York City officials are abandoning plans for one tax but might implement another in 2014.
Despite budgeting $150,000 in revenue this year, the city has not collected and does not plan to pursue an admissions tax in 2014, business administrator Michael O'Rourke said Wednesday.
A law authorizing the admissions tax has been on York City books for many years, but it wasn't until a few years ago that city officials seriously considered collecting it.
Had it been implemented, the tax would have affected baseball fans, ice skaters, concertgoers and anyone else who buys a ticket to an event in York City.
"We came to the conclusion that it was not worth the effort," O'Rourke said.
A new tax? However, the city is revisiting the distressed pension earned income tax -- more commonly known as the commuter tax.
That tax would affect anyone who works in the city but lives elsewhere. The catch, O'Rourke said, is that the city might also have to increase its earned-income tax rate on city residents.
The distressed pension earned income tax is not an option everywhere. York qualifies under Act 205 because of
its distressed pension fund, a longtime symptom of the city's widespread financial problems.
The city's earned-income tax rate is currently 0.5 percent. The York City School District also collects a 0.5 percent earned income tax, O'Rourke said.
In order to collect the tax from a commuter, the city's rate must be higher than the total earned-income tax a person pays to his or her home municipality and school district.
So, for example, a commuter who already pays 1 percent of his or her income wouldn't have to pay anything to the city unless the city increases its tax rate.
And that would impact city residents.
Revenue drops: Meanwhile, for a variety of suspected reasons, the city's revenue from the earned-income tax is decreasing.
For example, city officials budgeted $2.75 million from the tax this year. But it now looks like the city's haul will be closer to $2.34 million, O'Rourke said.
That might be a result of unemployment or decreased wages among city residents.
Or the city's earners are leaving -- what O'Rourke called "middle-class flight."
Implementing the distressed pension earned income tax was a recommendation of Public Financial Management. The consulting firm predicted in a 2011 report that York would end 2016 with a $50 million deficit if drastic measures were not taken to prevent such a scenario.
The report estimated the new tax levied to residents and commuters would generate $2.9 million in 2012.
O'Rourke said he's working to collect the needed data and crunch the numbers to determine if the tax is worth pursuing.
"We have to look at the places where the majority of our commuters come from," he said. "If it looks like it makes sense, then I will propose it."
-- Reach Erin James at firstname.lastname@example.org.