With Harrisburg city government facing more than $13 million in red ink, a Commonwealth Court judge on Monday ordered city council to double the city's earned income tax, starting in September.
Judge Bonnie Brigance Leadbetter granted a request by the city's state-appointed financial receiver, William Lynch, to temporarily raise the income tax rate to 2 percent, up from the current 1 percent. The increase will only be in effect for one year, but Mr. Lynch could seek to extend it.
For a full 12 months, the higher income tax would generate an additional $6 million for the financial distressed city, said City Controller Dan Miller.
He also said the city is taking in less revenue than it is spending and the year will end Dec. 31 with a $13.6 million deficit, unless bond payments are skipped and bills from vendors aren't paid. City council has so far refused to increase the income tax, as Mr. Lynch has called for as part of plan to restore fiscal balance.
Council said the state should allow the city to create a "commuter income tax" on the many suburbanites who work at the Capitol, which would raise $16 million, Mr. Miller said.state