A tax change approved by state legislators and sitting on the desk of Gov. Ed Rendell for final authorization will have drastically different impacts on two bordering Luzerne County municipalities, officials say.
Wilkes-Barre Mayor Tom Leighton said the bill, which would change the way the Emergency and Municipal Services tax is collected, will have a minimal effect on the city.
But an official in Wilkes-Barre Township says the bill will have a “huge, huge impact on the budget” and could even result in cutbacks in township services and jobs.
Under the bill, the EMS tax would be renamed the Local Services Tax and instead of being collected as one lump sum in January, municipalities would collect it from workers in a series of small deductions through paychecks. The state has allowed each municipality to collect up to $52 per year from all workers in their municipality to help pay for police, fire and ambulance services and road maintenance. The township and the city set their EMS taxes at $52.
The biggest change in the new bill is that workers who earn less than $12,000 annually will now be exempt from the tax.
Michael Revitt, Wilkes-Barre Township business administrator, said his municipality currently collects about $500,000 in EMS taxes and could lose as much as $200,000 to $300,000 with the new bill.
“In towns like Wilkes-Barre Township, a lot of employees are in retail or in the restaurant business and a lot of these workers make under $12,000,” he said.
Revitt says it’s unfair because all workers, regardless of income, are protected by the township’s services and use its roads.
“When someone calls 911, you don’t ask the question: Do you make less than $12,000?” Revitt said.
Meanwhile, Leighton said he’s “not overly concerned” because only a “small portion” of the city’s 14,000 workers make $12,000 or less.
“I’m confident the revitalized downtown will help recoup any difference,” Leighton said, noting that the EMS tax brings in about $1 million to the city.
Revitt said the city won’t suffer as much because its economy is made up of more professionals, while the township’s economy is supported by many part-time workers.
Revitt said “waitresses make $2 to $3 an hour” and most of their income comes from tips which aren’t always reported.
All workers should have to pay a prorated tax for services based on their incomes, Revitt said, so that everyone is contributing.
Municipalities currently have the right to create their own exemptions. Wilkes-Barre Township’s is set at $3,000, Revitt said.
The change approved by legislators could take effect for the 2007 budget and the township currently has the current EMS tax system included in its working budget for next year. So, the township might be forced to scramble to find ways to make up for the lost revenue.
“I don’t think a lot of legislators realized the impact this could have on retail-based municipalities,” Revitt said. “It’s almost as if municipalities with retail-based economies are being punished.”
Although he doesn’t feel the impact will severely hurt the city, Leighton didn’t sound thrilled about the change. He said the EMS tax is important and noted that many of the people who work in the city don’t have the same quality emergency services in their home municipalities.
“One dollar a week is not a whole lot,” he said. “I’m responsible for your health and well being while you’re working….When they’re leaving the city, they’re leaving behind great care.”