All right, good afternoon everyone.

We're gonna get this uh show on the road here.

Um so uh welcome to the Veteran Finance Committee.

Uh we'll just quickly take roll and uh get started here.

Okay, Miss Moda here, Ms.

Girlak here, uh Mr.

Chair, everyone is here.

Thank you, Mike, and let the record reflect we have Councilperson Bender, Council President uh Napoli as well.

Um yeah, so thank you all for coming tonight.

Uh we'll get started.

I think I guess first on our agenda is uh looking at Bill 12.

Bill 12 Amendment City Code Part 2, general legislation, chapter 633, water, article uh five, uh water services and charges to add a section relating to uh water and sewer rebates by creating a sliding schedule of water and sewer rebates.

Perfect.

I guess do we have any comment from the administration?

Uh good evening.

Yes, I have Mike Zumas with me as the uh revenue and audit manager.

He's gonna walk us through the uh bill.

Good evening.

Um I worked with uh Jenny McKenna to uh for bill 12 to increase the goal was to offer financial relief to eligible seniors and persons with disabilities um to get rebates on their water and sewer fixed charge.

Um and that's a fee that is um currently administered by Lehigh County Authority, so LCA.

Um the goal is to kind of mimic the garbage rebate process that was implemented uh for last year and increase the threshold.

So then we're trying to reach more seniors and and uh persons with disabilities.

So the scale um would go from zero to fifteen thousand is a 75% rebate, 15,000 to 20,000 is 50 percent rebate, so on and so forth.

Um do you guys have any questions on that?

No.

Um I think do you just mind repeating the the scales?

Sure, we're good.

Um so the scale is gonna be income from zero to fifteen thousand is a 75% um rebate on the water and sewer fixed charge.

Um household income of $15,000, $1 to 20,000 is a 50% rebate.

Uh household income of 20,000 and $1 to $25,000 is a 25% rebate.

Uh household income of $25,000 and $1 to $34,450 is a 10% rebate.

And again, that's on the water and sewer fixed charge.

Um for 2025, the quarterly um the quarterly sewer charge for 2025 was 29.75 cents, and the quarterly um fixed charge for uh the metered water use was 85.57 per quarter.

Thank you.

So I'll take any comment on the on the dice if anyone has anything on the go ahead.

Uh just a quick question on what the um percentages and the scale was was it based off AMI or some other so um we were looking into essentially what we did was we mimicked the garbage rebate process from that we introduced in 2024 that um started in for the 2024 um it was 2024 um and then it was implemented that January so um I know we we talked about uh at council meeting um referring to AMI and things like that, but um I think this percentage is something that we mirrored the PA 1000, which was the rebate form at the time got you okay, thank you.

I don't uh you have something sure.

Um for residents who are interested, I mean are these for these resources are they available like this water and sewer one?

Could they get it through the city of Allentown?

Are we pointing them to LCA?

So this is something that the city of Allentown would admit administer and and issue the rebate on along with the garbage.

And how and do we have any ideas on how we would communicate that to so I think a um a more concerted push to um talk to state representatives?

I know we talked to um Lehigh County's aging committee um when we were increasing the garbage rebate.

So uh I think a concerted effort to to get the word out will help um applicants.

I know um when we increase the garbage rebate threshold, um we were able to um I think help three times as many residents.

So I think we can get more.

I think it's a matter of uh a concerted effort to push that um that notice out there um have the rebate form on the currently the rebate form is on revenue and audits page, so maybe having that in uh in a more accessible spot so people can become aware of that.

Okay.

I like the state reps idea because I think folks are going to our state reps for um for tax rebates, you know, on their understanding state state tax.

So maybe have them having these resources you know right next to it would be advantageous for those same folks.

So I like that idea.

Thank you.

And and it won't be a great idea if um if the messages will be in in Spanish and in different languages.

Absolutely, that's a great idea.

We make sure that we have that translation in Spanish available as well.

So I would like to remind council that uh um though uh the water and sewer is uh is leased for long term for 50 years with the LCA we retained this rebate program to help our um residents, our property owners that fall within this um income window to uh to support them to assist them.

So technically we do not have water and sewer uh anymore as with the LCA, but we retain this to help our uh property ownership.

I appreciate the clarification, Director Patel.

Um I guess there is just one other question, just a little bit more general as far as is there currently a resource, whether it's on the website or in our department of any and all rebates that the city currently administers.

Yes, so it it is on our website, but it it is on the revenue and audits page in the uh within the finance department's um page.

So uh that is what uh Mike was saying that we make sure that it's in the on the front um somewhere on the main page so taxpayers can see it.

Um I guess I'm just if we can have a motion to refer this to the full council meeting on the I would like to make a motion.

I'll second.

All right, thank you.

So the motion will be uh pushed over to the next council meeting on March 4th.

All right, uh, next on our agenda, we have the financial reports for the month of December and January.

Um thank you.

Yeah, so take it away.

Thank you.

So I um did um send a memo um to Mike earlier today.

Um so the memo states, and we do have a version two of uh December 2025.

Um as we pay the vendors, we will have one more to after we close out the year.

So this is an interim report uh for December and uh January 31st also both were circulated on on February 20th.

