City Council passed a $141 million 2023 budget on Tuesday that includes the first property tax hike in four years, along with increases in water, sewer, trash and stormwater fees.
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All told, the increases will amount to about $295 for the average homeowner, or $73.75 per quarter.
Tuesday’s meeting was not without drama, as City Councilwoman Janet Diaz made a last-minute proposal to spread the property tax increase over three years.
The city is raising property taxes by 8%, from 11.7 mills to 12.64 mills. Diaz offered an amendment to limit the increase to 5% in 2023, followed by a 1% increase each year in 2024, 2025, and 2026.
That would limit the burden on residents “so they don’t have to work three and four jobs,” she said. “Our community is hurting.”
Mayor Danene Sorace and Director of Administration Patrick Hopkins warned that Diaz’ amendment, if enacted, would put Lancaster in violation of state law requiring cities to pass balanced budgets.
Why? The budget adoption process involves passing separate legislation authorizing appropriations and setting the rates for the city’s revenue sources. When Diaz made her motion, she and her colleagues already had unanimously voted for the spending bill. That committed them to passing the tax and fee increases needed to cover those expenditures, Sorace and Hopkins said.
After discussion, Diaz’ amendment failed 5-1, with Diaz casting the sole “yes” vote. (Councilwoman Faith Craig was absent Tuesday.)
Diaz went on to cast the sole vote against the property tax increase and the water and trash rate increases. She voted in favor of raising the stormwater and sewer fees, making those votes unanimous.
For more information
Lancaster’s 2023 budget, the mayor’s budget address and related materials are available on the Department of Administrative Service’s home page.
After the voting was over, Sorace said Diaz’ motion caught her and the city administration by surprise. There had been no hint of such a suggestion since the budget was introduced on Nov. 22, she said, including at City Council’s seven-hour budget hearings on Dec. 10.
The budget presented to council is not a first draft, the mayor said: It has gone through multiple rounds of cost-cutting that totals millions of dollars. Four years is the longest the city has gone without a property tax increase since 2006, and the chronic structural deficits that cities face due to outdated state law means that future budgets will involve even tougher decisions.
Council members are welcome to get more involved in the budget process, Sorace said, and her administration will work on improving transparency to make it clearer to the public how it arrives at the proposals it presents for adoption.
Money for infrastructure
The budget calls for just under $72 million in general fund spending, and $69.2 million spread across its water, sewer and trash funds and its stormwater fund, which supports green infrastructure and other efforts to mitigate stormwater runoff into the city’s sewer system.
The city is raising utility rates in part to pay for infrastructure projects intended to catch up with decades of deferred maintenance. Former Mayor Art Morris urged City Council to press the administration harder on those spending decisions.
Yes, service lines have to be fixed, but it’s a balancing act, and City Council shouldn’t take the Public Works department’s projections on faith, he said.
He criticized the decision to shift only $2 million from the water fund to the general fund in 2023 and 2024, rather than the $4 million in previous years. The money represents the return on the investment the city made when it extended its water line to the Susquehanna River, and it’s a mistake to forego it, he said.
Hopkins told City Council earlier in December the change is being made in order to set up a $750,000 design and engineering fund so that public works projects can be implemented in a more timely manner, and to limit the financial demands being made of water ratepayers.
The city is budgeting $6 million in federal American Rescue Plan Act money for its general fund. The actual appropriation will be made retroactively; on Tuesday, $4.5 million from ARPA was appropriated to pay police and fire expenses in 2022.
City Council did make one amendment to the budget before passing it, reducing the increase in the mayor’s salary by $919.
By city ordinance, the increase is tied the state legislature’s raises. In Lancaster’s draft budget, the increase was estimated at 8.8%; subsequently, the legislature’s increase was set at 7.7667%. Applying that percentage yields compensation for Sorace in 2023 of $95,786, rather than $96,705.
