Lancaster overcomes deficit, cuts taxes

Since taking office in 1997, Mayor Charlie Smithgall has been there daily, signing all the purchase orders and "watching every penny that goes through the city government."

As the chief executive of a city with a strong-mayor form of government, Mr. Smithgall takes on most of the responsibility for the city's financial workings. He also enforces all ordinances passed by council and supervises the work of all city departments.

Lancaster is a third-class city operating under a mayor-council form of government, one of two alternative forms allowed under the state's Optional Third Class City Charter Law.

In addition to the mayor, who is elected to a four-year term, Lancaster has a seven-member council, elected at-large for overlapping four-year terms. The elected city treasurer and controller also serve four-year terms.

Mr. Smithgall said Lancaster has enjoyed surpluses each of the last three years, but he's keeping his fingers crossed that rising fuel and health-care costs don't torpedo the budget.

Politicians, reporters and residents alike will say city government is working -- and working quite well. The city was named an All-America City in 2000, an annual honor for civic excellence granted to 10 cities across the country.

But the picture in the Red Rose City hasn't always been rosy. Lancaster has endured some tough times.

In 1995, the city faced a $1.9 million deficit that most observers blamed on city officials mishandling municipal revenues and a mayor who didn't closely monitor what was happening.

"She just trusted people to do their jobs," Bernie Harris, city hall reporter for The Lancaster Intelligencer, said of the previous mayor. "She didn't pay close enough attention. That was a mistake."

Once the problems became evident, the former mayor had to take drastic steps: cutbacks in the fire and street departments, including closing one of the city's four firehouses; instituting a hiring freeze, and devaluing the city's bond rating.

City council tried unsuccessfully to lay off police officers but was stymied by a no-layoff clause in the police contract, Mr. Smithgall said. The clause, he noted, has since been eliminated.

"They tried to save money wherever possible," Mr. Harris said. "They cut everything to the bare bones."

The city also got out of the garbage-hauling business, he said.

"On Monday mornings, the streets are full of garbage trucks," he said. "But the people are getting what they want -- they're getting the trash taken away."

The citizens voted in a new mayor in 1996.

Now, members of Lancaster City Council's three-man finance committee meet monthly to examine the budget. By the 10th of each month, they and the mayor have the previous month's financial report in hand for review.

The city's chief financial officer scolds and nags when a department spends a nickel over budget, Mr. Smithgall said.

Careful fiscal management resulted in a renewed city. By 1998, the city had hired back all of its laid-off city workers. In 1999, council raised taxes 1 mill and hired 25 new police officers for increased neighborhood coverage.

"It costs the average taxpayer about $60," Mr. Smithgall said of the tax increase. "The cops are on bikes or walk -- we have one on a horse -- all in defined neighborhoods. The neighborhood police are problem-solvers. They provide a local contact for the people."

In 1999, city residents also enjoyed a 17 percent cut in the occupational privilege tax.

Part of the recovery included a partnership among civic organizations like the Urban League, Neighborhood Services, the city's Community Action Program and the Spanish-American Civic Association that serves the city's large Hispanic population.

"They got together and decided who could solve which problem best," Mr. Smithgall said.

Some credit also goes to the Lancaster Campaign, a joint effort among elected officials, businesses and civic leaders to bolster the city's downtown area.

With the help of a $90,000 economic action development grant, they were able to create an action plan, then develop their ideas. As a result of their civic planning, the downtown is going through a kind of renaissance.

To start with, the city set up tax incremental financing zones, or TIFs. Under the system, a business takes over buildings in town for renovation. For 10 years, the business pays the base tax on the property and 40 percent of the assessed taxes on improvements. After 10 years, the business again pays the full tax amount, said Matt Parido, administrative assistant to the mayor.

"They don't lose the tax revenue entirely by leaving the buildings unused or insisting the new owner pay the full tax load," he said.

The town fathers point with pride to Fulton Bank in downtown Lancaster, which has just completed a $22 million banking center, and now they are working on a convention center with the help of $15 million from the state.

"We have some problems. Every city does. But these are small," Mr. Harris said. "I guess the best proof is, if you ask me about the people who show up to city council meetings to voice concerns, I'd have a hard time coming up with names. There's no regular crowd of complainers. Mostly around here, if people have a problem, they call city hall, and somebody there takes care of it."

THURSDAY: An in-depth look at the government of Johnstown.

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