So as of December um 31st, 2025, um we the general fund is um um the revenues are showing strength of three percent at 152 million, and the the major contributors can continues to be the earned income tax, business license fee charges for services and investment income.

Um and the expenditure as of um uh when we circulated the report for version two, uh the spend is at 96 percent.

So reflecting savings of 4% than uh what we had um adjusted the budget with.

And the adjustment in the budget comes from here, you know, when we roll the um POs and other uh revenues and expenditures um they're coming in uh throughout the year that council is made aware of and and approves.

And so the our adjusted budget was 154 million dollars.

So it's it's uh reflecting a savings of 4%, and the leading categories for the savings were services and charges and materials and supplies, and our adjusted um expenditure budget was 152 million, uh net up vacancy factor or vacancy factor was 2.4 million.

I also have information on the uh premium pay.

Um police fire and EMS premium pay police came in at um just over three million dollars, and so did fire.

Um EMS um is at just over a million dollars, and the budget amounts are listed on the memo for your reference.

Um the end of the year next category I have is the investments.

The general fund cash position is um 39.8 million, and majority of the funds are with the uh PLAGID uh investment trust account, and which um provides us with a better uh return on investment than um the commercial uh bank, which is our bank is TD Bank.

Um 35 million of the 37 million that's with uh Pligit is invested in term investments uh uh give it yielding uh return between 3.74 percent and 4.35 percent APY.

Okay, and the terms of the uh investment, the maturity date and the return on investments are listed there for you.

Um the additional 2.6 million was the liquid assets in TD bank to pay um our vendors and uh uh meet the uh payroll needs.

TD Bank's uh APUI, the uh yield is um uh three percent.

Um for December um 31st, the other funds activities, um the solid waste fund.

Uh revenues are uh in line with our year-end expectations uh 23.9 million, and the expenditures reflect savings of 3% at 23.8 million.

We had budgeted expenditures at 24.5 million.

The stormwater fund revenues were stronger by 2% at 6.2 million, and expenditures reflected savings of 20 percent at 6.1 million.

The risk fund, uh so we came back to you for uh additional appropriations for risk fund or health care costs uh have come in higher.

So the revenues, the adjusted revenues reflects that uh increase that you had approved mid-year, it's 34 uh point six million, and expenditures are at 34 uh 34.3 million with the adjusted budget of 30.5.6, and that reflects again the approved amount um uh during the year.

Um the golf fund activities.

The revenues came in at um uh our expected uh they met our expectations as 2.7 million, and expenditures reflected savings of 19% at $2.5 million.

Uh the budgeted amount was $3.1 million.

The rental unit fund revenues are stronger by 19%.

Um so just want to remind council that the uh revenues uh for um uh rental unit fund, the billing for rental union for the following year.

So for 2026, the billing is done sometime in October.

So when you're seeing the strength is because the billing was done, so the future year's revenue is being recognized.

Um, and some of that revenue is being recognized in the in the 2025.

And the expenditures reflect the savings of 3% at $2.9 million.

The last fund I have uh to report on is the building code fund, which was a new fund for 2025.

We separated the activity from the general fund to see how that is performing, and we can keep track of the uh building um codes activity.

The revenues reached at uh 4.2 million, and uh um expenditures totaled at 90 percent at 2.5 million, and their budget was 2.9 million.

So that is a December um second version of 2025.

Um do you have any questions for me before I move on to January 2026?

Uh not not well.

I have a couple here, but I do want to take the time for to refer to our city controller.

Any thoughts or comments on the December report?

Um version two looked pretty good to me.

I always like version three.

Oh, I don't expect any surprises.

Yep, thank you.

Um there were a couple things, so I was just curious on the 3% um kind of stronger revenue for the year.

Is any of that then allocated for covering 2026, or is that just essentially relegated to an increase in the general fund balance?

So it drops.

And so it increases the cash in the general funds.

The fund balance gets increased.

And then my next one was just for some of the expenditure savings and solid waste and stormwater.

Are those just based off of the timing?

Is this another one where just certain invoices weren't paid at a certain time, or does this reflect any sort of efficiency in how we operate it, or is it all contract for the most part?

Great question.

So it's a combination of all of that.

Some of the invoices might be coming through, and you'll see that in version three.

And the other things it could be that we were planning on a capital uh improvement, and uh uh the our procurement process didn't allow us to complete that.

So uh that gets dropped in the fund balance, and the department can carry on for the following year.

Thank you.

Those were those were some of my questions.

Any questions from the dais for 2025 decided?

Okay.

If you want to move forward to January, I'm I'm all good for that.

Okay, thank you.

All right, so activities for um as of January 31st, 2026.

Um first month is uh uh doesn't provide a really uh full picture, but I will give you where we stand.

Uh so general fund uh revenues are um at 4.3 million uh and it meets our uh estimation models, and the expenditures uh came in at uh 10 million, um which is about seven at seven percent.

Um the increase of one percent compared to January 2025, and and I expect that because we increase the um um you know the wages are higher, the cost of uh doing businesses increased.

Um so that uh that um I don't see any concern with that increase.

The other funds.

Um again, January is just the beginning of the year, so hard to gauge.

So all of the other funds, risk fund, uh, the solid waste fund, the stormwater, golf fund, rental fund, um revenues and expenditures are at our January estimations.

