Newtown Township, Newtown Borough Supporting Sterling Tax Amendment

NEWTOWN, PA — Newtown Borough and Newtown Township officials took action this week in support of a legislative move in Harrisburg to amend the Sterling Act and bring millions of dollars back to the suburbs.

On Tuesday borough council voted unanimously to pass a resolution supporting the Commuter Tax Fairness Act. And on Wednesday, the Newtown Township Supervisors voted to direct its solicitor to draft a similar resolution supporting the measure.

"This is a widely embraced step in the right direction to return tax revenue to the municipalities where folks who work in Philadelphia live," said Newtown Township Solicitor David Sander. "All the municipalities have been pushing for this. It has now been passed by the state senate. Now it's going to the State House. This resolution would urge our elected officials to vote for it and put it through."

The legislation, introduced by Bucks County State Senator Frank Farry and passed by the state senate last week, would amend the Sterling Act by requiring the City of Philadelphia to return up to one percent of the non-resident Philadelphia Wage Tax to the municipality where the employee lives.

The change would not impact the amount of taxes shelled out by workers, but it would redirect one percent of the 3.44 percent Philadelphia wage tax back to their home municipality if their home municipality has an earned income tax in place.

“As a formal municipal official, I know how difficult the financial challenges are for local governments and first responders. Because of Philadelphia’s City Wage Tax, millions of dollars are diverted from the municipalities where our residents live —resulting in higher taxes for basic services like fire, police, and emergency medical services,” said Farry, who represents 14 suburban municipalities in the 6th Senate District.

Enacted in 1932 to assist the city during the Great Depression, lawmakers said the Sterling Act made sense because the counties surrounding the city consisted mainly of farmland with few government services and the residents in the adjacent counties visited the city on a regular basis to shop, dine and avail themselves of businesses and services not available in the adjacent counties.

Since then, the suburban landscape surrounding the city has changed dramatically.

"As times have changed, the needs and costs to deliver governmental services have changed during the almost century since the Sterling Act was first adopted," said Bensalem Township Solicitor Joseph Pizzo during a March public hearing on the legislation. "Now, more than ever is the time for the legislature to consider and adopt changes to the Sterling Act so as to alleviate, if not eliminate, its negative impacts on the suburban communities surrounding the City of Philadelphia.”

Northampton Township Manager Robert Pellegrino said the money is needed in his township and others in Bucks County to foot the bill for increasing costs for emergency services.

“Many suburban Philadelphia communities are also dealing with a lack of volunteer firefighters and are transitioning to full-time paid fire services that will require a significant financial investment in personnel and equipment,” he said.

During the March public hearing, Senator Farry revealed that Bucks County municipalities are shortchanged close to $10 million annually as a result of the act. That included Bensalem Township at $2.5 million, Northampton Township at $1.1 million, and Middletown Township at $685,000 annually.

If the legislation is approved, Newtown Township stands to recoup $363,000 a year in lost revenue to the City of Philadelphia while Newtown Borough would realize an additional $26,374 a year. In Newtown Township, 763 residents pay the tax to the city at the non-resident rate of 3.448 percent while in Newtown Borough 59 residents pay the city wage tax.