View the City of Bethlehem 2019 Proposed Budget.
MAYOR DONCHEZ'S 2019 BUDGET ADDRESS
Good morning and thank you for joining me for the Annual Business Leaders Breakfast. I would like to take this opportunity to thank Moravian Village for hosting this event, and the businesses who sponsored this breakfast. A special thank you to the Greater Lehigh Valley Chamber of Commerce for sponsoring and organizing this breakfast. This is the 20th year the Bethlehem Chamber has brought this event to the business community.
The City of Bethlehem’s strength is a result of our community partnerships. We are strong because of our residents, our businesses, our institutions of higher learning, and our medical institutions.
To that end, I would like to thank Lehigh University, Moravian College, Northampton Community College, East Stroudsburg University, St. Luke’s University Health Network and Lehigh Valley Health Network for their continued support and investment in our community.
Before I begin, I would like to take a moment to thank my department heads, and all City employees for their hard work and dedication during the year.
In addition, I would like to thank City Council for their support on many initiatives during 2018 and a special thank you to my Financial Advisory Committee for their ideas and expertise.
As my fifth year in office comes to a close, I want to say that I am proud of the continued progress we have made, with an emphasis on streets, parks, downtowns, and improving the financial and operational stability of Bethlehem.
Although we didn’t see enough of the sun this year, it is now setting on 2018. 2019 will bring dramatic changes to Bethlehem. The property that includes the iconic Martin Tower will continue to be transformed. The Westgate Mall has been sold, and new ownership will bring a new vision.
The City will likely have a new casino operator, as Sands and Wind Creek, look to close their mega deal, once they receive final State approval. New development and grand openings on 3rd and 4th Streets and at Lehigh University, will continue to inspire the Southside. LVIP VII and Majestic Realty will continue developing old steel land and creating new jobs.
2018 brought a number of new businesses to Bethlehem and in 2019 we will see a new QVC distribution center and a new Aetna call center.
While Bethlehem moves down the path of change, my administration has worked diligently with City Council, over the past 4 years, to get Bethlehem’s financial house in order. We have streamlined operations, refinanced debt at lower rates, and leveraged our purchasing power to achieve better deals for energy, banking, and healthcare.
The result has been revenues meeting expenses and a much improved balance sheet. The 2017 audit, confirmed additional growth in our general fund, and as 2018 nears the final month, that positive trend is continuing.
The results have been noticed and validated through significant credit rating upgrades. Today Bethlehem holds an A+ bond rating with S&P.
While the initiatives of the past several years have put us on much firmer ground, challenges still remain in the world of municipal finance, the largest being pensions. In 2012, the City was successful in aligning pensions for new hires to the minimum benefit required by state law, and we hope to see some relief from that adjustment in coming years.
However, this summer, when our bi-annual actuarial pension study was completed, it was confirmed that Bethlehem’s pension payments will increase by $2.25 million next year.
Pension expenses will rise to $12.6 million in 2019, which represents 16% of our overall General Fund budget.
That news, combined with increases in two other large, non-discretionary expenses (debt service and labor contracts) created an immediate $3 million projected deficit for 2019.
My administration has worked hard to develop a plan to reduce this deficit, while preserving all the services and programs we need to provide to the taxpayers of Bethlehem.
With 85% of our proposed budget dedicated to personnel and debt service, we focused intensely on discretionary spending (materials, supplies, outside services, equipment), then challenged department heads to a zero-based budget, using 2017 actuals as the baseline.
This effort was ultimately successful and I would like to thank my staff for their cooperation and commitment in reducing expenses. By meeting this challenge, we were able to cut over $1.25 million from the initial deficit.
Changes in operations cut expenses by an additional $750,000, as the City’s headcount will be reduced by 14 next year. (None from public safety.)
From 670 in 2010, the City’s workforce will drop to 590 during 2019, which will be the lowest in decades. In order to close the remaining gap and balance the budget, I am proposing a 3.8% tax increase for 2019. For a home assessed at $50,000, that would equate to $34 per year.
The budgeted General Fund Revenue for 2019 is $78 million. Real Estate tax remains the largest revenue component at 37%. Federal, state, and county grants account for 10%.
The General Fund Expenses are set at $78 million to balance the budget for 2019. Note that personnel expense is, by far, the largest percentage of our budget at 75%. The Police Department is the largest in terms of employees and dollars, at 158 and $24 million, respectively.
As a group, our public safety departments (Police, Fire, and EMS) will cost over $42 million to fund in 2019.
By making sustainable adjustments to our income statement, the City will maintain a strong balance sheet, maintain our A+ credit rating, and will be able to invest $24 million into many much needed, long deferred, capital projects and infrastructure improvements throughout Bethlehem.
Road improvements have been at the top of many people’s list for some time. Historically we have spent $600,000-$800,000 on road work each year. That’s not enough! For 2019 we are dedicating $2 million to our paving budget, a significant commitment, and we will begin catching up on street paving throughout the city.
Public Works is the department responsible for high profile operations, such as street paving, leaf collections, and snow removal, and Mike Alkhal does a tremendous job leading that department. He oversees 99 employees, a $10 million operating budget, as well as the bulk of our $24 million capital budget.
The responsibilities of engineering, streets, mechanical, electrical, traffic, facilities and grounds all fall to Mr. Alkhal. His experience, performance, and reputation, gives me great confidence, that this aggressive plan to upgrade Bethlehem’s aged infrastructure will be a success.