I give you the um investment activity.

So at the end of January 31st, a general fund cash position is 30 34.5 million.

32.2 million is with Pligate, and 30 million of the 32.2 million is in invested in term investment yielding uh returns between 3.74 and 3.8 uh 3.89% APY.

Uh the remainder of 2.2 million is is in money market prime and class accounts, and the yield um in those accounts is 2.3.81%.

And the um additional funds in TD bank that are liquid assets for um vendor payments and to cover payroll, uh 2.2 million.

And that is my um report for January 31st, 2026.

Thank you so much.

Um I really don't see any any questions though, so thus far for January.

Um any comments either from DIS or controller.

Yep, go ahead.

This Patel noted there's a great imbalance between expenses this month and revenue, and this is one of the reasons why a city needs a healthy fund balance to get through January and February before those two forces balance out.

Um there was a time a while ago, Cynthia, you you were still on council when um the city did not have a much of a fund balance, and um had to borrow against a lot of bars to make it through the month of January, not a good situation to be in, but you know we've had some good years, we have student management.

So you know we really don't even have to think about that.

You know you've got the money.

I just wanted to take a second one.

Thank you.

I appreciate that, Mr.

Controller.

All right.

Um any other comments for the reports?

Jeff is absolutely correct.

We don't see start receiving revenue from the property tax um is generally the highest revenue in the first few months until um February, March, uh, sometime.

So that's when the influx of cash comes in.

So having that fund balance um allows us to make the payroll and the vendor payments.

Yeah.

So one more thing, also I want to mention is that we implemented increase in deed transfer tax.

Currently, we are working through sorting through how to be transparent.

So you will be able to see that in the next month's report in the housing fund.

The revenue will be reported in the housing fund.

So we'll bring that through.

We were just uh sorting through our internal process to make that happen, but we'll have that part of the AVRE report.

Thank you so much for the note.

All right.

Um I guess we can go into the next part of the agenda.

We're gonna kind of do a quick uh deep dive for all of you guys who have been interested in the overall process of the budget committee looking into budgets.

Today we're gonna take a look at um different cities and what they do comparing it to what we do and kind of pursue that that process of doing some investigation and seeing what options we have as a city to implement to improve our process.

I'll sit here so you guys can see me while I present.

So um, this is just um as Chair Pungo mentioned, uh presentation on how other Pennsylvania cities manage the budget process.

Um, next slide, Mike.

So, first some background, just to make sure we're all on the same page, and I think that this PowerPoint is a little wonky from what you see on the screen, but um, Allentown operates under a home rule charter.

The budget authority for everybody that doesn't know is divided between the executive power of the mayor who prepares the budget and council as a legislative body to review and adopt the budget.

So on January 21st of this year, council approved a resolution which establishes guidelines for studying the city of Allentown's budget process.

So, just to summarize what that resolution said, I'll read it just to make sure we're all on the same page.

Section 802 of the charter requires submission of balanced budget and capital program under the following provisions.

So on or before 90 days prior to the ensuing fiscal year, the department head will submit a proposed budget and capital program to the mayor.

After that, on or before 75 days prior to the ensuing fiscal year, the mayor will submit to city council a balanced budget, capital program, and a message.

And that proposed balanced budget and capital program is in whatever form the mayor deems desirable unless otherwise required by council.

The city home rule charter adopted by Allentown voters originally included a December 15th budget default.

Should city council fail to adopt a veto approved budget by December 15th, the mayor's original proposed balance budget would become the official budget of the city for the next fiscal year.

So Allentown voters via a referendum in November of 2019 removed the automatic budget default process, preventing a tax increase from going into effect by default, requiring council and the administration to adopt a budget by December 31st.

Voters also approved changing the supermajority requirement from five members of council to four for any tax increase.

That referendum did not account for procedures, provisions, nor closure if the council and the administration did not adopt an annual budget by December 31st.

And we'll see what other cities do actually.

This resolution that was passed this year noted that council persons bender and Pungo would work with the budget and finance committee and council staff to conduct a targeted review and analysis of the city's budget process.

So that includes A the review and development and adoption of the city's budget, which was done at the January 28th budget and finance committee meeting by Director Patel.

B comparison of the city's budget process to other municipalities, which we're doing now, and C identifying the procedural impacts that occur when you can't reach an agreement on a budget.

And that will be presented at the March 25th budget and finance committee meeting.

That review shall also include the collection of input through surveys or other means from city council members, city administration, and employees involved in the budget process, the city controller and the mayor's office, and shall incorporate all of their feedback suggestions and recommendations.

Those surveys were completed, and that will also be reviewed at the next budget and finance committee meeting.

So that is how we got to today.

So we're gonna review how other Pennsylvania cities handle budget submission timelines, adoption deadlines, default or interim budget provisions, veto with authority, line item veto authority, which allows the mayor to veto specific appropriations within the budget and approve the rest of the budget and council roles.

And our focus is what happens when a budget is not adopted on time.

So we're gonna start with the city of Reading.

So Reading is similar to Allentown.

They're a home rule charter city, third class.

Their time frame for the budget is their department heads have to submit a draft budget to the managing director 90 days prior to the start of the fiscal year, and then the mayor submits that budget to council in October, which has to be approved by city council by December 15th.

