Washington council votes to repeal distressed pension tax
The final step has been taken by City Council to eliminate the Act 205 distressed pension tax in the city of Washington.
Council voted 4-0 Thursday to approve an ordinance to repeal the tax to defray costs to the city’s pension plans. Councilman Joe Pintola was not in attendance.
Keeping the tax in place would have added about $300,000 to the city’s contribution this year. Combining this action with a move to refinance the pension bond debt taken earlier this year will save the city about $500,000 in pension payments this year.
Mayor JoJo Burgess was appreciative of the efforts of Councilman Ken Westcott, who chairs the finance department, and those who worked with him on repealing the tax and saving the city money.
“It’s also a good move to have us out of that situation of a distressed city to even have that tax,” he said.
Act 205, the Distressed Municipal Pension Recovery Tax Act, was signed into law in 1984 and allows municipalities to increase their earned income tax rates to fund their municipal pension liabilities. Faced with an underfunded pension fund, the city initiated the tax in 2009 at a 0.63% contribution of a city employee’s salary.
In both 2018 and 2019, council voted to reduce the tax, with it eventually being decreased to 0.2%.
Council also approved the 2025 meeting schedule, which is similar to the 2024 schedule.
In most months, the agenda meeting will be held the Monday before the first Thursday of the month, with the voting meeting to follow on that Thursday. The exceptions are January, July and September.
All meetings will start at 6 p.m.