2013 Budget

Business Leaders Breakfast Presentation [PDF]

2013 Proposed Budget Address
November 9, 2012

2013 Final Budget [PDF]

2013 Proposed Budget Release Presentation

There is probably no more important responsibility for a Mayor than developing a budget. Allocating the expenditure of tax payer dollars is never easy. My department heads work tirelessly to lay out proposals, which are studied and reduced all in an effort to ensure that we spend tax dollars wisely. At the end of the process, a budget is crafted which outlines the priorities of the City for the upcoming year.

But like other cities in Pennsylvania and across the country we face some tough financial questions. Questions there are not necessarily easy answers to. I have, throughout the year, acknowledged the very real financial pressures the city is faced with- it would be irresponsible to do otherwise. I have also proposed fiscally responsible plans to address these pressures head on.

In spite of the all the cutting of spending and staff reductions we are still forced to increase taxes. I have fought with all my heart to make sure that we have as little a tax increase as possible, but I am here today to announce that we will ask Bethlehem taxpayers to pay an additional 8.5% in real estate taxes in 2013. Balancing this budget was a difficult task. The easy thing to do would have been to throw our hands up and say the situation is bleak so we have to raise taxes. Property tax increases should always be looked at as last resorts after all other options are exhausted and every other cut has been made. We have tried to hold the line on spending. We have cut fat and waste from the system. We have used competition to become more efficient. We have stretched resources and we have become more creative. We have faced tremendous financial challenges in the city but the answers to these challenges are not found by first running to the taxpayers. To the contrary, we must keep taxes as low as possible in order to continue to attract the economic investment that will revitalize our city.

However, throughout this year, I have consistently demonstrated the willingness to step up and make the right decisions for the City of Bethlehem – decisions that were often quite difficult. But part of leadership is having the courage to make the tough decisions. And unfortunately after having exhausted every other option the city is in need of a tax increase.

Today I am proud to present a budget for 2013--a budget that is balanced, fiscally responsible, and meets both the short- and long-term goals for the City. The 2013 Budget is a product of sound fiscal management by every department in the City, and is the result of sensible management practices, cost cutting, and growth of the City’s tax base. The 2013 Budget provides the resources necessary to meet the goals of this administration--delivering excellent city services in the most cost effective way, and providing the needed investments in our community to continue to revitalize our neighborhoods and grow our tax base. We should all be proud to live in “one of the most livable cities in America” and it is rewarding to be part of this city’s renaissance. The City continues to turn the corner with a $56 million increase in the tax base from last year and a total of $236 million increase since I took office.

Balancing this budget was a difficult task. With the five positions cut in this years budget, all total in the last three years we have reduced the city’s workforce by 69 positions, representing a 10% reduction in the city’s total workforce. 80% of the city’s budget is made up of wages and benefits, and at some point, if you are going to find meaningful cuts you have to look at your workforce. Bethlehem, like so many other cities, can no longer afford the government it had, particularly during these though economic times, and in the face of rising pension and medical costs we need to right size our government and bring it in line with our ability to pay for it. Ultimately, it meant some very tough choices and separating the nice to have from the need to have, and understanding the difference between a want and a need.

I have often said, property tax increases should always be looked at as a last resort, after all other options are exhausted and every other cut has been made. Certainly, with the current state of the nation’s economy-- steady unemployment with anemic growth is not the time to burden taxpayers with higher taxes. All of us--whether operating a household, a business, or a government--need to recognize the current economic climate and adjust accordingly. We have done just that.

We have also cut fat and waste from the system, and will continue to do so through the implementation of Continuous Improvement, or “CI in the City,” a program that has already produced millions of dollars of savings to the taxpayers.

I also want to make it clear that we will not stop there. Throughout 2013 we expect to continue to maximize efficiencies, and operate government like a business where possible. We will utilize continuous improvement –with its functional peer review of our daily activities – to maximize each dollar spent in City government.

We recognize that this remains a period of unprecedented economic expansion, with $1.4 billion dollars of economic development ongoing in the City. We have worked hard to put our resources on the front lines where they will impact the residents the most. In fact, this administration can honestly say the taxpayers and water and sewer customers of Bethlehem receive more and better services than at any other time in our city’s history.

I also want to highlight a few of the larger investments in this year’s budget:

Police

Fire

Public Works

Parks & Public Property

Tax dollars must be spent wisely in the areas where we need it most. As I have said before, the single most important job of City government is keeping its residents safe. Keeping our neighborhoods safe encourages people to raise a family here or build a business here. Small businesses and strong neighbors are critical to a successful City.

We must always remember that we are in a competitive market, so we cannot make reckless cuts in services, just to drive down taxes. Austerity without purpose will not improve our City or help us to capitalize on new economic opportunities. We will not convince one family or one business to choose Bethlehem by cutting crucial city services like our police and fire departments, which is why this budget continues to provide for the necessary investment of tax dollars in the area of public safety and other basic city services.

52% of the total expenses of this year’s budget are in the area of public safety, which equates to over $38 million. Since taking office, I have made investing in the area of public safety a priority and it is hard to argue with the results. Today, Bethlehem is one of the safest, if not the safest City in the Commonwealth.
Only a decade ago, the City paid $3.85 million in medical expense. Today, we are budgeting $9.2 million for medical costs.

All market indicators point to continued economic growth and continued job creation in Bethlehem. The financial challenges of City Hall will not slow down the economic rebirth of our city. And despite difficult financial times I am committed to finding ways to invest in infrastructure, to maintain our buildings, facilities, and equipment and to make the delivery of basic services a priority. We will not sacrifice investment and spending on critical functions to solve our problems. I realize that we only lose ground and put our community at risk if we avoid spending on necessary basic functions that will grow our economy and grow our city.

In past budget addresses I have repeatedly talked about the City aggressively paying down debt, even at times to the detriment of our annual fund balance. From 2004 through 2013 we have paid $90 million in principle and interest. The City remains on pace to retire 52% over the next ten years and $19.5 million this year alone. Our debt position and how quickly we were set to payoff our debt was noted as a positive by S&P. “Bethlehem’s estimated overall debt burden is moderate and rapidly amortizing.” Standard and Poor’s Credit Ratings – February 9, 2011.

I am proud of our record of achievement in driving economic development in the City and when businesses invest in a community, they bring jobs. More jobs and more businesses make it possible to grow our tax base and keep taxes steady.

I want to take an opportunity to recognize and thank my Business Administrator, Dennis Reichard and Director of Budget and Finance, Mark Sivak for the countless hours pouring over reports and projections to craft this budget. I also want to thank my department heads, who worked hard to prioritize their needs for the upcoming budget. The hard work of running an efficient City is in the details and my City team is dedicated to continuing the remarkable transformation of our great City.

I also want to thank City Council for the time that they will take over the next few weeks to review the budget. I will make my administration available to answer any questions they have regarding the specific details of the budget. Together we can continue to build a better Bethlehem for all of our children.