In terms of amendment provisions, council amendments may not increase expenditures above estimated income.

And if changes exceed the mayor's budget by 5%, or if a program is added or deleted in the mayor's budget, that budget is returned to the mayor who has three workdays to respond.

If they don't reach an agreement, if council fails to adopt a budget by December 15th, they do have a default budget clause, and the mayor's original proposed budget becomes the official city budget.

In the city of Easton, they're very very similar to Reading.

They're also a home rule charter city, third class.

They have a city administrator similar to a managing director that puts together the budget and presents it to the mayor, who then in turn presents it to city council in October.

Council must adopt a budget by December 15th.

Now, with amendments in Easton, they have to be voted on by December 10th.

If they're not voted on by December 10th, they can't be considered in the final budget.

If council doesn't approve a budget by December 15th, then the mayor's proposed budget becomes the official city budget through their default budget clause.

Now, Philadelphia is a first class city, so it operates a little differently, but we still wanted to include them in the presentation just to show you what other cities do.

Their fiscal year is July to June, so their budget is introduced by the mayor April 1st.

Council reviews they can amend, but they must adopt by June 1st.

There's no explicit default clause in Philadelphia, but if council does not pass a budget, the city cannot legally expend funds.

And the charter states that the city controller may not approve spending.

Now the mayor has veto and line item veto authority and council can override with a supermajority vote.

Bethlehem is also governed a little differently.

They don't have a home rule charter.

They're governed by the optional third class city charter law.

But we wanted to include them again for comparison and their sister city here in the Lehigh Valley.

The mayor submits the budget by the last council meeting in November, and that budget must be adopted by council by December 31st.

They don't have a default budget clause, but if council does not pass a budget, the city of Bethlehem cannot legally expend funds, very similar to Philadelphia.

And mayor can veto, and that can be override by council supermajority.

Pittsburgh, second class city, they have to introduce their budget by the second Monday in November.

Council must adopt a budget by December 31st.

In terms of amendment provisions, council may increase or decrease appropriations, but they have to stay within the bottom line submitted in the mayor's budget.

Council can also amend the operating budget within five weeks after the fiscal year close.

There's no default budget in Pittsburgh, but again, similar to Philadelphia and Bethlehem, if council doesn't pass a budget, the city cannot legally expend funds, and the mayor has veto authorities.

That doesn't change.

Lancaster is a home rule charter city.

They just recently passed this, also a third class city.

Their budget was introduced, or their budget is introduced at the last regular November council meeting.

Council must adopt a budget by December 15th.

They do have a default budget in Lancaster, and if the mayor vetoes the budget, council has until December 31st to override the veto.

But interestingly enough, in Lehigh County, tax rates cannot go into effect by default.

So in Lehigh County, if the executive prevents presents a budget that has no tax rate change, and the board fails to adopt a budget by October 31st, then that plan goes into effect.

If there is a tax rate change, the board can send the budget back to the executive with the direction to change the revenue estimate or the tax rate.

At that point, the executive has to resubmit a budget within 14 days following that direction from the board.

If the board fails to adopt that budget by December 14th, then that resubmitted budget becomes effective.

So that second budget becomes effective.

So this is just a snapshot so that we could see like how all of these cities compare.

So just to recap how others man manage how other cities manage budget impasses, they could use the default budget.

So again, that's the automatic adoption of the mayor's proposal.

They can have a mandatory adoption deadline that's standard December 15th or 31st, most commonly.

So how we saw in Philadelphia, the controllers prohibited from approving funding outside of public safety.

They could have defined amendment cutoff dates, like the city of Easton, and they can explicitly define the failure scenario if they don't come to an agreement.

So while there are certainly models to refer to and best practices, there's no perfect budget process as you all know.

But National Civic League does offer the model sync charter as a resource to cities to guide their charter language and governance structures.

So we can, you know, take a look at this template from Model City Charter and possibly take a look to use this language for any charter changes if council decides to do that.

I also want to mention here that in addition to this presentation attached to the agenda, there's an updated version of the 2007 budget process review that was completed by a consultant, Goldman Goldsmith Conn.

Council found itself in an eerily similar situation in 2007.

And that was during the Roy Aslerbach administration.

So I want to read an excerpt of the conclusion of that study.

And mind you, this was in 2007.

So that was prior to the recent referendums and the changes to the charter.

So the conclusion of that study says Allentown's home rule charter establishes a budget process framework that is reasonable, appropriate, and effective.

The process assigns clear accountability between the executive and legislative branches.

It would be unwise at this time to enact significant charter changes to a process that replicates the model charter and has worked well this past year.

Like any good system, Allentown's budget process can be improved so that it works even better, emphasizing timely communications and information sharing between the legislative and executive branch and ensuring appropriate budget training, particularly for new city council members, can help strengthen the decision-making process and thus taxpayers' credibility with its elected officials.

So again, the complete study is attached to this agenda.

I think it's really interesting if you want to take a look to see what happened in 2007.

So with that being said, our next steps are again analyzing the findings of the internal survey and the employee interviews.

And then the committee chair, um councilpersons, uh uh Binder and Pungo will meet with the mayor and the finance director and city council members, and they'll provide a white paper summary of the findings and conclusions at the next budget and finance committee meeting.