Bethlehem’s park-system is widely diversified. We have 35 parks nestled within our neighborhoods, the Rose Garden, Sand Island, Monocacy and Saucon Park, tennis courts, basketball courts, football, baseball and soccer fields, the skateplaza, 4 pools, an ice rink, and 12 miles of trails. Our elaborate park system, truly enhances the quality of life for our residents, and we are committed to improving conditions, and increasing recreational opportunities, both active and passive.
The City partners with many area agencies to provide programming, that reaches residents of a variety of ages and abilities. With federal, state, and county grants supporting our efforts, my administration will invest over $7 million into our park system in 2019.
Memorial Pool is a tremendous recreational resource centrally located in Bethlehem. In 2019/2020, it will be undergoing a major renovation. With input from a series of public meetings and guidance from industry experts, we developed an exciting, creative, multi-functional design that will serve as our destination pool for years to come. The existing bathhouse structure will remain to save on costs, but will receive major electrical, plumbing, and roofing upgrades.
I would like to extend a special thank you to my friend, Senator Lisa Boscola, for her efforts in securing over $1.5 million in state grants for this project.
Since opening in 1957, Memorial Pool has offered refreshing recreation to countless patrons over the past 61 years, and will be ready for the 2020 season.
Across Illick’s Mill Road, our new General Manager Larry Kelchner, will be working with our long-term Superintendent Tom Wilchak, on $1.75 million of projects at the Bethlehem Municipal Golf Course. The Bethlehem Municipal Golf Course is the most played course in the Lehigh Valley. It opened in 1956, the year before Memorial Pool, and has the same issues as the pool. It is a popular and beloved destination, that needs re-investment, so it can continue to be a community resource for years to come.
Beginning this offseason, targeted trees will be removed, sand traps will be restored, new cart paths will be installed, a new pavilion will replace the tent behind the 18th hole, parking lots will be re-paved and bathrooms will be updated. New booster pumps and irrigation system will give Mr. Wilchak a tremendous advantage in maintaining the course’s conditions. It should be noted that all the projects at the course, will be funded with golf course dollars, not tax dollars. As an enterprise fund, the course is responsible for and covers all expenses associated with the complex.
On that note I would like to thank Todd Donnelly for extending the lease to operate his Clubhouse Grille at the course for another 7 years, and to SEIU for agreeing to labor terms that will allow us to make the necessary changes at the course so it can be successful over the long term.
My administration takes public safety very seriously and spends more money on public safety than any other area. From 2000-2008, the City did not purchase any fire trucks, and as a result we have an aged fleet. In order to bring our fleet back in line with national standards, we are proposing replacing 2 engines in 2019. With public safety a highest priority, we will also invest in a new EMS vehicle, body cameras for police, and security upgrades for City Hall.
Per state mandate, Bethlehem and Allentown are required to consolidate their 9-1-1 centers with Northampton and Lehigh County, respectively, by July 1, 2019.
Our transition with Northampton County is a complex mission filled with many challenges, but I am happy to report that it is moving ahead on schedule, with the cooperation and professionalism of our dedicated staffs.
I want to thank Northampton County Executive Lamont McClure for his support and assistance in this effort. The transition will be completed in a few short months, between March and June of next year, and Northampton County’s 911 will then provide dispatch service to the City of Bethlehem.
Once the transition is complete, my administration will launch a new public information center for Bethlehem, with its own app, to provide information and assist our residents and visitors, with issues or questions they may have. More information will be provided when this project is set to launch.
Technology is the largest tool that has allowed us to do more with less. From hand-held devices, to massive leaf-collection vehicles that cut manpower needs in half, we continue to evaluate and update our internal capabilities.
In 2019, we hope to add a snow blower to our snow removal operations, which would be much more effective in the downtowns and tight streets, especially during heavy storms.
Inspectors and technicians in the field are being equipped with tablets and smart phones to improve the accuracy and efficiency of their efforts.
While many of the services the City provides require boots on the ground to complete, we are always looking for ways to use and apply technology to better serve the residents of Bethlehem.
In 2019, we will improve how we bring information to the public. Our website will offer common calendars that list City events, more online forms for citizens to access, and contain pages that can be easily updated internally by each of our departments.
This will allow our departments to remain flexible and responsive to the changing environment in which they operate. My administration will continue working with OpenGov to provide a portal into our financial software, which will increase the transparency of our financial reporting to the community.
In addition, this winter our website will contain a link that will enable the public to monitor the progress of our snow operations in real time (what streets have been brined, salted, plowed, etc.)
As our vibrant downtowns continue to grow, we want to provide the necessary support to the many residential neighborhoods that make up the fabric of Bethlehem. Our Housing Bureau works hard to ensure properties are kept up and maintained. Although we have worked to control the quality of rental housing, it has historically been monitored on a complaint-driven basis.
A comprehensive study presented to City Council last summer contained a very important recommendation; to move from the complaint-driven basis to a strategic, data-driven inspection schedule to ensure consistent, timely inspections, and a higher-quality housing stock for rental properties across Bethlehem. Alicia Karner and her department have developed an implementation plan that we will present to City Council for their consideration in early 2019.
I look forward to introducing this quality of life initiative, completing the consolidation of 9-1-1 to Northampton County, upgrading our fleet of public safety vehicles, beginning new and completing existing construction projects, paving more miles of road, and all of our plans for 2019. It will be another exciting year as Bethlehem continues to move forward.