The proposed 2019 budget for State College includes a modest real estate tax increase, which would be the borough’s first in three years.
A 2.19 percent increase, or .36 mills, is included in the proposed general funds budget. It would bring State College’s municipal millage to 16.76. The borough last approved a tax increase for 2016, a 2 mill bump.
For a home with a $300,000 market value and no homestead exclusion, the increase would translate to an additional $30.68 a year. For a $400,000 market value home, it would be an additional $40.91.
A public hearing on the budget is scheduled for Dec. 3, with adoption on Dec. 17.
Borough Manager Tom Fountaine said at an initial budget overview for Borough Council on Oct. 30 that the tax increase is for expenditures that were included in the 2018 budget but without ongoing funding, and for anticipated increases in State College’s contributions to regional programs.
The increase includes .14 mills to cover $67,500 for street tree maintenance and .08 for $40,000 in operating expenses for the new Historical Architectural Review Board. Borough Planning Director Ed LeClear explained the HARB expenses are largely for a preservation planner kept on retainer to review applications for certificates of appropriateness under the HARB guidelines.
It also includes .14 mills for a $67,000 increase in Centre Region Council of Governments programs. The proposed overall COG budget, which was expected to be referred to the six municipalities for adoption at Monday night’s General Forum, is $26,052,029, a higher-than-normal increase of $2.7 million over last year.
State College’s increases in COG programs include 8.9 percent for Centre Region Planning Authority/Municipal Planning Organization, 8.2 percent for fire protection, 6.4 percent for Centre Region Parks and Recreation, 3.4 percent for CATA, 3.4 percent for emergency management, 1.6 percent for Schlow Library and .2 percent for COG administration.
Borough Council President Evan Myers said the COG budget uses surplus funds that won’t be available again next year and that he expects steeper increases in municipal contributions in the future. Firefighter stipends, for example, are expected to continue to increase as services move from a volunteer department toward a paid department.
State College’s proposed general funds budget includes expenses of $29,446,562 and revenues of $28,957,132, balanced by $89,430 of excess unreserved fund balance for one-time non-recurring expenses and a $400,000 allocation from unassigned fund balance to offset increases in defined-benefit pension costs resulting from a modification of actuarial assumption based on mortality rates.
Fountaine said the increase was expected and was approved earlier this year.
‘It will stabilize the defined-benefit pension funds going forward,’ he said. ‘This is the first year that hits so there is a fund balance we have allocated through the years for use in these pension funds and this $400,000 comes from that.’
The general funds budget increases by about $1.5 million over 2018, about average for a year-to-year increase for the borough.
With special revenue, enterprise and other governmental funds, the overall budget is $49,744,019. As every year, the vast majority of expenditures are for personnel and operations.
Several new appropriations for strategic community programs are included:
– An additional $5,000 for First Night State College, bringing the borough’s contribution to $25,000. Fountaine said the allocation had previously been at that level but was reduced about 10 years ago.
– $25,000 is allocated to begin planning and work for the 2020 census.
– $7,000 for Art Alliance of Central Pennsylvania.
– $15,000 is designated for the Martin Luther King Jr. Plaza Committee for programs and activities. Fountaine said staff also is recommending the committee be formally made an advisory committee to Borough Council.
‘It has been operating on an ad hoc basis to this point,’ Fountaine said. ‘Given the programming and activities that committee is enthusiastically undertaking we have concluded we should have an ongoing committee for that.’
The budget also looks to add a new senior planner, which would help to meet requirements for entry into the Pennsylvania Keystone Communities Program. Eligibility for the Department of Community and Economic Development program would allow the borough to receive additional grant awards.
‘That’s a significant opportunity we are currently forgoing,’ Fountaine said, adding that the position also would provide staffing support for the State College Redevelopment Authority.
LeClear said at a Nov. 19 work session that the Keystone Communities Program creates priority access to DCED funds and tax credits for neighborhood improvement and redevelopment projects.
Among other budget highlights is $100,000 from the parking fund for a comprehensive parking study, which will look at supply and demand to prepare for replacing and expanding parking downtown.
About $2.5 million in capital fund projects include street reconstruction and resurfacing, sinkhole repairs, stormwater projects, a Hiester Street bus pull-off, and safety improvements for the Atherton Street corridor downtown.
Sanitary sewer funds of $1.066 million are allocated for rehabilitation and inflow and infiltration. Block grant funds of $271,590 will be used for streetlight replacement.
For 2018, the budget has performed as expected year-to-date, with revenues in most categories on par with 2017, said Dwight Miller, manager of financial services. The exceptions have been increases in real estate taxes. Transfer tax revenue had already increased $841,936 over last year, to $1,871,646 through September. Real estate tax revenue was up $290,876 to $7,575,138.
Miller, however, cautioned that the transfer taxes can’t be expected to perform at that level every year and that the net increases overall in real estate taxes can’t be counted on to fill budget gaps.
‘Often we hear that all of this construction happening downtown is going to solve our budget woes, but as you can see, it doesn’t,’ he said. ‘It doesn’t even come close to covering the small increases in personnel costs we have from one year to the next.’
