Palmer, Forks Officials Happy Earned Income Tax Issue Resolved

The issue over earned income taxes heading to the Allentown hockey arena development zone, a thorn for municipalities like Palmer and Forks townships, has been resolved.

State Rep. Joe Emrick, who represents Forks, stated in a recent legislative posting, that the issue was fixed with the new budget.

"We had to take care of the NIZ [neighborhood improvement zone]," Emrick said. "It was brought to our attention about earned income taxes being taken out. We fixed that with this budget. The Lehigh Valley legislative team worked very hard to make sure that current taxes were returned and that no future EITs will be taken. It was critical."

Officials in Palmer and Forks townships said Monday they were happy to hear the news.

"The whole reason was because of the earned income taxes," Palmer Township Supervisors Chairman Dave Colver said. "If that goes away, there's no reason to be involved as far as municipalities if they don't mess with taking our EIT taxes."

Colver said the township hasn't been notified of anything official as of yet.

The voted a few months back to join two other municipalities in a lawsuit against earned income taxes going to Allentown's .

Palmer officials had expressed frustration with the city of Allentown and the state Department of Revenue after inquiring how much of a tax impact Palmer Township might face. Both of those requests failed to provide the information.

Bethlehem Township and Hanover Township had filed a lawsuit challenging a special state law allowing Allentown to retain earned income taxes of people who work within the city's Neighborhood Improvement Zone.

While decided not to join the lawsuit, officials Monday said they were pleased with the issue being resolved.

"Personally, I am very pleased that a compromise was obtained," Forks Supervisors Chairman Erik Chuss said. "The premise for using EIT from the suburban communities to fund the Allentown arena was seriously flawed and we are glad to hear that the situation was rectified. There were other municipalities with much more at stake in this than Forks Township and we are grateful they pushed the issue as hard as they did. It is good to know that the Allentown arena project is back on and we look forward to the opening in 2013."

Forks Supervisor David Billings agreed.

"I am very glad the state decided to change the law to prohibit Allentown from taking EIT from other municipalities for the hockey arena," Billings said. "With that said, it is amazing the original law giving Allentown a special deal at the expense of other municipalities and school districts was ever passed."

The zone was created to help Allentown build a hockey arena and redevelop other parts of its downtown and waterfront with an estimated $550,000 in earned income taxes coming from surrounding municipalities and school districts.

Under ordinary circumstances, earned income taxes paid in the municipality where people work are forwarded to their home municipality, where they are typically shared between the local government and school district.