Lebanon City Council learned at last night’s monthly meeting that the city and the Internal Revenue Service have come to an agreement that resolves the city’s failure since 1985 to withhold Medicare tax from police officers’ paychecks.

An IRS audit in August discovered that the city had not been making the required 1.45% deductions since 1985, when a change in the tax law required Medicare payroll deductions to be separated from Social Security withholding.

Read More: Lebanon learns it hasn’t withheld cops’ Medicare tax since 1985

Medicare withholding has since been required for all officers hired on or after April 1, 1986. That covers all but one of the city’s current police officers, Mayor Sherry Capello told council.

Mayors, council members, and city auditors since 1985 had not uncovered the error.

The city began withholding Medicare for officers in September, after the audit revealed the problem.

Under the agreement, the city will pay $238,313.89 to resolve the error. The IRS will not charge penalties or interest. Capello said the payment will come from American Rescue Plan funds received by the city.

Downtown pedestrian alley to become “urban greenspace”

In other business, council passed a resolution authorizing city administrators to apply to the Pennsylvania Department of Conservation and Natural Resources for a grant to improve Liberty Street, a pedestrian alley that crosses Cumberland Street between 7th and 8th streets.

Capello says the grant money will be used to create an “urban greenspace” to be known as Liberty Trail Park. She estimated the cost, not including stormwater work, to be about to $500,000.

Liberty Trail Park will run from from Spring Street south to Walton Street.

Orange line shows footprint of proposed Liberty Trail Park. (OpenStreetMap.org)

Liberty Street on both sides of Cumberland was closed to vehicular traffic sometime in the 1960s. The newly designated pedestrian walkway quickly became known for drug use and other questionable activities, earning it the nickname “Acid Alley.”

Excerpt from Aug. 30, 1971, Lebanon Daily News article. (newspapers.com)

Capello hopes to have the project completed by the spring of 2024.

State to reimburse city for 9th Street repaving costs

Council also passed a resolution authorizing the mayor to sign a reimbursement agreement with PennDOT for the upcoming repaving of 9th Street/Quentin Road/Pennsylvania Route 72 North, a major northbound artery through the city.

The city is required to pay contractors directly, and PennDOT will reimburse it for up to $2,130,759, according to the mayor.

The 9th Street repaving is the third phase of a years-long repaving program that has seen two other major arteries, Walnut Street (U.S. Route 422 East) and 10th Street (state Route 72 South) resurfaced in the last two years. The fourth and final phase, Cumberland Street (U.S. Route 422 West), is scheduled for next summer.

Council to hold budget hearings in November

City Council will hold several special meetings at City Hall to prepare the 2023 budget. All are open to the public:

  • Thursday, Nov. 10 at 4:45 p.m. – budget hearing #1
  • Tuesday, Nov. 15 at 4:45 p.m. – budget hearing #2
  • Thursday, Nov. 17 at 4:45 p.m. – special council meeting to introduce 2023 budget ordinance
  • Tuesday, Nov 22 at 4:45 p.m. – budget hearing regarding Community Development Block Grant program.

Other business before City Council

  • As of Sept. 30, with the fiscal year 75% complete, Capello reported that city revenue and expenditures were at 96% and 65%, respectively, of budget projections.
  • At council’s Oct. 20 pre-council planning meeting, Capello said that the city is working with PAWS to resolve complaints of feral cats in the area of Reber Street and Colebrook Road. PAWS reported that the feral colony has shrunk to 10 cats, all neutered.

Next City Council meetings

City Council’s next pre-council planning meeting will be on Tuesday, Nov. 22, at 4:45 p.m. The next regular monthly council meeting will be on Monday, Nov. 28, at 6:30 p.m.

Both meetings are open to the public and will be held in the City Hall multi-purpose room, 735 Cumberland St., first floor, Lebanon.

Meetings are also streamed live on YouTube here.


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