Bethlehem reviews 2026 budget; administration highlights real‑estate, EIT growth, pensions and ARPA strategy

City of Bethlehem officials presented the second public hearing on the proposed 2026 budget, focusing on revenue projections, pension and medical costs, grants and the city’s plan to use reserves and American Rescue Plan Act (ARPA) dollars to limit new borrowing.

Business Administrator Eric Evans told council the city’s combined funds total roughly $244 million and that the largest reliable revenue source remains real‑estate taxes, reported at $35.5 million for the year. Evans said earned‑income tax (EIT) has been a strong driver recently — the administration projects roughly $12.5 million from EIT next year — and the budget includes conservative growth assumptions after several years of above‑average receipts.

“Real estate is still the bulk of it,” Evans said while walking council through the revenue pie and grant tables. He noted grants total about $23 million and flagged one‑time items — including lost‑revenue reimbursements and escrowed transfers, such as the 27th‑pay reserve — that affect year‑to‑year comparisons.

The controller’s office, represented by George Yosso, reiterated the city’s emphasis on strengthening internal controls and increasing electronic payment options. Yosso also confirmed actuarial and payroll timing shaped certain entries in the proposed book.

On obligations, officials said pensions and medical costs remain the largest recurring pressures. Evans and the mayor explained pension MMOs (minimum municipal obligations) follow actuarial cycles; recent strong market performance will reduce pressure on future MMOs if returns hold, while medical costs are self‑insured and closely managed.

“We keep our promises,” a council member said during discussion about pension obligations, thanking staff for sustaining payments that support firefighters, police and other retirees.

Council asked for more detail on several line items: the administration confirmed the lost‑revenue reimbursement used in recent budgets will decline and said the community recovery, homeless initiative and affordable‑housing accounts are carryovers that will be spent over multiple years. Evans said the administration will present the planned uses for those ARPA‑related funds at an upcoming meeting.

Councilmembers also sought clearer accounting of escrow transfers and asked staff to accelerate reconciliation timing so transfers and reconciliations are available earlier in the calendar year. Finance chair and administration staff discussed using a September 30 snapshot to set many budget figures and noted some reconciliations are inevitably finalized after year‑end.

On debt and capital, Evans said the city plans to use about $22 million of reserves to fund 2026 capital needs, avoiding a bond issuance this year. Officials signaled they will reevaluate refinancing and restructuring options in 2026 if interest rates fall, and explained that ARPA dollars were intentionally used earlier in the term to avoid additional long‑term borrowing for capital equipment and infrastructure.

The council did not take votes during the hearing. The administration will return with more detailed staff memos and the finance committee will continue review at the next scheduled session. The third budget meeting is set for Thursday, November 20 at 6 p.m.; final reading and enactment of the ordinance is scheduled for Tuesday, December 16.