And then, you know, if there is anything that council would like to pursue, then they'll seek a legal analysis.

And that's it.

Thank you so much, Genesis.

So if I could just make a quick comment, you kind of alluded to the 2007 um study, and I know it wasn't really presented on there, but I think the key difference.

So, like in 2007, they recommended keeping the default um where we stand now is that the people of Allentown voted to remove that default.

So you know, part of the purpose of this analysis is to say, okay, what mechanisms can we have to help us prevent you know not coming to an agreement, but also add some sort of guardrails because we removed one of those sorts of guardrails, but what can we do to help us, you know, make sure that there's a clear delineated you know path of decision making so that way we can say, hey, look, if this doesn't happen, this is this is what's gonna happen.

Um so that is very interesting, and thank you for including that in there.

Um are there any other comments from the diet as far as the presentation or any questions?

Yeah, um, just quick question out of curiosity, you might not know this on the spot, but um the one slide explicitly stated that the uh administrator, the managing director in some sense that they put together the budget, they presented it to the mayor, and then it becomes her or his budget.

How many of these municipalities had that type of role, a managing director type of role, and they are the ones that put it together?

And if we don't know, it's cool, but maybe because that might play a role.

Um, if you've got a managing director putting it together, it takes the politics out of it, it just it's a budget, it's it's a manager.

It's a good question.

I don't know how many cities in Pennsylvania operate with um that in place, but I will say, and you know, Mike and you know, but talk about it too, but model city charter does recommend that cities operate with a managing director.

Um that is their recommendation with this latest guidance that they've offered to cities, they do recommend that a managing director leads a city.

Oh, okay, thank you.

That's interesting.

I think the ones in study, the ones in the study that she reviewed included Easton and Brennan, and they both have managed.

They both have managing directors, yeah.

I think the titles are business managers, yeah.

They can cities and managing director.

Okay.

I just wanted to say thank you so much for putting all this together.

I know it's been we all working a lot on this one, but I know that um that you put a lot of effort into finding all this information.

So I just wanted to say thank you, and I really appreciate that.

Thank you.

It's been a pleasure working with you all.

Thank you so much again.

And and again, the resource for the model city charter part of this process is one the education of it.

So today we got to look at some of the different resources that we have.

Um we could use that, and and part of our next meeting will be reviewing the white paper, but potential decisions.

So, like, what does it look like for us to revise our budget process?

Does it is it a charter?

Is it an ordinance?

Is it standards or practices?

Which we'll we'll get into at the next meeting, but I think this kind of stuff is great to keep in mind as we look at potential framework on how we could improve the process and also respect what the people of Allentown wanted in that referendum, and but how can we, you know, also remain accountable as a city and administration.

So thank you again, Genesis.

All right.

Um next on our agenda is a discussion on our alternative revenue sources.

So I know this has been you know coming up recently, and we want to make sure we're we're doing a concerted effort to discuss what has been done and maybe what we still can look at and review.

So I know we we have something from the administration, so Director Patel, if you don't mind um, I can walk you through what has been done.

Um and I have mentioned that before as well.

Um back in 2024.

Um we I'm always and with the team, always exploring different revenue options.

What else can we do to increase their revenue for the city?

And so in 2024, um we actually had uh the procurement pro we went through the procurement process of uh um uh uh putting a bid out there.

Uh we did the um we had a three businesses that uh bid on the job.

We had a technical review and a cost review.

We brought them in for interview as well.

Um what we learned from there were three different companies that uh bid on the job, uh RSI uh first company is revenue solutions inc.

The second one was ESI, eConsultant Solutions Inc.

And the last one was P uh PEL, Pennsylvania Economic Uh League.

So these three companies bid on the job.

We uh the city had a um review committee.

So it was a member from the CED community and economic development from the mayor of the mayor's office and the two staff members from the finance team made up the team that reviewed this bids and we had the interviews with the companies to learn what how they can assist us in increasing the revenue for the city.

So what we learned from each company is that we are we have a lot more constraints from our legislations that limits us on how and what we can increase and limited sources or limited number of uh revenue sources that we can touch or increase and then we are then balancing that act of if we increase this, how does that impact the businesses coming into the city?

If we increase, for example, the property tax, how does that impact our taxpayers or our um uh you know residents who are on a fixed income and all of those things are going through our our minds when we are uh trying to uh process this in information.

So what the conclusion from all of these three companies was that um we are doing everything possible um uh from the city's perspective from the administration perspective based on what the criteria we have to work with.

Um they could help us, these companies could help us organize our data.

For example, five-year plan, they could they could help us doing do the analysis.

But what they stated was your five-year plan is is good.

It's projecting based on what what the historical knowledge is, what the predictions are in the future, what do we in the economic world, what the expectations are, all those are built in the five-year plan.

We can we can talk about it, we can help you present it.

That's not what we were looking for.

We were looking for sources of revenue coming in.

One of the thoughts was the fees revenue or you know, the entertainment fee revenue type of things, or increasing the um the rental part of it.

We are limited on from the uh business privilege tax side because of the legislation, um, limited in the NIS area because the NIS legislation.

So those were the things discussed during what else can we do?

So they can help us present it to council differently.

That's not what we were seeking.

