Home Rule can seem complicated.
But it doesn’t have to be.

Introduction

What is Home Rule?

Home Rule is a good government initiative that recognizes that citizens know their communities best, and that one-size-fits-all laws passed by legislators in Harrisburg may not always work for them. The locally drafted Home Rule Charter serves as the municipality’s “constitution.”

Why is Lancaster City looking to adopt a Home Rule Charter?

The way Pennsylvania’s small cities like Lancaster raise funds to pay for services like public safety, streets, and parks has not changed since 1965—nearly 60 years ago. At the same time, the cost to provide services to cities continues to increase.

Over time, this has led to a structural deficit, where each year it costs Lancaster City more money to provide services than it can generate from existing revenue sources. This leaves Lancaster City with two options to close the budget gap, either substantially reducing services or dramatically increasing property taxes. Neither of the options is sustainable in the long term.

Are there limits on what a Home Rule municipality can do?

Yes. A municipality that has adopted a Home Rule Charter is still bound by the United States and Pennsylvania constitutions, as well as existing federal and state laws regarding arbitration/labor relations, boundary change laws, election codes, ethics laws, sunshine laws, open records laws, vehicle codes, utility regulations, eminent domain, zoning, municipalities planning codes, tort claims, and more.

Will Home Rule let the City pass housing price regulation?

No. All Pennsylvania cities are forbidden by state law from passing legislation that would mandate general citywide controls on housing prices (also known as rent regulation/rent stabilization.)

How many other Home Rule municipalities are in Pennsylvania?

There are 82 Home Rule Charter cities, boroughs and townships in Pennsylvania, including 26 third-class cities like Lancaster.

Can the Home Rule Charter be changed in the future?

Yes. The Home Rule Charter includes a robust citizen referendum process that lets Lancaster City voters adjust the Charter by a majority vote.

Taxes

Will the Home Rule Charter raise my taxes?

No. The Home Rule Charter does not set tax rates. Taxes are set each year by elected officials (City Council and Mayor) during the regular budget development process. The Home Rule Charter would give elected officials the ability to adjust the mix of taxes that fund the services every resident relies on every day.

What taxes does the City of Lancaster collect?

The City of Lancaster only collects four (4) taxes: Property Tax, Earned Income Tax, Local Services Tax, and Real Estate Transfer Tax. Learn more about these taxes here.

Will the Home Rule Charter let the City tax anything it wants to?

No. The City is not allowed to create new taxes. Any new taxes, like sales taxes, beverage taxes, or entertainment taxes, could only be added after being explicitly allowed by the state legislature.

Will a Home Rule Charter let the City implement progressive tax rates, like those at the Federal level?

No. Progressive taxation is forbidden by the Pennsylvania constitution. All cities in Pennsylvania, whether they are Home Rule or not, must levy the same tax rate on all residents.

What safeguards does the Home Rule Charter have to prevent unnecessary tax increases?

The Home Rule Charter includes a provision that puts a 6% cap on the annual growth of total tax revenue the City of Lancaster collects. This means the total amount of money the City can collect from taxes can not grow more than 6% year over year. In some special circumstances, Council can grant special approval for an increase over 6%. However, the following year’s revenue growth will be capped at the 6% rate.

Will Home Rule address the fact that approximately one-third of city property is tax exempt (government buildings, churches, schools, hospitals, etc.)?

No. Federal law prohibits the City from taxing tax-exempt property.

Why can’t the City continue to pay for services by increasing Property Taxes?

Continuing to rely on Property Taxes to pay for government services everyone relies on will drive retirees, lower-income families, and renters from their homes as housing prices continue to increase.

Property Tax

Why is Property Tax the only tax rate the City can control?

Property Tax is the only tax that the City actually has local control over. The rest (Real Estate Transfer Tax, Local Services Tax, and Earned Income Tax) are currently frozen by state law.

How do Property Tax increases lead to higher costs for homeowners and renters?

