Over the last five mayoral administrations in the City of Lancaster, a lot has changed, but four things have remained the same:
1. Property taxes remain the primary tool Lancaster city has to pay the bills and, over time, our reliance on property taxes has grown. Beginning in the 1970s, the city received federal revenue-sharing that accounted for as much as 15% of our revenues. This ended in 1986. Other federal funding has declined year over year, including Community Development Block Grant funds, which have been cut nationally by 75% from their peak in the mid-1970s.
2. Nearly 30% of the properties in Lancaster are tax-exempt churches, schools, nonprofits or government entities that do not pay property taxes.
3. The city is mandated by state law to provide professional police and fire services, which account for 62% of our budget — a share that has been consistent for more than 40 years. More than 90% of mandated public safety service budgets are personnel related — their wages, benefits and retirement costs.
4. Economic development is important and it does not significantly increase revenues for the city. On Nov. 10, 1982, the Lancaster New Era published a story with the headline “Lancaster & Other Cities are Financially Strangled” and this additional piece of information highlighted: “City Downtown Revival Adds Little in Taxes.” The article noted the recent Armstrong World Industries-Hamilton Bank Complex and Old Town developments and posed the question “What did development deliver in the way of property tax income?”
The answer: “Surprisingly, next to nothing. ‘It's astonishing,’ said Mayor (Art) Morris, ‘But I’ve been saying it for years.’ ”
Just think about that. That was 1982 and virtually nothing has changed.
With only one source of revenue under our control (property taxes), mandated expenses, revenues increasing at around 1% (in a good year) and expenses increasing at around 3% (mostly due to wage and benefit increases), we have a structural deficit that widens every year.
And in 2020, this structural deficit, combined with reduced revenues because of COVID-19, has cities like Lancaster pushed further toward financial devastation — either in the way of increased taxes, curtailed services or both. We’ve trimmed costs and furloughed staff. We’ve managed to amass a rainy day fund that we will tap this year and next.
And it’s not sustainable.
The answer to the city’s structural deficit lies in Harrisburg. Over the decades, many efforts have been made by my predecessors. I, too, have been working at this in earnest over the past two years and thought this might be the year for at least a partial fix, but it didn’t happen.
We’ll restart our advocacy efforts early next year, championing both the city’s hardworking taxpayers and employees. If Harrisburg can’t help, we’ll be faced with the same set of bad choices that were the subject of another newspaper article from Nov. 10, 1982: “Should Lancaster City Cut Services or Raise Taxes?”
Danene Sorace, a Democrat, has been mayor of the City of Lancaster since January 2018.