Altoona's Act 47 consultant on Tuesday presented a financial recovery plan that recommends an increase in earned income and property taxes, a freeze in worker wages and voluntary consolidation of services with various agencies and municipalities.
It calls for no layoffs and only a slight reduction of the workforce through attrition.
Overall, the plan - open for public comment until Nov. 28, when there will be a public hearing - is less radical than it might have been.
Mirror photo by Gary M. Baranec
John Fylund prepares to begin his presentation on a series of cost-saving and revenue-generating suggestions to Altoona City Council and staff members Tuesday evening.
"Nothing too dramatic," said Scott Campanaro, the only union president at the meeting.
"Nothing crazy," Councilman Dave Butterbaugh said.
But while lacking in dramatic absolutes, the plan contains lots of opportunities for moving the city toward solvency, provided local officials work at it, officials from the consulting group Stevens & Lee said.
The four-year plan recommends raising the earned income tax rate for residents by 0.25 percentage points.
It recommends raising it for nonresidents by 0.15 percentage points - thus instituting a commuter tax, the rationale for which is that those workers benefit by city services like police, firefighting and streets maintenance.
The increases will be possible because Act 47 allows municipalities to go past state caps on earned income tax.
The increase for the average resident would be $75 a year, and for the average nonresident $62 a year.
The increase for 2013 would bring the total EIT for residents to 0.95 percent and for nonresidents, who now pay only a pension surtax, to 0.35 percent. The plan calls for scaling back between 2014 and 2016 to a total of 0.90 percent for residents and 0.30 percent for nonresidents.
Over four years, these increases would generate about $7.3 million.
The plan recommends raising the property tax for capital borrowing for priority projects - in the category of debt service - by 1.27 normalized mills for next year and 1.41 mills for the three years after that.
The debt service category is uncapped, so the city
doesn't need to be in Act 47 to levy these increases.
Because the city's property tax is based entirely on the value of land, the actual millage increases are 9.912 mills for 2013 and 10.966 mills for the years following.
The increased cost next year for a property with land assessed at $2,000 would be about $20.
Over four years, these property tax increases would raise $1 million for the city.
The plan calls for elimination of the $5 per capita and flat rate occupation taxes as expensive to collect and inefficient.
The wage freezes wouldn't apply to union workers until 2014, when their current contracts expire.
They would apply to non-union workers right away.
The plan calls for maintaining, but not increasing or otherwise altering the "step" increases by which police, firefighters and some public works employees work their way over several years into the wages that apply to full-fledged line workers.
It also calls freezing workers in their current "longevity" slots.
Due to a recent revision of Act 47, these wage restrictions would prevail against any contrary ruling for public safety workers in binding arbitration, Susan Friedman of Stevens & Lee said.
The plan calls for seeking ways to cooperate with other municipalities and agencies on police services, accounting, information technology, health insurance, vehicle maintenance and more.
Generally, residents don't care how a municipality gets its work done, as long as it gets the work done, John Filan, a member of the consultant team, said.
Among the specific suggestions: consolidation of fleet maintenance among the city, the Altoona Area School District, the Altoona Water Authority, Blair County and other local governments "to reduce costs and duplication of facilities" and equipment.
The plan calls for limiting the city's obligation on health care to 5 percent per year, with plan redesign and changes in deductibles, premium shares and co-pays covering the rest of the projected 10 percent annual increases.
The plan calls for a study to determine whether the city can transition legally out of its defined benefit pension plans to defined contribution plans typical of private industry.
It also recommends exploring ways to shrink the city's obligations for post-retirement health care coverage for current workers, while setting up a fund to pay for such coverage.
The plan calls for keeping fees at the maximum - full reimbursement of the city's costs.
It calls for exploring the feasibility of charging for EMS-type services provided by the fire department, which has the potential for becoming a "profit center," Filan said.
It calls for "crime-mapping" by the police pepartment to target its use of officers and increase efficiency.
The plan calls for exploring "market-based revenue opportunities" - which could run the gamut from advertisements on city vehicles to naming rights to festivals put on by Penn State Altoona.
The plan calls for reducing operational expenses by 4 percent, maintaining a fund balance cushion of 5 percent and routine performance measurements.
There are 155 recommendations overall.
Act 47 requires the consultant to monitor performance for four months after plan approval.
But that limit isn't absolute, John Espenshade of Stevens & Lee said.
Council retains principal responsibility for running city government, Espenshade said.
It's all "a bit overwhelming," Councilman Bruce Kelley said.
But the plan includes both the short- and long-term solutions council had requested, and may help the city escape Act 47 before too long, Mayor Bill Schirf said.
"Now the hard work begins," Espenshade said.
Mirror Staff Writer William Kibler is at 949-7038.