City's earned income tax surpasses real estate tax in 2024 budget report

In a recent meeting of the Budget and Finance Committee in Allentown, significant discussions centered around the city's revenue sources and expenditure management for the fiscal year. The meeting highlighted a notable shift in the city's financial landscape, particularly regarding the performance of the earned income tax (EIT) compared to traditional property taxes.

The committee revealed that in 2024, earned income tax revenues reached $43.3 million, surpassing the city real estate tax, which generated $39 million. This marks a significant change in the city's revenue dynamics, as property tax had historically been the largest source of income for Allentown. The shift is attributed to post-COVID economic adjustments, indicating a broader trend in local finance where earned income is becoming increasingly vital.

In addition to the EIT and property tax, other revenue streams included business privilege taxes, detransfer taxes, and various fees, contributing to a total revenue of approximately $145 million. The committee also noted that investment income added $3.1 million to the city's coffers, showcasing the importance of diversified revenue sources.

On the expenditure side, the committee reported that the adjusted budget for the general fund was $157 million, with actual expenditures coming in at $145 million, resulting in a 7% savings. Personnel costs accounted for a substantial 70% of the general fund expenditures, which included wages, pensions, and healthcare, totaling around $102 million. The committee emphasized that the city managed to spend less than budgeted in several areas, including services and materials, which contributed to the overall savings.

The meeting also provided insights into public safety funding, with data presented on police, fire, and emergency medical services expenditures over time. This information is crucial for understanding how the city allocates resources to maintain public safety amidst changing financial circumstances.

As Allentown navigates these financial shifts, the implications for future budgeting and resource allocation will be closely monitored. The committee's discussions underscore the importance of adapting to evolving economic conditions and the need for strategic financial planning to ensure the city's continued stability and growth.