Today is municipal primary Election Day in Pennsylvania. For decades that statement has carried with it an air of urgency, responsibility and decision-making. You woke up in the morning knowing that today was one of the two days this year when you would partake in that most democratic of processes and go cast your ballot for those candidates you want to lead you and your local governments. You would perform your civic duty and make a difference. It felt like you were taking part in something larger than yourself. You got an “I Voted” sticker and wore it proudly.
But with the new normal created by the pandemic – that new normal being the usage of mail-in voting by many electors – the day now has a very anticlimactic feeling about it. The sense of urgency, responsibility and decision-making have been removed and replaced by a feeling of “it’s just another day.” Perhaps even a feeling that you are making others’ lives difficult by having them staff polling places just so you can go vote. Why would you do that when you could have mailed in a ballot?
And this even though voter turnout for these every-other-year contests are traditionally low. Over the last 10 years voter turnout for local municipal primaries has ranged from a low of 14.34% of registered voters in 2013 to a high of 23.53% in 2019. But municipal primaries are a necessary part of the governing process, and if you are like me and don’t vote by mail, you’ll cast your ballot in person and go out and vote today.
Why? Because… taxes.
Locally we have a choice of seven candidates for State College Area School District Board of Directors. Since each of these seven candidates is cross-filed on both the Democratic and Republican ballots (a topic for another day – I’m not a fan of this practice), and only four candidates will be nominated on each ballot to advance to the November election, what’s likely to happen is that the same four people will advance to the November municipal election on both ballots. If that happens, then the decision for who gets elected to the State College Area School District Board of Directors will, for all intents and purposes, be made in this primary. Now, that’s not a guarantee, but it does raise the stakes a bit to encourage you to vote today if you haven’t already.
Which brings us to those taxes.
A majority of the State College Area School District’s income comes from local taxes – both income tax and real estate tax. And the real estate portion makes up most of that, meaning real estate taxes are a topic of importance for everyone. As they do every year as budget time comes around, the school district management and board have lately been considering a number of options for real estate taxes next year: increasing them at various rates or not increasing them at all.
Currently, the average local homeowner has an assessed property value of $73,391 which results in a tax bill of $3,314 per year. Granted, we live in an affluent area here in Happy Valley, and $3,314 may not seem like a lot of money to take from the average residential taxpayer to have and run a decent school system for our kids.
But if you break it down, $3,314 is a bit of money. Let’s say you are that average local homeowner and the sole income generator in your house, and you earn a decent income and get paid $50 an hour for your work. That means you have to work over 66 hours – more than a week-and-a-half – every year just to cover your share of the local schools. Maybe that seems like a fair trade to you, or maybe you think that might be a bit much and you would rather some of your work go to pay for something you might enjoy a little more, such as a vacation.
In either case, the school board is contemplating what to do with their budget for the upcoming year. One option is to increase your real estate tax rate by 1% — which results in that yearly $3,314 bill going up $33 to $3,347. Meaning you now have to work almost 67 hours at $50 an hour to cover that tax. The reason for the possible increase is that projections show the school district running a cash-flow deficit in a few years without the increase, which then turns into a negative fund balance overall a few years after that. And a negative fund balance is not a good thing.
There are a couple ways you can look at this.
The first is, because the school district is limited in the size of the tax increase they can assess without putting the increase to a vote by the people, that if they don’t increase the tax rate this year they lose any of that potential one-year gain every year moving forward.
The second is to suggest that because we don’t need the increase this year to balance cash flow — revenues are ahead of or equal to expenses — that we not increase taxes until we start running a cash-flow deficit and actually need the money. Not to mention the economic turmoil many people have been through this past year as the pandemic decimated sections of our economy suggests that even a small tax increase in real dollars would be tone-deaf to the plight of more than a few locals.
The last is to suggest that there are two ways to fix a cash-flow deficit. One is to increase income (raise taxes), and the other is reduce expenses. Perhaps we could find items to cut in the budget. The issue you encounter here is the school district is essentially a service-based business, meaning the majority of its expenses are tied up in “human resources.” Salaries and benefits make up almost 75% the school district’s expenses. So if you want to start cutting expenses, that’s the logical place to start since even major cuts elsewhere only gets you a small incremental real-dollar reduction.
An interesting sub-note to this equation is that while the projected 1% tax increase would mean only an average additional $33 annual payment (forever) for residential properties, for commercial and industrial properties the average increase would be $246 per year. That might not sound excessive when we visualize that as a cost that big business can absorb, until we realize that some of us are that big business, and the rest of us are just going to pay it in when big business passes it along in increased prices.
Such is the life of a State College Area School District director: making tough decisions. Some decisions, such as cutting expenses, are tougher than others. Which is why a tax increase tied to your proverbial wallet, coupled with the cross-filing of candidates, means that choosing the four best candidates out of the seven available is a very important task for today.
If you haven’t already voted, watch these videos, make an informed decision, and get out there and vote. Even if it feels like you’re inconveniencing the volunteers by making them show up – they are there anyway!
