After weeks of debate, State College council passes 8.7% tax increase for 2026
AI-generated summary reviewed by our newsroom.
- Council approves 2026 budget with two-mill tax hike equal to 8.7% increase.
- Council offsets revenue gap using fund balance, $2.8M transfer tax and deferred projects.
- Budget keeps structural deficit sixth year; council plans early 2026 review, state lobby.
The State College borough council approved its 2026 budget Monday evening after weeks of review and debate about how much of a tax increase it should pass.
The 2026 budget includes a two mill tax increase, or 8.7% — a major reduction compared to the previously proposed 8 mills, or 35%. For the sixth consecutive year, the borough will have a structurally unbalanced budget, a violation of its structurally balanced policy adopted in 2016 that says recurring revenues will be covered by recurring expenditures.
The borough previously proposed an eight mill (35%) increase so the 2026 budget was structurally balanced, but the council directed the manager and staff to reassess and find a way to lower that increase due to affordability concerns from council members and the public.
To reduce the tax rate, the borough will have to use money from the fund balance as well as $2.8 million from real estate transfer tax revenue it unexpectedly received this month. The borough will also defer $1.2 million in street reconstruction projects in the capital budget.
Council members Josh Portney and Gopal Balachandran voted against the budget. Balachandran previously said he would like to see a four mill tax increase, an option the borough manager presented earlier this month, as well as not filling three currently vacant police officer positions included in the budget.
“I believe that if we call for a tax increase, we need to do something about our expenses as well. In this situation, I think it’s particularly unwise to hire three more police officers when we are at historically low crime rates in Pennsylvania, which is cause for celebration,” Balachandran said. “This historically low crime rate may come as a surprise to many, given how much misinformation there is about crime rates. But until we get a hold on our spending, I’m still a no vote on the budget because we are simply just kicking the can down the road.”
Council members said they would begin reviewing things for the 2027 budget early in 2026. Council President Evan Myers said the council and community needs to put pressure on the state legislature as well, to pass legislation that would allow them to garner more revenue. Myers listed a number of examples, like a local services tax, an alcoholic drink tax and taxing investments.
“State College is the vibrant center of the Centre Region. We’re filled with visitors, football fans, people coming to the arts festival, first night, other celebrations, and we welcome them all here. But we have to pay for all that that strain puts on State College and that falls on the residents. We can’t recover that revenue from those folks that come and visit, but yet who we have to support,” Myers said.
The council also approved a 12.5% rate increase for its refuse program as part of the budget, as well as increases to the sewer rental and tapping fees.
According to the borough, the two mill increase means a typical $300,000 (market value) home will see an increase in 2026 of about $102.56 ($8.55/month); a $400,000 home will see a $136.75 increase ($11.40/month), and a $500,000 home will see a $170.94 increase ($14.25/month).
Those with homestead exclusions will see a reduced increase. A $300,000 (market value) home will see an increase in 2026 of $52.56 ($4.38/month); a $400,000 home will see an $86.75 increase ($7.23/month) and a $500,000 home will see a $120.94 increase ($10.08/month).
