Mahanoy City hears presentation on pursuit of home rule charter
KAYLEE LINDENMUTH / SENTINEL PHOTO - Matt Domiles, Pennsylvania Economy League, speaks to Mahanoy City Borough Council and local residents about the home rule charter process at the borough council meeting on March 12, 2019.
By Kaylee Lindenmuth
MAHANOY CITY – About two dozen Mahanoy City residents heard a presentation regarding the borough’s pursuit of a home rule charter to relieve its financial difficulties.
The meeting was held an hour earlier than normal in the Large Group Instruction room at the Mahanoy Area High School, and was originally scheduled for February 12, postponed by a snow storm.
Last month, the borough began the process of seeking a home rule charter by adopting an ordinance for a question to elect a government study commission to be placed on the ballot for the May 21 primary election. Mahanoy City would be the first in Schuylkill County to have a home rule charter.
Two advisors from the Pennsylvania Economy League, which was assigned as coordinator for the borough through its Act 47, or financially distressed, status, spoke about the borough’s situation, and the options and impacts it has on the table.
Matt Domiles noted that the borough entered financially distressed status in 2016, when he says the borough owed $800,000 on its bills, of a budget of $1.1 Million.
“That shows you the magnitude of the financial distress of the borough,” said Domiles, adding the state loaned the borough the amount interest free.
Domiles added that, at the time the borough entered Act 47, it was projected to have deficits around $250,000 every year through 2021.
Domiles explained the law regarding earned income taxes levied by municipalities in the commonwealth, noting that the maximum is 1%, and, if a school district levies the same amount, it is split between the two at 0.5%. Act 47 allows the borough to levy 2%, he said, which has brought the borough into a financially stable position where it is projected to have surpluses of around $15,000 a year in the same timeframe.
However, Domiles said, the borough can only be in Act 47 until 2021, at which time the income tax will fall back to 1% and the subsequent revenue — $477,894 — will need to come from somewhere else.
The borough’s options, Domiles added, are to increase revenues, decrease expenditures, both, or adopt a home rule charter. Increasing revenues by levying the highest taxes allowed by borough code, he said, would only bring in an additional $243,994.
Regarding expenditures, Domiles noted the borough police force is the highest single expenditure the borough has at $406,914 annually, with the Department of Public Works as the next highest with $150,750.
One example of a combination Domiles presented was to cut the police department, saving $406,914, and increasing property taxes by 3.9 mills to bring in $70,980.
Domiles added, though, that the home rule charter offers more flexibility for the borough without cutting services to the borough. According to his presentation, a home rule charter removes the earned income tax rate limit, allowing it to maintain its current 2% rate, and removes the property tax rate limit of 30 mills.
Domiles said that 2% of all boroughs and townships and 43% of cities have a home rule charter. However, no municipality in Schuylkill County have a home rule charter.
Domiles emphasized the decision regarding whether or not Mahanoy City adopts a home rule charter lies with the voters of the borough. Borough residents must elect a seven member government study commission, which will be up for election in May. He added that if voters either fail to elect seven members to the commission or if the question is denied, the matter is rejected. If it is rejected, the borough cannot pursue the matter for four years.
The commission will study the current form of government for the borough and compare it with other forms, and, nine months after its election, will present a final report to the borough. If it recommends a charter, it will have two more months to draft the charter, which will be brought to a vote at least 60 days after.
According to a timeline presented by Domiles, the final report will be due in November 2019, if the commission is elected, and the earliest a charter can be brought to a vote is November 3, 2020.
“This is long-term. The decision made here is a long-term decision,” said Domiles. “This [will decide] how the residents of the borough want to steer into the future.”
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