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Tax Hikes Needed to Pay for Pensions/Health

Posted on December 24, 2014

The city of Lebanon, Pennsylvania just passed a budget that contains a 28 percent tax increase. . .

Lancaster’s pension obligations have increased by 228 percent since 2006.

That year, city pension obligations amounted to $1.9 million, covered almost entirely by the state.

For 2015, the obligations will be $6.4 million — nearly $4 million of which will be borne by city taxpayers. And they will rise in the years ahead.

Without reforms at the state level, the Gray administration projects a general fund deficit of $4.5 million for Lancaster in 2018. . .

Beyond the pain of paying the employer share of the benefit increases included in a pension boost the Legislature approved in 2001, municipalities face unsustainable costs. Legislation proposed by Grove would help them stem those costs.

The state Legislature has shown a similar lack of fortitude when it comes to property tax reform. . .

Pennsylvania’s municipalities generally, and cities in particular, need more options — sales taxes, earned income taxes, credit for nonprofit properties — if they are to survive in an era of declining state and federal revenues.

Otherwise, even a Lebanon-sized 28 percent tax increase might not be enough to get Lancaster into the next decade.

(For the rest of the article, click the link.)

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