Parkland to Lose $200,000 to Arena Project

After learning would lose about $200,000 this year in earned income tax money to Allentown’s , a school board member says it’s time for the district to talk about possible legal remedies.

At an Education Committee meeting Tuesday morning, Parkland board vice president Robert Cohen said the revenue loss to the NIZ was worse than he expected and he’d favor holding an executive session to discuss “our legal options.”

“I just feel like I’ve been mugged,” Cohen said. “We’re struggling here and somebody just picked our pocket.”

Board President Jayne Bartlett agreed.

Berkheimer Associates, Allentown’s tax collector, released figures earlier this month that showed the city’s special downtown tax zone -- created to fund the new hockey arena and other improvement projects -- will collect about $1.8 million from outside municipalities, according to The Morning Call.

For the first quarter of this year, Parkland lost about $48,663 in earned income tax revenue from people who live in its municipalities -- South Whitehall, Upper Macungie and North Whitehall  -- but work in Allentown. The municipal governments also lost money to the NIZ. For South Whitehall, it was $15,270, Upper Macungie, $21,066 and North Whitehall, $12,324.

Several municipalities and a school district against Allentown’s arena project and the city is negotiating with them to settle the suit so construction can go forward. Allentown has said it would return the earned income tax funds to the municipalities and let them share in new earned income tax collections generated by new development, according to The Morning Call. But the municipalities have rejected the offer, arguing that the tax subsidies for businesses in the NIZ will lure businesses away from them. 

John Vignone, Parkland director of business administration, said it’s likely that the amount the district loses to the NIZ will continue to increase as Allentown’s downtown attracts more businesses.

Superintendent Richard Sniscak said the revenue loss could grow to $1 million in 10 years. Sniscak said an executive session to discuss Parkland's legal options could be scheduled for a future board meeting.

“I believe the arena project, if it takes off, that all the municipalities will benefit from a stronger economic downtown Allentown,” Sniscak said. “On the other hand we can’t afford to be losing this type of revenue or more on an annual basis.” 

The news of lost earned income tax revenue comes as Parkland by 3.67 percent, cut 60 staff positions and take $3.3 million from its fund balance to balance its 2012-2013 budget.