We were seeking to increase our revenue numbers so we can keep up with the rising cost of whether it's a personnel or a rising cost of running the city.

Um we then we concluded that we would spend money to present the data in a different format.

Doesn't solve the problem that we were looking to solve.

So we did not move forward with it.

And some of the fees were 290 dollars per hour.

Uh some were going to do it for 80,000, the presentation for five-year plan.

Um we the administration did not believe that we would what we were seeking, we were receiving from from that RFP.

So that was a conclusion from not just a finance team, from the uh other departments as well, that uh we could not move forward with that.

Um the analysis after doing the analysis and the the bid process.

So we didn't move forward with that.

Thank you, Director Patel.

As far as um, I know there's been some questions up here in the dies.

I think council personal mentioned it, I guess.

Excuse me, everyone.

Uh there was an amusement device tax, so I believe um we had some of that mentioned.

I guess that was repealed back in 2021.

Um correct.

It was repealed uh, so it was there for about 20 years.

Um the revenue we were receiving.

So the I know specifically 2021 revenue was about $6,000.

And the the what that um how we the revenue was assessed was based on the unit, uh, the the entertainment it was providing.

It was a fixed um charge for per unit.

So um the work involved in um receiving or collecting that revenue was the cost was more than the revenue we're receiving, and we communicated that to council then council, and council agreed, and uh council agreed to repeal that.

So in 2021, it was repealed.

Um are there any other revenue sources that have existed that you know either similar to that one that we've repealed, or you know, we just feel like it's a missed opportunity at this point, or I think the um other um I'm sorry, it's just escaping me, but I do want to mention something else that uh previous finance director had worked on.

It was the um economic uh nexus, that's a new thinking outside of the box.

Um, and he had introduced that uh um so let me explain what that is.

Um so all of that with the COVID, our lives changed, and how we um how we um um purchase and how we uh uh you know buy things changed.

So we we went online to purchase many things, and then the those things were delivered to us, and the things that are delivered being delivered to us, for example, Amazon or Target or Walmart comes to my house.

I've also become like that.

I used to like to go to store, no longer I like that Amazon brings my shampoo to my home.

So that Amazon truck dropping of shampoo uh at my front door would have a uh a tax on business privilege tax.

So that's a new source of revenue that we we explored, then we had uh run into uh staffing issues, and it was on hold for a little bit.

Actually, uh Mike Zuma's revenue and audit manager is actively working on that currently, and we have already um sent um hundred uh letters to top uh businesses like Amazon, Walmart, Target, where people buy consumer goods um in volume, and so we see uh how it's helping us.

We do receive some revenue, but not at what we had expected.

So we are exploring that currently.

Thank you.

Um I I would I would mention this too, and I think ms the controller would remember this, that at least on three separate occasions, consultants were brought in to look at not only at revenue streams, but at organizational structures.

So you had public finance management did that, the Novak report did that in the Pennsylvania economy lake.

So not only were they looking at revenue streams, but they were looking at where can we save money with organizational structures?

That was an angle.

But those were three high-powered groups that came in here.

So this issue has blocked around here for a long time.

Thank you, Mike.

So you got to answer um your question about other taxes that may have gone by the wayside.

If you look at the finance report, you see per capita tax, but you see it as older per capita tax.

City used to get five dollars ahead, but it was one of those taxes where the city figured that it took a lot more time in aggravation to collect that five dollars, and that five dollars was worth so that's gone away, and any money that we get in is really from prior years, and it's really pretty narrow.

School district, however, still charged it, they're $15 ahead.

Um districts that are stopped collecting it because it is truly status.

But that would be that and the uh the amusement tax would be the only things that I can think of that you know would answer your question.

Yeah, thank you.

Any other thoughts?

Yes, uh, so just to follow up on the nexus tax?

Economic economic nexus.

Okay, economic nexus.

So you're saying that the corporations who are delivering are supposed to pay, and they're not?

No, no, it was something that changed during COVID time.

Yeah, and uh not that they are not paying, it's something new.

And there was a um case with Wayfair Company, yeah.

Um that um I forget what city do you remember, Mike?

South Dakota uh had um explored this first, and then the the finding was that that economic nexus is something that could generate tax, and we pay it back off that, and uh we are exploring that.

Okay, so it's not it's okay, got you.

Um I did have other questions, but I don't know if anyone else does.

Okay.

Um is the term um entertainment tax and amusement tax, are those terms synonymous, or is there uh legal like difference between them?

Because like I'm looking at Bethlehem's, they call it an amusement tax, and you take it over ten dollars, that's gonna serve more than 200 people, two dollars extra.

The uh consumer has to pay.

They don't call it entertainment tax.

Would us calling it something different potentially change our ability to implement it.

I believe the legal team can respond to that question.

But our on the tax we had was based on as I described the the devices that used to provide us amusement.

You know, you put the coin in and you are playing the games, that's that was a tax that we uh then said the it wasn't cost effective for us to go.

Oh, okay, like the ones in like the corner store.

Okay, so not like concerts.

No, no, okay.

All right.

We are limited on those, but I again I think legal team can provide better opinion on that.

Yeah, um, yeah, I mean that would be helpful to see if just by changing the the language.