The City legally has to provide quality of life services to its residents (such as fire protection, public safety, and street maintenance.) But most of the tools the City has to pay for these services (Real Estate Transfer Tax, Local Services Tax, and Earned Income Tax) have not kept up with inflation over the last 60 years. This has led to the City largely relying on Property Taxes to fund services. Increases in Property Taxes to pay for increased costs to deliver services directly leads to higher housing costs for both homeowners and renters.

Who do Property Tax increases impact most?

Lower- and fixed-income households, retirees, seniors, and renters. Increased Property Taxes hurt those with fixed and lower incomes, because their capacity to pay these taxes does not increase. And renters see higher rents as landlords increase their rental rates to maintain their profit margins.

Earned Income Tax

Why is the Earned Income Tax a better way to pay for government services?

The Earned Income Tax is a better way to pay for government services like public safety and street maintenance because it is directly tied to how much money you earn, not how much your home is worth. The less you earn, the less you pay; and the more you earn, the more you pay.

Who pays Earned Income Tax?

Earned Income Tax is paid to the school district and municipality where someone lives. If you live in Lancaster City, your Earned Income Tax is paid to the School District of Lancaster and the City of Lancaster. (Note: some City residents are in the Conestoga Valley or Lampeter Strasburg school district and their Earned Income Tax is paid to the City and the school district they live in.)

What is the current Earned Income Tax rate?

Currently, the Earned Income Tax rate for all Lancaster City residents is 1.1%. 0.5% is allocated to the school district, and 0.6% is allocated to the City.

What is considered Earned Income?

Earned Income is income you receive from working (the income that is reported on your W-2 and 1099 tax statements.) Other income like Social Security, Social Security Disability Insurance, pensions, investment earnings, spousal support, child support, and social assistance programs is not subject to the Earned Income Tax.

How do I know how much of my income is subject to the Earned Income Tax?

This amount can be found on your local tax return filed with the Lancaster County Tax Collection Bureau.

How would an increase in the Earned Income Tax rate impact me?

Use the calculator below to see how a slight increase in the Earned Income Tax rate would impact your unique situation.

Other Improvements in the Home Rule Charter

Does the Home Rule Charter let the Mayor or City Council sell the City-owned water system?

No. The Home Rule Charter does the opposite—it requires any sale of a City-owned utility be authorized by a vote of all registered voters in Lancaster City.

How does the Home Rule Charter expand opportunities for citizen input?

The Home Rule Charter includes expanded provisions for citizen petitions and referendums, including easier ways to petition City Council to take up legislation. It also provides a method for citizen referendum for a community-wide vote on legislation that could have a broad impact on City residents.

How does the Home Rule Charter improve the annual budgeting process?

The Home Rule Charter starts the annual budget process a month earlier than current practice, extends the time citizens have to review the proposed budget, and allows for a public question and answer process on the proposed budget.

The Home Rule Charter also expands the role of the independently elected Controller, adding additional responsibility for oversight on the budget and auditing of City finances.

What changes does the Home Rule charter make to City Council?

Not much. The Home Rule Charter keeps a 7 member Council elected at-large. In addition, Council compensation remains set by Council ordinance, and Councilors can not increase their own compensation during their elected term—any increase would take effect after the next municipal election. The Home Rule Charter does dictate that Council members can not receive other benefits, like health insurance.

Ethics Commission

How does the Home Rule Charter expand transparency in City government?

The Home Rule Charter establishes an Ethics Commission, which is charged with educating the public, City staff, and elected officials on the requirements of the state ethics code. The Commission will also investigate charges of misconduct, and enforce the ethics code.

Who will serve on the Ethics Commission?

The Ethics Commission will be made up of seven (7) city residents: 3 appointed by Council, 2 appointed by the Mayor, and 2 appointed by the Controller.

How can we be sure the Ethics Commission is independent?

Members of the Ethics Commission can not be employees of the City, elected officials, or hold any position with a political party or political organization for at least one (1) year prior to their appointment.