State College council approves 15% tax hike for 2025. What will happen in future years?
State College borough homeowners will see a 15% real estate tax increase next year after the borough council approved the 2025 budget Monday with a three mill tax increase.
The increase will bring the borough’s total millage to 22.88. Of the tax increase, two mills will go to the general fund and one mill will go to the capital fund. It will bring in an additional $1.2 million to the general fund and $582,185 to the capital fund.
During Monday’s meeting, the council unanimously approved the budget with $76.5 million in expenditures and $64.3 million in revenues. The general fund budget makes up about $40 million of those expenditures and about $38 million of the revenues.
Other top funds in the budget include:
Capital Fund: $11.5 million in expenditures, $6.3 million in revenue
Sanitary Sewer Fund: $9.3 million in expenditures, $8.8 million in revenue
Refuse Collection Fund: $7.2 million in expenditures, $4.5 million in revenue
Parking Fund: $3.8 million in expenditures, $4.3 million in revenue
The budget includes funding for a few capital improvement projects through grants and the Capital Fund balance: the second phase of Calder Way ($3.2 million), High Point Action Sports Park ($2.4 million), street reconstruction ($2.4 million) and street resurfacing ($2.2 million). Because the budget isn’t structurally balanced and has insufficient capital fund balance, many other capital projects are delayed until at least 2026.
The budget also includes a plan to achieve a structurally balanced general fund budget by 2027, something the borough has been without for several years. That’s part of the reason why the tax increase is needed in 2025, borough manager Tom Fountaine said during a council meeting in November. Since the COVID-19 pandemic, they’ve tried to pass budgets without increasing taxes to allow residents and businesses to recover and used one-time revenues in place of tax increases, Fountaine said. A tax increase will likely be needed in 2026 and 2027 as well.
The borough remains the municipality with the largest millage rate in Centre County and is the largest tax increase in the Centre Region as other municipalities approve next year’s budgets.
Council President Evan Myers on Monday acknowledged the tax increase and the council’s concern about affordability in the borough, but pointed to ways the council has taken action to save money. That includes the Solar Power Purchase Agreement, which the council approved 6-1 Monday, with member Josh Portney voting in opposition.
“The budget we’re presented here is a sound one. It does include a tax increase for homeowners of less than $15 a month,” Myers said. “...We recognize that State College is the vibrant center of the Centre Region. State College is therefore burdened with providing services that other municipalities in this region are not. That’s not a complaint, just a statement of the position we’re all in. All of us on this council take our fiduciary responsibility extremely, extremely seriously.”
Tourism is a huge economic driver for State College, council member John Hayes said, but they have to support that and provide services for visitors without passing those costs onto the people who live in the borough.
Myers committed to scheduling more time next year to consider policy initiatives and to review and discuss the budget. Many council members, like Matt Herndon, said they were looking forward to having dedicated time to do so. Herndon said he hoped to have discussions on zoning and parking reform, and update meeting procedures so they can spend more time deliberating and crafting policy to make the borough more affordable, sustainable and enjoyable.
Portney has been vocal about his concerns with the budget and tax increase but voted in favor of passing it on Monday. He said he’s looking forward to focusing on keeping costs down and having accurate budget projections.
“I want to make sure that in the future, we’re working toward affordability, which really includes making sure that we’re holding the line on taxes,” Portney said.
Council member Kevin Kassab previously worked for the borough in community engagement. He said things like community engagement activities are part of what makes the borough a great community, but it still costs money. While he was looking at the budget, he knew the impact of $15/month but also considered: “What would I cut? Why do I live in State College? And that’s a really, really hard decision to make.”
To his point, Myers said that even with additional time next year dedicated to finding ways to cut spending, they may find that there aren’t services they want to cut. They also might look for ways to bring in additional revenue without raising taxes.
The borough previously speculated about a drink tax as a way to help fund police services — something they’re restricted from doing by the state legislature, Myers said. But he encouraged everyone to keep an open mind and think about creative solutions in the new year.
“Let’s not restrict ourselves to one aspect of it. Let’s think as broadly as we can, knowing that there are some things we’d like to do that at least at this point we still cannot do. But we can pressure, we can lobby, and there are things that perhaps creatively we can do,” Myers said.
