State College poised to increase property taxes for 2023. Here’s why — and what to expect
After two years without property tax increases, State College Borough is poised to increase them for 2023 — due to rising costs and inflation.
According to borough manager Tom Fountaine, the typical borough resident is set to pay about 9% more on the municipal property tax, or about $173.77 more annually on a $500,000 home. Of course, that’s pending Monday’s council vote on the budget, but multiple council members have acknowledged the need for a likely increase during public discussions.
Next week’s council meeting is set to kick off at 7 p.m.
How much more will you pay?
State College Borough’s proposed 9% increase means the municipal property tax rate would increase to 19.88 mills, which is 1.623 mills more compared to last year.
According to the borough, that means a typical $300,000 (market value) home would see an increase in 2023 of about $104.26; a $500,000 home would see a $173.77 increase and a $700,000 home would see a $243.28 increase.
Those with homestead exclusions — more on that here — would see a reduced increase. A $300,000 (market value) home would see an increase in 2023 of about $63.69; a $500,000 home a $133.19 increase and a $700,000 home a $202.70 increase.
Council briefly discussed the possibility of tweaking the homestead exclusion to further reduce the burden of an increase on some homeowners, but state law does not allow for the borough to change the homestead exclusion the same year as a property tax increase.
Why raise property taxes?
Because of the pandemic and its economic impact on residents, the borough consciously chose not to raise property taxes the last two years — but, without an increase, the 2023 budget would operate at an even deeper deficit.
“The tax increase is necessary to help gradually get back to a structurally balanced budget,” borough spokesperson Kayla Lafferty said in an email. “Using reserves (one-time revenue) to cover recurring expenditures violates the Structurally-Balanced Budget policy adopted by Council and is not a sustainable way to fund on-going expenditures.”
In 2022, the borough needed to use $850,876 worth of reserves. In 2023, even with the proposed tax increase, according to officials, the borough is expected to tap in to a little more than $2 million in reserves.
The proposed property tax increase is expected to generate an additional $937,121.
Given the fact the borough is expected to require reserves again in 2023, along with other factors like pension costs, Fountaine acknowledged during a work session Monday night that another tax increase in the future would not be off the table.
Monday’s meeting will be hosted in a hybrid format, both in-person at the Municipal Building and online via Zoom.
