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Catasauqua council approves 33% tax hike

Catasauqua Borough Council voted to raise property taxes 33% at its Sept. 26 meeting.

The 3.55-mill tax hike is the largest one-year increase in Catasauqua since the borough incorporated in 1854.

The tax hike vote was 6-1, with only Councilman Paul Cmil voting against it.

It was reported a property assessed at $50,000 will have the property taxes rise in 2023 by $177.

Vice President Howard Cunningham motioned for the hike, with Councilmember Jill Smerdon providing the second to move the tax increase to a council vote.

“It’s stupid. We can’t do that,” Cmil said after the meeting. “How are people gonna live? If I was a homeowner in Catty, I’d leave.”

Catasauqua Borough was a major player in the American Industrial Revolution in the early 19th century. By 1900, there were about 5,000 residents in Catasauqua, which reportedly had the highest percentage of self-made millionaires of any town in the United States.

During World War I, Catasauqua, a Lenape Native American word meaning “dry ground” or “thirsty ground,” became the first community in the United States to raise $1,000,000 in war bonds for the war effort. Catasauqua earned the nickname “The Million Dollar Town.”

By 2022, Catasauqua has seen a financial slowing with a number of street and bridge projects in place, including the Iron Works project. The previous borough council majority had a goal of transforming Catasauqua from a pass-through town to a destination community.

The pandemic and its effects on the borough budget and escalating administration and engineering costs for the number of projects began a deterioration of financial vitality. Reportedly lacking a “rainy day fund,” the borough slipped into a precarious financial position.

Adding to the situation was an active, contested borough council election cycle in 2021. This resulted in, what some observers felt, an election year no-tax hike budget for 2022. It was thought this would set the stage for a 2023 tax hike of a mill or perhaps a mill and a half.

The borough’s financial adviser, Ryan Hottenstein, presented the budget numbers to council at the meeting. Beyond the projects escalating in costs, Hottenstein noted the police department was over budget in excess of $200,000 in 2021, and he expects the department to be over budget for 2022. He cited overtime costs as one element of the department’s overage.

At a recent Coffee with the Cops event, Catasauqua Police Chief Douglas Kish commented on the frustration of efforts to hire full-time police officers. He noted there is a paucity of qualified applicants, contributing to police overtime.

Community activist and leader of the Catasauqua Main Streets group, Kim Brubaker asked Hottenstein how the borough could have gotten into the current situation with the professionals advising council. Hottenstein replied he did not know.

Smerdon reported a July 21 conversation between former borough Manager Stephen Travers and FSL Public Finance that the borough was downgraded to BB plus, junk bond status. Reportedly, the borrowing of $400,000 by the former council to make payroll and other expenses at the beginning of 2022 contributed to the rating downgrade.

She noted former council members and Travers said, on several occasions, that borrowing money in that way was typical and “should be of no concern.”

She reported the FSL Public Finance representative said the borough has a “negative outlook.”

The new council arrived in January 2022 and called for the reopening of the no-tax-hike budget of 2022 to re-examine the costs of a number of nonprofit, civic groups that serve Catasauqua and receive funding from council.

The new council majority listed the Public Library of Catasauqua, Main Streets, the George Taylor House and other groups for possible cuts. Numerous members of the groups voiced displeasure with council’s thoughts to make cuts in their budgets. Council made no cuts to these groups at that meeting.

Catasauqua remains reliant on grant funding for its projects moving forward.

At the Sept. 26 meeting, council approved two resolutions to pursue two grants totaling $2.377 million. The grants are for improvements to Front and Walnut streets.

Because of the perceived challenged financial state, borough Engineer Vanessa Nedrick reported any required borough match for the grants is being waived by the state. It is unclear if the borough will receive these grants.

The next fiscal challenge for council is what they will do with the sewer and water fees.

Last year, Travers recommended a 5% sewer and water fee hike for 2022 and 2023. Council voted for 3%.

Travers abruptly resigned in July 2022.

At a recent public meeting, Cunningham referred to the sewer and water fee as a tax. His statement was that, as far as he was concerned, the sewer and water fee is a tax on the people.

A tax has the primary purpose of raising revenue. By contrast, a fee recoups the cost of providing a service - in this case, water and sewer use.

In other business, Mayor Barbara Schlegel thanked those who attended the recent Coffee with the Cops gathering, adding the next one will be 5-6:30 p.m. Oct. 12 at Pie’s On Pizzeria, Front and Pine streets.

She noted the George Taylor House is holding a paranormal experience gathering Oct. 29 in celebration of Halloween. Visit the GTH Facebook page for more information.

The mayor also swore in three Catasauqua High School students to act as junior council members.

She noted the recent yard sale to benefit the police K-9 unit was a success.

The next council meeting is set for 7 p.m. Oct. 31 at the municipal complex, 90 Bridge St. It is a hybrid meeting, with both in-person and virtual options. Visit catasauqua.org for the call-in and access codes to view the meeting virtually.