Pottsgrove School District budget plan would hike taxes by 3.6%

Taxpayer watch logo by Eileen Faust/The Mercury

Property taxes for the average home in the Pottsgrove School District would rise by more than $145 under a $63 million preliminary budget the school board voted to advertise on Tuesday.

The average home in the Pottsgrove School District is assessed at $120,000.

The advertised budget calls for a 3.6 percent tax increase over the current millage rate.

That does not mean taxes will rise by that amount when the final budget is adopted in June, only that the board decided to preserve its options under the boilerplate process set by the state, said school board President Justin Valentine.

Were not committing to raising taxes by that amount, were buying time while the process plays out and until we get more and better information, Valentine said.

The budget process in Pennsylvania is a marathon, not a sprint, Business Manager David Nester told the school board during Tuesday nights board meeting at West Pottsgrove Elementary School.

That process, designed to allow a referendum on the budget if needed by the spring primary an option never pursued in the area requires a preliminary budget to be adopted by February.

A referendum is needed only if the school board proposes a budget with a tax hike above the state-imposed index, which for Pottsgrove is 2.7 percent in the 2014-15 school year, and if the district has not applied for exceptions, which allow the district to exceed the tax index without triggering a referendum.

Under the state law known as Act 1, the exceptions from keeping within the tax index are allowed for three reasons paying debt for school construction incurred before 2006; increases in special education costs; and increases in state pension costs, Nester said.

The school board voted to advertise not only a budget which raises property taxes to the index level of 2.7 percent, which would result in a .79 mill increase to the tax rate; but also to apply for $438,000 worth of exceptions, which would raise property taxes another 1.15 percent an increase the millage by another .425 mills.

Board member Rick Rabinowitz voted against advertising the budget as presented.

Even with the tax increase, the district would face a $1.3 million shortfall between $61.6 million in revenues and the $62.9 in expenses, Nester said.

However part of that gap would be closed by using part of the $5 million in reserves set aside for the ever-increasing costs of the PSERS state education retirement and pension system.

Nester said current projections show pension costs increasing by 27 percent in the coming year, an increase of $1.2 million, more than half of the districts total spending increase for the coming budget year.

For several years, Pottsgrove has been setting aside money to pay for the anticipated increases and the budget plan being advertised calls for using about $500,000 of that reserve to help cover the costs of the pension hike this year. That cuts the shortfall down to $800,000.

Applying for the exception that allows taxes to be raised another 1.15 percent would cut the budget gap to $362,000, Nester said.

Rabinowitz, who reacted last month to the news that the districts taxpayers generated a $1 million surplus in the 2012-2013 school year by calling for a tax cut in the coming year, asked Nester if there was any way to tell how much surplus might be generated in the current budget year.

Its too early in the year to say what the surplus might be, Nester said.

What he could identify were potential cost increases in the budget draft.

Wages will increase by 1.65 percent, an increase of $430,000 over the current year; the technology budget is calling for a 31 percent hike, adding $315,000 to the expenses line; and debt service is expected to increase by 2.85 percent, adding $167,000 to the tax burden.

Nester said salaries and benefits comprise 66 percent of the total budget expense; debt comprises 10 percent and administration costs 5 percent.

On the revenue side, the district receives 89 percent of its income $37.8 million from property taxes.

Another 6 percent, or $2.7 million, comes from earned income taxes, he said.

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