South Whitehall to Lose $60,000 To Arena Project

News that South Whitehall will lose about $60,000 a year in earned income tax money to Allentown’s controversial  has not quieted the township's opposition to the state law creating the zone.

Over 30 years, the loss to South Whitehall would amount to $1.8 million, said Township Manager Jon Hammer.

He said the NIZ law is "poorly written" and "needs to be changed." 

Beginning this year, earned income taxes collected from those working within a 130-acre area in Allentown are being diverted to pay debt service on bonds that will pay for the arena project and other city development. The tax revenue normally would be forwarded to the home municipalities of those who work in the city.

South Whitehall  against Allentown’s NIZ law. The city has been negotiating with the parties to settle the suit so construction can go forward.

"I don’t think most people really understand the issue," Hammer said. "The law as currently written we feel is unconstitutional. This just isn’t South Whitehall’s position, but the position of over 1400 municipalities statewide as represented by PSATS [Pennsylvania State Association of Township Supervisors]. 

The Morning Call reported that area Republican lawmakers want the law's author, state Sen. Pat Browne, R-Lehigh, to get the law changed so that the earned income tax of municipalities outside Allentown is not diverted to the city's development projects. Although the city proposed the municipalities keep the earned income tax, Hammer said the municipalities don't think the city would ultimately be able to do that because of the NIZ law.

The  also is expected to lose in earned income tax money to Allentown’s Neighborhood Improvement Zone and it is mulling its legal options.  

"How in good conscience can we divert money from children's education to pay for this?" Hammer asked.

Hammer said municipalities in the lawsuit presented an option to the city -- to shrink the NIZ to the arena block -- and they would be open to discussing the use of their earned income tax revenue to building the arena. 

"We want them to build the arena," he said. "We encourage them to build the arena." 

Although Browne told The Morning Call he still believes negotiations can settle the lawsuit, Hammer said he thinks a negotiated settlement is "a long shot."

He said the law will need to changed by either the state legislature or the courts. 

South Whitehall has for 2012 that held the line on taxes.