Um and then the other thing that I've looked into is so Act 209, the municipal municipal planning code, uh, they allow for impact fees when there's development and it requires some sort of like infrastructural change outside.

So, like perfect example would be the state hospital.

Uh clearly couldn't charge an impact fee for what's happening on grounds at the state hospital, but if there are any um infrastructural improvements or changes that would be needed, say on Hanover to uh accommodate that that we'd be able to charge an impact fee when that developer uh applies for their uh building permit.

Have we explored that?

And there's 60 municipalities that do it.

Many of them must be third class.

Um I'm I'm not aware of that, but I may check with uh CED director to see if we have made that change.

City control if I may.

We just passed new zoning and a new saldo, which covered um I can't point specifically to impact fees, um, except to say your example of um the hospital site.

You know, before the planning commission approved those plans, the developer had committed to infrastructure improvements on Hanover Avenue to make sure the traffic flows smoothly and safely.

And I suspect uh that when the rest of that development is done, and it development will be south and to the east where it intersects with Canover Avenue again, it will also be expected and required to make those infrastructure improvements so that traffic once again flows smoothly and safely.

In some instances um a development may have an impact on a road and charging an impact fee is probably beyond our legal ability because the road is a state road, and it is pendaged that'll determine what if anything developers require to do to mitigate a circumstance or approve circumstances.

Um certainly a density um uh bonus if you build up UK um have some lower cost requirements.

So that was partially addressed, but perhaps CED can come one evening and really explain and address your questions a little bit more directly.

Yeah, I mean that that would be great.

Because I mean, and then I um I also think about like down near Bucky, like with all the development at the waterfront, that new the we we now have a whole new street.

Um and so it would it would just it would just yeah, it would be great to see um what that might look like or if it's already in the uh the the new zoning code side drive is probably paid for by the developer.

Yeah, it'd be cool to know that for sure, and it would be great also to not rely on the goodwill of a developer.

It would be great, you know, because not you know, not all developers are maybe as uh philanthropic as uh those individuals.

Um so it would be great to have maybe something on paper in case we get a nasty developer.

Um that's a great suggestion.

Um we look I I would look into that and and find out for you.

And I think to the council person and Gerlock's point, I think there's also other things, not just roads, but like you know, on a larger property where we're gonna add hundreds more homes, you know, that's more homes that we're looking after with our fire department or police department.

So I think there's there's you know some some some ground for us to maybe look with legal and see what what we can or can't do, but I think there's you know reason for it.

We're serving more residents, and I mean, naturally our city's gonna grow, so we have to account for that.

But you know, these are things that are impacted.

Um I guess there was just one question that I had specifically.

I know in the past we've gone back and forth about NIS um kind of different things, what the legislation can or can't do, but I guess to to kind of on the subject of impact fees, I guess there we do provide services within the NIS zone for different events, whether that's public safety, um public works, if we're like directing traffic, I think.

Um I'm just curious.

I I know there's a mechanism to recoup some of that.

Do we know you know how much we spend on that and you know what mechanism, what those mechanisms allow for recouping those costs?

Are we capped?

Are we recovering everything or to get a clearer picture?

We have reached out to different departments because we have public safety and um public works involved.

Um I really have that information for you.

Um, I appreciate that.

Thank you.

I think it's just kind of worth just understanding what we do and and just you know how we go about it.

Absolutely, that makes sense.

Thank you.

Any other questions?

Okay.

Okay, making sure the committee is covered.

Um couple things.

Uh one before I forget Genesis, great job.

Um, is it possible to share that with all our colleagues who are some of our colleagues aren't here?

That presentation uh regarding the budget.

I just don't want to forget about it.

Um secondly, uh I did want to make sure everyone knew I think I mentioned it, but uh a NISDA is scheduled to make a presentation to us, uh committee of the whole.

It's uh scheduled for April 22nd, which is a Wednesday.

So that would be an opportunity for any of us to um the executive director will be here, I believe some of his board members, and it's an opportunity to maybe um ask some of the questions that we've been asking to um to them.

So they'll be making a presentation, but they will also be taking questions.

So that's um scheduled for April 22nd.

Um just wanted to mention that.

Um regarding municipality economic nexus, um, that's it is very interesting.

I I've learned about it.

Um I will never qualify for it because um I don't do 100,000 of sales anywhere online um in one city.

So uh, but when we talk about the big guys, you know, the that there's an opportunity there.

And um, you know, I think um you mentioned that this is a project that has already started.

What is needed when you talk about resources, you know, talk about staffing, you talk about like what do we need to move that forward?

Because the one thing about this is I know we can't go backwards.

So every year we lose not doing this is a year you never get that money back.

What um talk about if you if you don't mind some of the challenges or some of the what we need to try and get this to the finish line.

I I believe I can answer your question.

Uh so the as Bina touched on the economic nexus threshold is kind of like a bright line test.

So um the Supreme Court, it's they were able to um set um for sales tax, it was 100,000, like you said for states, and then um certain um states could also enforce um corporate net income tax if they met that threshold.

So the business privilege tax, what we follow it's Act 511.

So there is auditing capabilities that we have access to records.

So we've sent letters, um, have had compliance.

Um what we're gonna focus on now is that auditing aspect that we have the the privilege to to audit these records.

