Downtown Sharon

Busy East State Street in downtown Sharon.

Sharon council passed a 2007 budget Thursday that calls for spending $67,500 more than the one proposed in November and cuts 3.5 city jobs, including a firefighter.

Real estate taxes won’t go up to support the $7.6 million budget, leaving the tax rate at 39.5 mills — the highest municipal property tax in the county.

Mayor Bob Lucas said the budget went up because the city auditors pointed out he underestimated projected revenues from earned income taxes and the emergency management services fees when he prepared the spending plan.

City council did cut about $185,000 from the mayor’s original proposal, Council President Fred Hoffman said, and the resulting $232,000 surplus will be used to cover outstanding 2006 bills.

To balance the 2007 budget, $1.075 million will be borrowed from the wage tax fund, Lucas said. It’s a “drastic improvement” over last year, Hoffman said, when more than $2 million was transferred from wage taxes to the general fund.

About $550,000 of the wage tax money belongs to the city, auditor Frank Nagy of Black, Bashor and Porsch, Sharon, said at a meeting last week. The city will have to repay the remaining $525,000.

Nagy said the wage tax account would have about $1.475 million at the end of the year before the city tapped it to balance the budget.

Despite the borrowing, city officials aren’t ready to apply for financially distressed status under Act 47, the state program to help municipalities avoid bankruptcy by allowing them to collect higher wage taxes and giving them preferential treatment for state financial help.

Hoffman said council could have taken “the easy way out” and asked the state to determine whether the city qualifies for Act 47, but council decided to wait until they talk with auditors and Phil Scrimenti of the state Department of Community and Economic Development.

Council member Victor Heutsche, who seconded a motion by councilman Darin Flower on Thursday to proceed with an Act 47 inquiry that was later withdrawn, said Scrimenti raised concerns that Sharon may not actually qualify for Act 47.

Scrimenti, Heutsche said, had previously advised council regarding the Early Intervention Program. Through the state program, consultants evaluated the city’s finances and issued a report and recommendations. Those included cutting costs and tightening accounting procedures.

“With all this confusion over where we are, I think we need to let the dust settle … and hopefully by the end of January we’ll have a grip on it,” Heutsche said after the meeting.

If Scrimenti and the auditors think the city will qualify, Flower said after the meeting that he will make the motion to apply for Act 47 again.

Recommended for you