Proposed tax hike down to 3.5 percent for 2017

POTTSTOWN >> The looming 5-percent borough property tax hike has been whittled down to 3.5 percent, according to the presentation of the $52.6 million draft budget unveiled to Borough Council Wednesday night.

Finance Director Janice Lee said the gap between projected revenues and expenditures is now at $269,225.

Raising the millage rate by 3.49 percent from 10.311 mills to 10.66 mills would balance the budget.

For a property assessed at $85,000 — nearly 6,000 of Pottstown’s 8,500 parcels are assessed at $85,000 or below — that means an annual increase of $29.68 on the 2017 property tax bill.

Last month, Borough Manager Mark Flanders warned that taxpayers could be facing a jump of as much as 4.87 percent in the borough’s property tax.

Citing a deficit that was then calculated at $380,627, Flanders pointed to a projected 20 percent hike in health care costs, rising expenses and a constant drum beat of property assessment challenges.

While costs are still rising, Flanders reported that by changing carriers and altering the parameters of the plan, the expected increase in health care costs is now down to 7 percent.

However, assessment challenges remain, well, a challenge.

According to Lee, there have been 893 successful property assessment challenges since 2012 — 209 in the last year alone — that have cut revenues by $224,146.

Without those reductions, the deficit in the proposed budget would drop from $269,225 to $45,079.

The borough is also affected

by a high number of tax exempt-properties, “several schools and a whole lot of churches,” said Lee, who added that the borough will again send out a letter asking those tax-exempt properties to pay at least onequarter of what their tax bill would be.

Out of 8,500 parcels in Pottstown, 326 — or 3.8 percent — are tax exempt.

In 2012, there were 308 tax-exempt parcels.

Were all the exempt properties paying their tax bill, the borough’s budget would enjoy $1,318,404 more revenue and a tax hike would be unnecessary.

Lee also noted that the borough has six properties assessed between $1 million and $3.5 million and four of them are tax exempt. She did not say which.

Flanders said last month the draft 2017 budget expenses are $1 million less than the current year, and Lee said $401,728 of those cuts are in the general fund, the only one of the 19 funds in the budget that has a deficit.

Lee warned council against looking again to the reserves to balance its general fund budget.

She said from 2014 to 2016, council took $459,182 out of reserves to keep taxes down. Combine that with an $850,000 over-run in 2015 and the practice has cut $1.3 million from the money available for 2017.

Granted, those withdrawals from reserves did provide for no tax hike in three of the last four years, but the practice now has the potential to drop the reserves to a level below that recommended by municipal accounting experts, said Lee.

“Better to have a relatively small tax hike now than a 9 percent tax hike in two or three years,” said Councilman Ryan Procsal.

The proposed budget calls for not replacing a vacant window position in the Inspections and Licensing Department, and provides for only two new police cars instead of the four requested by the department.

Lee said those are the only two departments that exist entirely within the general fund, in response to a remark by Councilman Dennis Arms that the public needs to understand cutting a position or expense at the sewer plant or on the road crew does not help close the deficit in the general fund.

The budget also calls for skipping the annual $250,000 payment to a non-pension benefit liability fund for police officers that the borough has made for the past four years. That liability is listed at $26 million and increases by about $2 million per year, according to Lee’s presentation

That leaves council in the position of deciding whether to vote Monday on advertising a draft budget that would raise taxes by 3.49 percent.

Arms, who said “I can’t vote for any budget that includes a tax increase,” urged council not to vote Monday to advertise the budget, a move made necessary by legal requirements of public notice — but only if council plans no further meetings in November.

Arms and Council Vice President Sheryl Miller both argued that council should schedule some budget sessions to try to get the tax increase down before publishing the legally required newspaper notice.

Council President Dan Weand said voting to advertise the draft budget does not preclude having additional work sessions, but Arms said “once it goes into the newspaper, I will start getting calls.”