property tax increases is becoming insurmountable, the mayor said.
“I am suggesting that a system that was established in 1965 is not working for us anymore.”