Scranton City Council unanimously introduced Mayor Paige Gebhardt Cognetti’s proposed $115.5 million city budget for 2026 that would not raise taxes.

It also would end the city’s split property tax rates of one rate for land and the other for improvements that date to 1913. Instead, the city would have only one property tax rate, as do nearly all other municipalities in the state.

Though city finances have stabilized over the past decade, the proposed budget’s narrative offers a sobering sentiment: “While our cash position is stable, we have a long road ahead to true fiscal health given legacy obligations for pensions, healthcare, and other benefits.”

While the proposed budget does not include a city property tax hike, individual property owners may see their tax bills fluctuate next year compared to this year as a result of Lackawanna County’s first property reassessment since 1968.

Reassessment is designed to achieve tax fairness by bringing assessed property values in line with market values. By law reassessment must be revenue neutral, with taxing bodies collecting essentially the same amount of property tax revenue in the year after a reassessment as they did the year prior.

As assessed values rise as a result of the reassessment, tax rates will fall accordingly. The impact on individual tax bills is not yet clear, but a general rule of thumb is that about a third of tax bills increase with reassessment, a third decrease and a third remain more or less the same.

In taking note of the reassessment, the city budget’s $33 million in real estate tax revenue complies with state law requiring revenue neutrality for taxing districts in the year following a countywide property tax reassessment.

“We continue to fight an uphill battle against decreasing real estate assessments. With the anticipated implementation of the new property reassessments in 2026 resulting from the Lackawanna County property reassessment project, the city’s real estate tax burden will now be distributed fairly among property owners by the adjustment of assessed property values reflecting current market values,” the budget says.

And in ending the 112-year-old split millages to coincide with the reassessment, the city budget proposes a single property tax millage of 6.0439 for 2026.

The idea behind a split real estate tax millage rate was that a higher millage rate for land would encourage development of vacant properties and spur economic growth, but over the past century most of the vacant property in the city has been developed, the budget says. Scranton has remained one of less than a dozen of the 2,560 municipalities in the state with a split real estate tax millage system. Having only one instead will “provide a much simpler calculation of city real estate tax collections and provide a much clearer comparison of city tax rates among other municipal entities, including the Scranton School District and Lackawanna County,” the budget says.

The budget also notes that the county reassessment also significantly increases the city’s taxable real estate assessed value, from $365 million in 2025 to $6.2 billion in 2026.

The city also anticipates that a sale of the Commonwealth Health System to a nonprofit entity would decrease the city’s taxable assessed value by an estimated $187 million and result in an estimated loss of $1.1 million in real estate tax revenue. The city’s proposed budget for 2026 reflects the impact of this pending hospital transaction in terms of real estate tax collection projections.

Some other budget highlights include:

Trash fee: remains at $300, with revenue from refuse fees and delinquent refuse fees also unchanged at $7.7 million. The city’s inclusion in 2021 of the annual trash fee in the annual property tax bill has significantly increased collections of the fee.

Earned-income (wage) tax: remains at 2.4%; this category has seen a steady increase over several years, partly from continued economic growth nationwide and in the city’s downtown, and collections are budgeted at $37.4 million in 2026, as compared to $36.1 million in 2025.

Real estate transfer tax: remains at 2.2%; budgeted conservatively at $6.2 million, as compared to $5.4 million collected in these taxes so far this year through Sept. 30. This revenue category also has benefited from a robust real estate market and five decreases in the Federal Reserve Fund’s federal funds rate over the past 14 months. The city also anticipates that its real estate market will remain active given housing shortages and the lack of affordable housing nationwide.

Delinquent real estate tax collections: maintained at $4.2 million. In 2025, the robust real estate market continued to contribute to real estate transactions in the city that enhanced collections of delinquent real estate taxes.

Payroll tax collections: also called a payroll preparation tax, budgeted to bring in $2.8 million in current payroll taxes and $530,000 in delinquent payroll taxes. This category this year brought in $1.13 million of current payroll taxes through Sept. 30.

Pay raises: the budget funds contractual and other pay raises for city employees.

New positions: Five new positions include a Business Administration GIS project manager, a Code Enforcement secretary, a DPW highway supervisor, a Parks and Recreation pool operator/groundskeeper, and a Parks and Recreation manager overseeing Nay Aug Park, which this year added a playground and a pool (to open next year) and has construction of pickleball multi-courts underway.

Total budget increase: the $115.5 million budget represents an increase of $2.3 million over the 2025 budget, which is primarily due to expected increases in revenue from the earned income and real estate transfer taxes and interest earnings. The city is also optimistic that it will receive in 2026 long-awaited grant reimbursements for a 2018 FEMA project completed in 2024 and 2025.

At its weekly meeting Thursday, which was moved from Tuesday because of Election Day, council voted 5-0 — with President Gerald Smurl, Bill King, Mark McAndrew, Jessica Rothchild and Tom Schuster in favor — to introduce the budget ordinance.

Smurl also announced that council will hold upcoming worksession caucuses on the proposed budget with members of the administration, preceding the next three weekly council meetings, on Nov. 13, Nov. 18 and Nov. 25, all at 5:30 p.m. at City Hall. Next week’s council meeting was moved from Tuesday to Nov. 13, because Tuesday is Veterans Day.

Jeff Horvath, staff writer, contributed to this article.