Williamsport City Council approved a first-reading of the 2025 budget with a tax increase of a third-of-a-mill in it.

The tax rate was tentatively set at 17.05 mills, with a final reading of the budget to take place at 7 p.m. on Thursday. Councilman Eric Beiter and Councilwoman Bonnie Katz were the two members who voted against the tax rate increase and Councilman Jon Mackey was absent.

A mill of tax generates a listed $860,957 a year in tax revenue. The tax millage proposed would generate a listed $286,986 in additional real estate tax revenue. Mayor Derek Slaughter worked on the proposed budget with his finance director and department heads and will keep looking to make cuts as requested ahead of the second reading.

This year’s budget was listed at approximately $32.5 million. Council approved a half-mill tax increase in that budget.

The new tax rate would require those with a house assessed at $100,000 to be levied $1,705 in annual city taxes, not including the school district and Lycoming County taxes.

The increase in medical insurance coverage, on average, was the main cost-driver, according to Jamie Livermore, city finance director.

“Taxpayers want good streets, safety and to be able to afford to live here,” said Katz. “There is not enough tax revenue to pay our bills,” she said, adding how there were grants that compensated and remarking how the city was “saved” by the $25.4 million in the American Rescue Plan.

“What bothers me is salaries,” Katz said, explaining how she understood that good paying wages were necessary to attract and retain quality employees, but questioned how that trend can continue as the city population decreases and brings in less tax revenue.

“The elephant in the room is that 40% of the taxable properties are not taxable,” Councilman Randy Allison said.

Despite several entities that are nonprofits such as the colleges and hospitals making payments in lieu of taxes, the amount of taxable parcels that continue to be lost is not a winning equation.

“That is not sustainable for a city of this size,” Allison said.

Katz said she knew of two people who had to move out of the city and that was primarily due to the tax rates that keep going up.

Beiter said a deficit-spending budget was not what he could support.

In discussing a proposed transfer of funds from capital projects into the general fund, Beiter said “disguised” a funding issue that must be addressed.

He said when money is drawn out of the capital projects budget, it is not likely to go back, and these projects remain unfunded.

Slaughter, who was reached the following day, said the discussion about the transfer involving capital projects to the general fund sounded more confusing than what was proposed.

He told the Sun-Gazette the situation. He said the city was down to the final $900,000 of its ARPA allocation. “The way we are going to handle that is to apply it to the capital projects budget,” he said.

Council then is debating whether the savings from that, about $633,400, should be kept in capital projects, which would give the city extra savings in the future for capital projects, or does it want to transfer that amount into the general fund and add to the bottom line?”

“We still have to fund the capital projects,” Slaughter said. He added that the city now has a “real capital projects budget … one that is funded appropriately with appropriate savings.”

Councilwoman Liz Miele said it is refreshing to finally see a capital projects budget done in this manner after there were course corrections initiated by suggestions from Tracey Rash, the former city financial consultant.

After the transfer discussion, the council was leaning towards leaving the savings in the capital projects budget.

Council President Adam Yoder said the consensus of council was appreciative to Slaughter for his work on this budget and for putting together a team of colleagues in the administration that presented it.

Over the next few days, the budget will be looked at by the finance director and mayor to see if there are any more cuts that can be made ahead of the second and final reading of the budget.

Yoder said to the administration, “We’ve asked you to find savings …and we are happy that you are.”