Last December, City Council adopted a budget calling for a 26% increase in real estate tax and a 0.1% increase in earned income tax — adding $200 to the tax bill for someone living in a house assessed at $100,000 and earning $50,000 a year.

On Monday, council adopted a tentative budget for next year with no increase in either tax.

Last year, the increases went largely to fund compliance with the city’s new comprehensive plan, Altogether Altoona — which next year’s budget will continue to fund, with the help of the higher rates put in place for 2025, officials said.

Those comp plan recommendations for 2025 called for increased investment in neighborhood improvements like streets, sidewalks, curbs and recreational facilities, as well as demolition of blighted homes, rehabilitation of those that can be saved and preparations for new construction projects — as well as rebuilding the city workforce, according to officials.

The 2025 budget approved in December allocated $1 million for the Altogether Altoona fund, and the plan for next year calls for adding $1.5 million to that fund, from which the city has spent $500,000 so far, according to Finance Director Jim Gehret.

Like the current budget, next year’s will be balanced, with revenues equaling projected expenses — and no need to draw on the unreserved fund balance, which last year was $12.4 million and which is more this year, Gehret said.

The 2025 budget called for spending $41.7 million — $3.5 million more than the previous year’s — but $1.7 million less than the proposed budget for next year.

Additional expenses for next year will result from new contracts with the non-uniformed workers, firefighters and police, Gehret noted.

A contract approved in April with the non-uniformed workers provided a 5% increase for this year, followed by 4% increases for the remainder; a contract approved in October with firefighters called for 4% increases throughout; and a contract approved Monday with the police calls for raises that aren’t on the public record yet.

There are also significant expenses with the pension fund — although for this year’s minimum municipal obligation (MMO) of $7 million, $4.3 million will be paid from the city’s Act 205 tax revenues, which must be spent only on pension obligations; while $2.2 million will come from state pension aid — leaving just $600,000 to be paid from the general fund, according to Gehret.

Health insurance premiums for 2026 will be up 6%, which is a reasonable increase — one for which the Human Resources Department deserves credit, Gehret said.

The 2026 budget allocates $1 million to capital reserve, to keep capital borrowing — and thus interest payments — to a minimum, Gehret said.

The budget calls for spending the remainder $700,000 of an initial $39.3 million allocated to the city from the 2021 American Rescue Plan, according to Gehret.

While the ARPA money needed to be committed by the end of 2024, the deadline for spending it is the end of 2026, Gehret said.

Interest accumulated from investment of ARPA money before it went to various projects can be allocated to the general fund, he said.

The city’s department heads did good work on the budget, according to Gehret.

“They provide a budget (for their departments) and stick to it,” he said.

Some agencies are loath to provide budgets that call for spending more than what those received the previous year, for fear of cutbacks.

That is not the practice in city departments, according to Gehret.

The city department heads ask for “what they need, not what they want,” he said.

“Sometimes I ask why (they might ask for money for a particular item or project), but they have the answer,” Gehret said.

Mirror Staff Writer William Kibler is at 814-949-7038.