SCRANTON — Although its previous commuter tax proposal was denied by the Lackawanna County Court in 2012, financially distressed Scranton again is considering a new avenue with which to impose a .75 percent earned income tax on non-residents working in the city.
Part of a larger plan to help the city out of its financial difficulties, the recommendation was presented in a report by consultant Henry J. Amoroso, who was hired by the Greater Scranton Chamber of Commerce.
The report states this Act 205 tax allows the city to tax residents and non-residents for the sole purpose of funding the city’s pension. The tax is calculated to raise $5.1 million in the first four quarters of collection.
“Unlike the ‘commuter tax,’ ” Amoroso said, “this would exclusively fund the city’s pension plans and must be eliminated once the pension is no longer considered to be ‘severely distressed’ by the Commonwealth, as defined by the parameters detailed in Act 205. In addition, this tax would not need court approval. The statute has existed for over 25 years and over 40 municipalities in Pennsylvania use this provision.”
Scranton City Council President Bob McGoff said he believes the commuter tax to be fair to all parties.
“As a resident of the city of Scranton,” he said, “and representing other residents of the city of Scranton, I would say that I believe that a commuter tax, an Act 205 tax, is a legitimate means of raising revenue. Certainly people who utilize the infrastructure of the city of Scranton should be somewhat responsible for part of it, for part of maintaining that infrastructure.”
He added the tax is only temporary, and the city is “not asking to do this forever.”
But, Kathy Harris, a Newton Township resident who works in Scranton, called the proposed tax as “totally unfair.”
“I work for a nonprofit where my wage increases very little,” she said, “not enough to keep up with the increases in cost of living. I already pay an LST (local service tax) to Scranton as it is. Why should I pay anything to their city employee pensions? Isn’t that what their property taxes are for? Scranton got themselves into this mess, let them get themselves out.”
Amoroso views the commuter tax as “an absolutely vital tool for tackling what we deemed to be the city’s most significant present budget issue — funding its pension plans.”
“Because so many of the surrounding communities make use of Scranton’s arts, education, and medical facilities, as well as the various government institutions that Scranton has in its capacity as the Lackawanna County seat and as broader regional center — all of which are essentially tax exempt — we thought it was important to view the City’s finances in the context of the greater community,” he said.
Amoroso said it is necessary to consider the context of the other proposals in the report affecting other stakeholders.
He noted there also will be a 28 percent increase on total real estate tax revenues, the phasing out of the business privilege/mercantile taxes, the sale or lease of the Scranton Sewer Authority, the sale of the Scranton Parking Authority and a broader debt refinancing as part of the plan to get the city fiscally solvent.
McGoff said he believes the plan, as a whole, will “allow the city to balance its budget and hopefully get out of the stressed status in a few years.”
The next step in implementing the plan is for Mayor Bill Courtright and administration to write the proposed legislation, which will then go before City Council.
Amoroso said he views his recommendations as “part of a broader strategy for recovery where every stakeholder gives something to help Scranton recover and grow. …
“So many of the problems cities like Scranton face have been years, often decades, in the making, and so the solutions to these problems need to be carefully thought out, addressed comprehensively and in a coordinated fashion.”