Scranton City Council will be voting Thursday to introduce a commuter tax, according to a public notice issued Monday.
A commuter tax - a 1 percent earned-income tax on nonresidents of Scranton who work in the city - is one of the city's key alternatives to property tax hikes under its revised Act 47 recovery plan adopted Aug. 23. A 1 percent commuter tax is expected to raise $2.5 million next year and $4 million in 2014 and 2015, city officials have said.
The council ordinance would propose to increase the nonresident earned-income tax from the current 1 percent to 2 percent, while maintaining the earned-income tax of 2.4 percent on city residents, the public notice states.
"The reasons for the increase to the nonresident earned-income tax rate is to raise sufficient revenue for the city of Scranton to meet its general operating obligations pursuant to its revised recovery plan," the public notice states. "It is within the city officials' judgment that the increase in nonresident earned-income tax is necessary."
The current 2.4 percent resident and 1 percent non-resident wage taxes would raise $21.5 million in 2013, and an additional 1 percent commuter wage tax generating $2.5 million in 2013 would result in a total wage tax collection of $24 million in wage taxes next year, the public notice states.
Such a notice is required to be issued under the state Local Tax Enabling Act.
After introduction Thursday during the council meeting that begins at 6:30 p.m., the ordinance would be up for another council vote Oct. 25, the notice states. Assuming the ordinance is adopted, the city also then would have to petition Lackawanna County Court of Common Pleas for approval to implement a commuter tax. The city must get court approval to allow the tax each year it exists.
While the council would be taking action Thursday to enact a commuter tax, opponents of such a tax are expected to also meet Thursday in Olyphant to discuss the issue.
Mayfield Mayor Alexander Chelik, who last month spoke in opposition to a Scranton commuter tax at a meeting of the North Pocono Council of Governments in Moscow, will host a similar meeting Thursday at 7 p.m. at the Olyphant Municipal Building, he said.
"This meeting is to organize all of the communities that responded to my initial letter" seeking their support to fight a commuter tax, said Mr Chelik.
He has been trying to revive opposition from the last time the city imposed the tax, in 1993-94, when a 0.6 percent tax was imposed. That tax was challenged in county court, where a panel of county judges who rejected the city's request to levy the tax cited city witnesses who blamed the need for the tax partly on "irresponsibility and mismanagement on the part of the (city's) political establishment." The judges said they had the right to apply "a judicial brake" to the city's taxing power if they found it unnecessary.
However, the city appealed and won in state Commonwealth Court, and opponents failed to convince the state Supreme Court to hear a further appeal. The commuter tax survived, but was discontinued by the city after 1994.
This time, Scranton would have to pass a more rigorous, three-pronged test to get court approval. This hurdle legislated in 1996 by former Rep. Frank Serafini requires the city to show it has "substantially implemented" other parts of a recovery plan, including: raising taxes and fees on city residents; taking steps to gain required approval from other groups such as courts, voters or unions; and showing that additional city tax revenue isn't enough to balance the city's budget.
Contact the writer: jlockwood@timesshamrock.com