Middletown Passes 2014 Budget with Earned Income Tax

After three weeks of strong pushback from township residents, the Middletown Board of Supervisors voted 3-2 in favor of a 2014 budget that includes the creation of a one percent earned income tax and a two mill real estate tax reduction that will cover a $4 million deficit in the general fund.

For 90 minutes before the votes were cast, residents registered their anger at the new levy, which for many represented an increase of more than 100 percent in local taxes. For example, the average homeowner living in Snowball Gate pays $462 in township property taxes. If that homeowner earns $40,000 or more, the earned income tax will cost an additional $400-plus.

Many of the residents pleaded with the board to cover the shortfall another way, either by raising property taxes 7 mills or dipping into the Middletown's $40 million investment fund, a reserve fund established by the sale of the township's water and sewer operations in 2002.

Board President Pat Mallon pushed back on those requests, saying that the earned income tax is the most human to spread the cost. An increased millage would create a hardship for senior citizens and residents on fixed incomes, and taking money out of the investment fund would create a slippery slope of using the funds to cover future deficits.

“I would rather my legacy be the supervisor that passed an earned income tax than a supervisor that let Middletown township go bankrupt," said Mallon. "And that’s what I believe would have occurred.”

Outgoing boardmember and lone Democrat Robert McMonagle and Pat Gallagher both offered possible solutions, but neither offers were seconded. McMonagle proposed a four percent spending reduction in each department's operations budget, plus a reduced .6 percent EIT, while Gallagher suggested canceling the 2 mill property tax reduction and using $2 million, or approximately five percent, of the investment fund to make up the difference.

Following the vote, many of the gathered residents left the meeting room in palpable anger, many shouting criticisms at the supervisors. The general feeling amongst the public is that not enough time had been given to work out a different solution. According to township manager Stephanie Teoli Kuhls, the proposal for an EIT was presented during a budget workshop on Nov. 11.

The news did not hit the residents until after the Nov. 25 public presentation of the proposed budget, setting off a groundswell of protests for the next three weeks.

Many questioned the timing of the EIT's introduction days after the general election. Weeks before Republican incumbent George Leonhauser and his running mate, William Oettinger were elected to the board, mailings sent to residents touted a combined seven years of no tax increases for Middletown and the Neshaminy School District. Residents said this misled them to believe that this trend would continue with an all-Republican board.

"This is so disrespectful to the working class in Middletown," said Larry Pastor during public comment. "The people who can least afford this tax are going to be affected the most."