Borough budget talks are just beginning, but the consensus is already leaning toward funding cuts and tax increases.
The borough is facing a $2.2 million deficit heading into 2016, financial services director Dwight Miller told council members Monday during a budget presentation. This is combined with flat revenue growth, a decrease in fines and violations, and a decrease in grants and intergovernmental revenue.
The general fund revenue has increased to $16.1 million from $13 million, adjusted for inflation, over the past 10 years, Miller said, but little has changed in assessed and taxable assessed valuation of real estate taxes. While surrounding municipalities have shown growth in assessed valuation, the borough has shown no natural growth in this area.
Adjusted for inflation, the borough has shown an increase in real estate tax revenue to $3.7 million from $2.7 million in the past 10 years, he said. This increase was linked to millage rate increases rather than property growth.
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In the meantime, Miller said, general fund expenditures have increased from $12.7 million to $17.1 million during that time period. A portion of that was attributed to salary and benefit increases as well as an $8 million loan used to finance the new service facility.
If things remain as they are for the next five years, he said, revenue should grow to $24.7 million while expenditures will reach $30.7 million.
Councilman Tom Daubert pointed to the earned income tax rate, which sits at 1.3 percent, saying that discussion is always fixed on property taxes and not income taxes.
Earned income tax revenue has dipped slightly over the past 10 years, Miller said, from $3.6 million to $3.3 million adjusted for inflation.
Borough Manager Tom Fountaine said staff can compile estimates on what an income tax rate change would bring to the borough.
Councilwoman Cathy Dauler suggested that since a high percentage of the budget went to regional contributions, a reduction there may make a difference. Since the borough already has its own staff in areas like planning and finance, she said, it could be a place where the borough could save.
“I’m not trying to sound like I’m opposed to regional cooperation, but when we look ... we see all municipalities will have growth because of development,” she said.
Councilman Evan Myers said it was unfortunate that the surrounding municipalities have room for expansion while the borough remains constrained, but said he felt that consistent cuts lead to community decay.
“I don’t know any community or business that can consistently cut their way to growth and prosperity,” he said.
Myers pushed for creativity in the coming budget discussion, saying it would be a long-haul process to draw in income tax-paying professionals to live in the borough.
Mayor Elizabeth Goreham echoed Myers’ comments, saying that the population of taxpayers has been in a constant decline and a massive change of hearts and perspective was needed to show how valuable neighborhoods are as income producers.
“This is the thing that bothers me the most,” she said, “and how we can turn that around and hold firm to that so when these big buildings are built, they’re for people who pay income tax.”
Councilwoman Theresa Lafer called on borough residents to give their input, asking for actual suggestions of what the public can and can’t live without.
“We’re looking for actual suggestions that don’t just say ‘balance the budget,’ ” she said. “That is not helpful.”
According to the budget calendar, the budget will go before the council on Nov. 9 and will be available for public inspection the same day. Council requested that the budget be available by Nov. 2 to give more time for review. A public hearing on the budget is slated for Dec. 7 with budget adoption scheduled for Dec. 21.