So it's more of getting compliance and um making sure when we are reviewing these records that they're accurate, that they do if they um qualify for the economic nexus that bright line test.

Um so it's just reviewing that information and making sure that we are auditing those um those entities.

Okay, and does that include like selling platforms?

Are you including like the eBay's, the Poshmarks?

Because they're legally they're obligated to to collect this data and actually pass it on to the buyers.

So for instance, if someone in um Allentown is buying something from a seller in Wisconsin, like eBay will actually add that tax to the sale so that and then funnel it to the municipality.

Are we are we working with those platforms as well?

Are we are we working with those platforms as well or so we have to be um kind of conservative to the information we share with these tax um collection process but we are looking at um any entity that we believe would meet this nexus threshold to to make sure there is compliance because I think that is the biggest thing is to um I know we talk about new revenue streams but the biggest thing is to make sure we're getting as much compliance to our whole taxing body so I think that's a way to um increase those uh taxes is to just get compliance from from whoever does owe that so just to add to that um we are receiving um some from Amazon and fewer and share it now um um but we are haven't had a chance to review yet like the auditing part is uh whether staffing issue had come in so that's where we are concentrating now the auditing perspective on that okay I guess my question is if there is a staffing issue like I think we'd want to know about it so if there's an opportunity to obviously find find revenue but it's if the barrier is a small staffing issue like that's something we should have a conversation um so I'm just putting it out there I'm sure we all agree on that.

Yeah I just to be clear and I'm it's it's for entities that do business in the city of Allentown but don't have a presence here so they don't have employees they don't have a facility so like for let's use an example like Walmart they don't have any employees or facilities in the city of Allentown.

So they would have to comply right with with this nexus the bright line test is um there's uh 15 transactions within the city and totaling gross receipts of over 5000 dollars so the rationale behind that bright line test is um it's we're in line with the commonwealth's um corporate net income tax so for we didn't run wanna run into a scenario if people are making sales um within the state of Pennsylvania um that they would have a tax obligation with the city of Allentown if we had a smaller uh bright line threshold so um what we did the bright line test like Bina said the predecessor he set that threshold at 500,000 so um if an entity has points of sales within the city over 15 transactions and over 5000 in gross receipts then they would be liable for or they would meet that nexus threshold okay are there any last question are there any models out there are there any other cities that are maybe ahead of us and and are knocking us out of the park that we can look to or any models out there so um within the state currently I think the city of Philadelphia is the only other um city of the first class that has uh that enforces the economic nexus um san francisco also um enforces it um and I believe other in Oregon might be looking into it but those are the ones off the top of my head that I can remember.

Okay.

All right thank you.

Thank you we'll review our internal process and come back to you with it if we need any resources.

Appreciate that well I think uh and lastly I we appreciate that but also like maybe some projections like you know what do what do we anticipate is out there so that you know the right decision could be made of what resources should be allocated uh to something so we did you know any any projections you would have I think would be helpful as well thanks I did just have one question as far as the authority collecting that is that does that fall on us is there a mechanism for collecting these revenues or I know we were talking about sprucing up the auditing process so we know how much is out there but how do we go about receiving these funds?

The um business privilege taxes collected in-house um through the tax examiners in the revenue and audit bureau all right thank you so then based off of us having the latest data from any party that is you know passes that bright line test and is applicable then that would get sent over to the right department in-house here in the city and they would work on the collection process of those funds correct okay thank you anything else yeah just for clarification we set did do does someone in Allentown sit in that bright line test the three um transaction 5000 you'd said your predecessor so I just is that state federal or so the um they based that off of the case law so the Supreme Court case was uh a landmark case that defined um nexus as not only being brick and mortar within um an area so um the business privilege tax um that it was a way to um that nexus definition um was a way to um stay in line with the Act 511 taxes um and

So the Supreme Court case was uh a landmark case that defined um nexus as not only being brick and mortar within um an area.

So um the business privilege tax um that it was a way to um that nexus definition um was a way to um stay in line with the Act 511 taxes um and also um just enforce compliance for entities that do establish nexus.

I guess just for clarification, but who do who do so the definition of that that was from the Supreme Court, the three three transactions 500,000 or where what what who's who defined that?

So originally the Supreme Court um decided the way fare decision, and then um other states started enforcing economic nexus at the state level.

Um I don't have the data, I I I believe all 50 states currently if if they haven't, they're in the process of um enforcing that, but what that would apply to would be the sales tax if states do um have sales tax um or corporate net income tax.

So from that wayfare decision, states then piggybacked off of that and then applied that nexus threshold at the state level for um sales tax purposes and then corporate net income tax purposes.

Okay, thank you.

Any other last minute thoughts?

All right.

Well, thank you for for that thorough review of some of that.

I know we have a couple of like open-ended items that we'll make sure to continue the conversation on, but I think we've got a good direction to potentially find some ways to help our Allentown residents and bring in new revenue sources or being more efficient with what we can get.

Um yeah, I don't know if there's um any public comment on anything to that we've heard to date or anything anybody else would like to include.

All right.

Well, thank you everyone for coming tonight to our budget committee meeting.

And uh just a reminder our next meeting will be uh next month on the 25th, where we'll continue our series on our review of the budget process as well as our standing uh agenda items.

Thank you.

Thank you.

All right.