Nazareth Area Municipalities to Lose $54,000 to Arena Project

Nazareth area municipalities will lose close to $54,000 this year in earned income tax money to Allentown’s controversial .

Earned income taxes to be collected yearly:

• Nazareth: $5,234
• Upper Nazareth Township: $4,379.48
  
• Lower Nazareth Township: $24,677
• Bushkill Township: $19,312

Berkheimer Associates, Allentown’s tax collector, released figures earlier this month that showed the city’s special downtown tax zone -- created to fund a $220 million hockey arena and other improvement projects -- will collect about $1.8 million from outside municipalities, according to The Morning Call.

Figures for Northampton County school districts were not included.

Beginning this year, earned income taxes -- for the state, local municipalities and school districts -- collected from within a 130-acre area in center city Allentown and along the waterfront are being diverted to pay debt service on bonds that will pay for improvements in the area. The tax revenue normally would be forwarded to the home municipalities of those who work in the district.

For the first quarter of 2012, Nazareth lost $1,308.74 in earned income tax revenue from people who live in the borough but work in Allentown. For Upper Nazareth, it was $1,094.87; Lower Nazareth, $6,169.45, and Bushkill, $4,828.03.

Several municipalities -- including , and Bushkill -- and a school district have joined a lawsuit against Allentown’s arena project, and the city is negotiating with them to settle the suit so construction can go forward. The lawsuit was initiated by Hanover Township, Northampton County.

Allentown has said it would return the earned income tax funds to the municipalities and let them share in new earned income tax collections generated by new development, according to The Morning Call. But the municipalities have rejected the offer, arguing that the tax subsidies for businesses in the NIZ will lure businesses away from them.

The news of lost earned income tax revenue comes after Upper Nazareth raised property taxes 83 percent. Supervisors cited the bleak economy, lack of a commercial tax base in the township and rapid residential growth -- followed by the bursting of the housing bubble -- as factors that forced them to raise taxes.