Lehigh County Commissioners passed an amendment to the 2019 budget that keeps the millage rate at 3.64, opposing the administration’s plan to raise taxes during a four-hour meeting Oct. 10. The amendment, sponsored by Commissioner Brad Osborne, a Republican and recent contender for the office of Lehigh county Executive, passed on party lines, 6–3.

The amendment specifies, “The millage rate shall be reduced in an amount representing $4,448,840 in 2019 real estate tax value. This equates to a millage reduction of 0.15 setting the millage rate at 3.64.” This will move the millage rate from the budget’s proposed 3.79 mills to 3.64 mills.

The amendment will take $4.4 million from the proposed budget’s line item from the Stabilization Fund – sometimes described as the county’s “savings account,” and transfer it to the line item for the Operating Fund – described by County Fiscal Officer Tim Reeves as the County’s “checking account,” thus negating the need to collect that amount in real estate taxes which has consequences down the line according to Reeves. The stabilization fund is often referred to as a “rainy day fund.”

The move forestalls an increase in income taxes, but according to Reeves, forces the administration to finance or borrow money for capital expenditures for which they had planned to pay cash.

“The ultimate repercussion of this action,” said Reeves in a post-meeting interview, “is when they do raise taxes, the taxes will be higher.”

In doing so, the commissioners rejected the advice of both Reeves and County Executive Phillips Armstrong.

Reeves, who has extensive experience in public finance, worked as the Lehigh County’s director of collections and tax claims under former Fiscal Officer Brian Kahler before accepting an appointment to his current position as county fiscal officer.

Reeves, a 1990 Penn State graduate with a major in accounting and a minor in finance ,and who is a Certified Public Accountant, has a strong background in both public and corporate finance. He said he is dedicated to providing facts to both the administration and to the commissioners.

Reeves argued against the amendment ,saying that passing the proposal would lead to a case of “Robbing Peter to pay Paul.”

At least one Republican – Commissioner Nathan Brown, seemed to acknowledge the inevitability of the need to raise taxes. “I think a tax increase is coming soon,” said Brown.

Commissioner Brad Osborne had a more nuanced rationale for opposing the administration’s proposed tax increase.

“It was clear to me,” said Osborne in a post-meeting interview, “that the budget had to be amended. The administration’s five-year plan showed the stabilization fund for 2020 was being drawn down to $12.7 million which is well below the GFOA recommended guideline of $18.7 million, for the stabilization fund.” Osborne said the GFOA recommends that the stabilization fund be $18.7 million, or equal to 60 days of operational expenses.

GFOA stands for Government Finance Officer’s Association, an advisory organization. According to its web site, “GFOA advisories identify specific policies and procedures necessary to minimize a government’s exposure to potential loss in connection with its financial management activities.”

Osborne said there has been an average favorable variance for the past six years of $7.5 million, meaning that the administration has budgeted for more expenses than was spent. He said a 4.1 percent tax increase would yield $4.4 million for 2019, which was not warranted.

Osborne said the five-year financial projection presented by the administration during the budget presentation “ignores the historical favorable fund balance average of $7.5 million each year.”

Sponsor Osborne argued, “We [the administration] don’t have a good track record of estimating expenses and revenue.”

“This puts us further behind the eightball,” said Democrat Commissioner Dan Hartzell in a later interview. “I wish the administration’s budget had passed more or less intact; instead the changes made by the majority of the board will only make a bigger tax increase likely in the near future.”

Commissioners will vote for the final budget Oct. 24. The county executive will have an opportunity to veto the budget; if he does, then the commissioners can vote whether to overturn the veto.

In other business, commissioners considered over 20 amendments to the 2019 budget.

Most were routine, but two were the source of passionate push-back from county department heads and fellow commissioners.

A proposed change to the salary schedule for non-union workers got the most attention. The amendment, sponsored by Commissioner Brad Osborne, proposed that “step increases for non-bargaining unit employees” be “removed from the budget and replaced with a 2.5 percent wage increase” for non-union employees.

Republican Commissioner Dr. Percy Dougherty opened the discussion with an objection to the idea. He said the plan is very unfair. He suggested waiting until “we find a better way” and to wait for a pay study.

The proposal motivated the department heads to strongly argue against the action. They all saw it as bad for their employees.

Rick Molchany, director of General Services, said the plan, “makes no sense.” He urged the commissioners not to “miss our chance to set pay policy.”

Molchany said, “Motivation is not gained through pay increases. You have to address job dissatisfaction,” to applause from the crowd in the hearing room.

District Attorney Jim Martin said, “I represent the non-union people in my office. It’s high time that employees be treated better. You have a terrific work force who deserves fair treatment.” More applause.

Martin told the commissioners that after 21 years on the job, “I happen to have some institutional memory,” a reminder the commissioners that he has been around longer that most of them. “I also have supervisors making less than their subordinates,” underlining the unfairness of the current pay system noted by other department leaders.

President Judge Edward Reibman referred to the pay study mentioned by Dougherty. “This non-existent, illusory pay study” needs to be done.

He said dropping the proposed step increases “affects morale. Our important assets are our people.” He urged the commissioners “to take into account that we know our people. Wait for the pay study so that we have some objective basis” for decisions. “Reject the amendment!” More applause.

Coroner Scott Grim also wanted commissioners to wait for the pay study. He said, “We ask [our non-union employees] to go above and beyond the call of duty.”

Controller Glenn Eckart, Director of Corrections Janine Donate and Public Defender Kim Makoul all took a turn at the microphone and together with their fellow department heads presented a united front to the commissioners opposing the amendment and supporting the idea that they wait until the pay study is completed before taking action.

Commissioners urged the study be completed by February.

One amendment proposal sponsored by Commissioner Dr. Percy Dougherty seemed to catch fellow Commissioner Geoff Brace by surprise. The proposal dramatically reduced grant money to several area nonprofit organizations, including the Bradbury Sullivan Community Center, which was slated for a cut from the budgeted $10,000 to $2,500. The grants are from the Hotel Tax Fund line item of the budget.

Other cuts proposed: Allentown Art Museum – from $25,000 to $20,000; ArtsQuest – from $10,000 to $0; Davinci’s Discovery Center – from $25,000 to $20,000; the Martin Luther King and Coretta Scott King Memorial – from $10,000 to $2,500.

South Whitehall Township had been slated for a $2,500 grant but the proposal reduced it to zero.

Dougherty said in an interview that the intent of the reductions was to increase the amount that could be put to paying for the county-owned baseball stadium.

After heated objection from Brace, the amendment was withdrawn; the grants remain in the budget.