Lehigh County Board of Commissioners passed an amendment to the 2019 budget that keeps the millage rate at 3.64, opposing the administration’s plan to raise taxes, during a four-hour meeting Oct. 10. The amendment, sponsored by Commissioner Brad Osborne, a Republican and recent contender for the office of Lehigh County executive, passed along party lines 6-3.

The amendment specifies, “The millage rate shall be reduced in an amount representing $4,448,840 in 2019 real estate tax value. This equates to a millage reduction of 0.15, setting the millage rate at 3.64.”

This will move the millage rate from the budget’s proposed 3.79 mills to 3.64 mills.

The amendment will take $4.4 million from the proposed budget’s line item from the stabilization fund, sometimes described as the county’s “savings account” or the “rainy day fund,” and transfer it to the line item for the operating fund, described by Tim Reeves, county fiscal officer, as the county’s “checking account,” thus negating the need to collect that amount in real estate taxes.

According to Reeves, this move will have consequences down the line.

The move forestalls an increase in income taxes but, according to Reeves, forces the administration to finance or borrow money for capital expenditures for which it had planned to pay cash.

“The ultimate repercussion of this action,” said Reeves in a post-meeting interview, “is when they do raise taxes, the taxes will be higher.”

In doing so, the commissioners rejected the advice of both Reeves and county Executive Phillips Armstrong.

Reeves, who has extensive experience in public finance, worked as Lehigh County’s director of collections and tax claims under former fiscal officer Brian Kahler before accepting an appointment to his current position as county fiscal officer.

Reeves, a 1990 Penn State graduate with a major in accounting and a minor in finance and who is a Certified Public Accountant, has a strong background in both public and corporate finance. He said he is dedicated to providing facts to both the administration and to the commissioners.

Reeves argued against the amendment, saying that passing the proposed amendment would lead to a case of “robbing Peter to pay Paul.”

At least one Republican, Commissioner Nathan Brown, seemed to acknowledge the inevitability of the need to raise taxes.

“I think a tax increase is coming soon,” Brown said.

Osborne had a more nuanced rationale for opposing the administration’s proposed tax increase.

“It was clear to me,” Osborne said in a post-meeting interview, “that the budget had to be amended. The administration’s five-year plan showed the stabilization fund for 2020 was being drawn down to $12.7 million, which is well below the [Government Finance Officer’s Association] recommended guideline of $18.7 million for the stabilization fund.”

Osborne said the Government Finance Officer’s Association (GFOA) recommends the stabilization fund be $18.7 million, or equal to 60 days of operational expenses.

GFOA is an advisory organization. According to its website, “GFOA advisories identify specific policies and procedures necessary to minimize a government’s exposure to potential loss in connection with its financial management activities.”

Osborne said there has been an average favorable variance for the past six years of $7.5 million, meaning that the administration has budgeted for more expenses than was spent. He said a 4.1-percent tax increase would yield $4.4 million for 2019, which was not warranted.

Osborne said the five-year financial projection presented by the administration during the budget presentation “ignores the historical favorable fund balance average of $7.5 million each year.”

“We (the administration) don’t have a good track record of estimating expenses and revenue,” Osborne argued in favor of the amendment.

“This puts us further behind the eight-ball,” said Commissioner Dan Hartzell, a Democrat, in a later interview. “I wish the administration’s budget had passed more or less intact; instead, the changes made by the majority of the board will only make a bigger tax increase likely in the near future.”

Commissioners were expected to vote on the final budget Oct. 24. The county executive will have an opportunity to veto the budget; if he does, then the county commissioners can vote to overturn the veto.

In other business, the commissioners considered more than 20 amendments to the 2019 budget.

Most were routine, but two were the source of passionate discussion from county department heads and fellow commissioners.

A proposed change to the salary schedule for nonunion workers got the most attention. The amendment, sponsored by Osborne, proposed that “step increases for nonbargaining unit employees be removed from the budget and replaced with a 2.5-percent wage increase” for nonunion employees.

Republican Commissioner Dr. Percy Dougherty opened the discussion with an objection to the idea. He said the plan is “very unfair.” He suggested waiting until “we find a better way” and to wait for a pay study.

The proposal motivated the department heads to stand and strongly argue against the action. They all saw it as bad for their employees.

Rick Molchany, director of general services, said the plan “makes no sense.” He urged the commissioners to not “miss our chance to set pay policy.”

“Motivation is not gained through pay increases. You have to address job dissatisfaction,” Molchany said.

“I represent the nonunion people in my office. It’s high time that employees be treated better. You have a terrific work force who deserves fair treatment,” District Attorney Jim Martin said.

Martin told the commissioners that after 21 years on the job, “I happen to have some institutional memory,” seemingly as a reminder to commissioners that he has been around longer than most of them. “I also have supervisors making less than their subordinates,” he commented, underlining the unfairness of the current pay system noted by other department leaders.

President Judge Edward Reibman referred back to the pay study mentioned by Dougherty.

“Wait for the pay study so that we have some objective basis for decisions,” he said.

He added the proposed dropping of the proposed step increases affects morale.

“Our important assets are our people,” Reibman said.

He urged the commissioners “to take into account that we know our people. Reject the amendment!”

“We ask [our nonunion employees] to go above and beyond the call of duty,” Coroner Scott Grim said in urging the commissioners to wait for the pay study.

Controller Glenn Eckhart, Director of Corrections Janine Donate and Public Defender Kim Makoul all took a turn at the microphone and, together with their fellow department heads, presented a united front to the commissioners opposing the amendment and supporting the idea that they wait until the pay study is completed before taking action.

Commissioner Geoff Brace urged the pay study be wrapped up by the end of February.

Director of Administration Edward D. Hozza Jr. addressed the commissioners on the status of the pay study being done by the Arthur J. Gallagher & Co., a firm that specializes in compensation and benefits practices.

“Your time schedule of February is aggressive,” Hozza said.

One amendment proposal sponsored by Dougherty seemed to catch Brace by surprise. The proposal dramatically reduced grant money to several area nonprofit organizations, including the Bradbury-Sullivan LGBT Community Center, which was slated for a cut from the budgeted $10,000 to $2,500. The grants are from the hotel tax fund line item of the budget.

Other cuts proposed: Allentown Art Museum - from $25,000 to $20,000; Arts Quest - from $10,000 to $0; DaVinci Discovery Center - from $25,000 to $20,000; the Martin Luther King and Coretta Scott King Memorial - from $10,000 to $2,500. South Whitehall Township had been slated for a $2,500 grant, but the proposal reduced it to $0.

Dougherty said in an interview that the intent of the reductions was to increase the amount that could be put to paying for the county-owned baseball stadium.

After heated objection from Brace, the amendment was withdrawn. The grants remain in the budget.