HARRISBURG — Residents of Pennsylvania’s debt-saddled capital city will see their earned income taxes double, a state judge ruled Monday.
The new revenue from the tax increase will be used “only to pay for the services essential to the public health, safety or welfare,” will not be split with the city’s school district and will not be used to pay off any of Harrisburg’s estimated $1.5 billion in debt, Leadbetter ordered.
The tax will be implemented immediately, after the City Council passes it, and will remain in place for one year, the judge ordered.
Maj. Gen. William Lynch, the city’s state-appointed receiver, wanted the tax increase as part of a plan to generate more revenue as part of a state-approved recovery plan for the fiscally distressed capital.
The current 1 percent earned income tax is split between city coffers and the Harrisburg School District.
The Pennsylvania Economy League, which subcontracts with the state’s Department of Community and Economic Development to monitor finances for Pennsylvania’s fiscally distressed municipalities, estimated that the 100 percent tax rate increase would generate $1.7 million in 2012.
Harrisburg is slated to end the year with a $12 million deficit.
Melissa Daniels contributed to this report.
Contact Eric Boehm at Eric@PAIndependent.com or Melissa Daniels at Melissa@PAIndependent.com.