The Tom Borthwick Recovery Plan for Scranton

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KP contributor Tom Borthwick has some thoughtful suggestions for how Scranton might raise some more revenue over at the NEPArtisan blog:

•Send a tax bill to any non-profit engaging in an activity outside the scope of their non-profit activity. The University of Scranton has a coffee shop on campus. That has nothing to do with its mission. It makes money. It is a business. This goes for parking lots that they (or any non-profits) charge for, bookstores, and housing. This will affect all of the colleges and universities in town and that’s fine. They utilize city services and, while they do provide an economic benefit to the City (which is always their retort), every citizen provides an economic benefit as well. So do businesses. And they pay. So send them a bill. If they don’t pay, that’s what we have lawyers for. Maybe it’s a silly proposition, but they should be assessed.

•Implement Council’s “Street Smart” plan. People should pay what they owe at meters. If they leave, people shouldn’t be able to mooch their excess. I know I do it all the time, but if we implement smart meters, I wouldn’t be able to and the city would make more money.

•Implement Council’s tax on parking lots and garages. This would force non-profits to pay and it would equitably spread pain across both public and private garages. Council believes a 15% tax would generate about $500,000 per year. Not a bad idea.

•Implement a Commuter Tax. The only people who really should hate this have nothing to do with the City because they either don’t live here or abandoned the City to save money on taxes. Too bad, welcome back to the fold! It reduces the disincentive for people to leave the city. Scranton is the #1 economic engine in Lackawanna County, and probably Northeastern Pennsylvania. It is not unreasonable to ask those who work here to contribute to its well-being. It also reduces the burden on overburdened city residents.

•Increase Garbage Fees, but higher than proposed. The Mayor proposed a $22 increase in the garbage collection fee. That’s not all that much. Fees are also easier to deal with than taxes and apply more broadly than taxes. The University of Scranton would have to pay this fee increase, which spreads its impact. A tax increase would just his residents. How much should it go up? I’m not sure, but it’s a better choice than taxes.

•Implement a payroll tax. Much like the “spread the pain” aspect of increasing garbage fees, non-profits would pay into this tax, decreasing the pain felt by taxpayers.

•Explore a Health Care Consortium with other large government bodies. This is something I’ve proposed for the Scranton School District when I ran for School Board (and will propose again, should I run next year). The City of Scranton, Lackawanna County, and the Scranton School District are the three largest employers in the County. Pooling their resources, they could certainly achieve a collective decrease in health care costs for the city. The Scranton School District saved about $2.2 million after getting permission from the SFT to switch carriers as long as coverage remained the same. I’m sure the unions in the City and County would agree to the same within the context of a Consortium. This would save a fortune for all three government bodies.

•Lease, and I emphasize only lease, the city’s parking garages. The SPA’s debt is explosive and disgusting. It is due exclusively to unparallelled incompetence. Selling the garages would be liquidating assets that can provide revenue for the SPA in the long run. Leasing the garages until the debt is settled makes sense.

Not being very familiar with the circumstances on the ground in Scranton, I can’t comment on the specific situation at the Scranton Parking Authority with much familiarity. However, I think that while the tendency is for cities to underprice parking, you do want to be careful about overpricing it too. The reason to price parking is demand management – making sure there are always a few spaces open, even during peak times. The best way to do this is through variable pricing – charging more at peak times, and less at off-peak times. This would almost certainly bring in more revenue than SPA is currently collecting, without opening things up to a private company to siphon off needed revenue, which is how these leasing and partial privatization schemes tend to work. Either charge market prices in public garages, or sell the garages.

Another idea I think should be on this list is a split-rate real estate tax, with separate millage rates for land and buildings. The problem with simply raising Scranton’s existing property tax is that building taxes are a drag on economic growth. The incentives are terrible. Not so with land value taxes! There’s no deadweight loss to the economy, and landowners can’t pass it on to residential or business tenants. Most people see their taxes drop, and raising the millage rate just gets you more development. Best of all, land can’t move, so it’s impossible to dodge it.

This entry was posted in Budget, Northeast PA.

4 Responses to The Tom Borthwick Recovery Plan for Scranton

  1. Thanks for sharing. I’ll pass this along to some of the officials working on this. Question, do you know offhand if changing the way the city taxes land be legal? One of the challenges we face is being the only Class 2A city in the Commonwealth. We follow a whole different set of laws. The Payroll and Commuter Taxes would need to be approved by the legislature before we could implement them, for example.

  2. Jon says:

    Yes, I believe Class2A cities are allowed to split the real estate tax rate. I’ll double check with Josh Vincent at CSE though.

  3. U of S alum who loves Scranton and the U says:

    Mr. Borthwick-Why don’t you just ask the University of Scranton to pull up stakes and move away? If it wasn’t for the University, the hundreds of millions it pumps into the local economy (tell me another employer who is as generous with wages, salary, benefits), employs fellow citizens, hires local, buys local, contracts local; the City would be in even worse shape than it is today. Your entire argument is preposterous regarding colleges and universities. Tackle the real problem of wages and unchecked spending.