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Borough Analysis Warns Of State College Budget Gap

on August 16, 2010 5:42 AM

Unless the borough raises taxes, continues to reduce staffing or does some combination of both, State College soon won't be able to maintain a balanced budget, an internal analysis warns.

The Borough Council is expected to review and discuss the analysis at its meeting today, scheduled for 7:30 p.m. in the municipal building, 243 S. Allen St.

Prepared by the borough staff, the analysis is dubbed a five-year financial forecast. It notes that more than half of the borough's general-fund revenues comes from three sources: real-estate, earned-income and local-services taxes.

Income from those taxes is growing at roughly one percent a year, while major borough expenses may well grow much more quickly, according to the forecast.

If current trends in revenue and expenditures do not change, the forecast shows, the borough's general-fund expenses will outpace costs by nearly $670,000 in 2011. That gap is projected to grow to more than $4 million a year by 2015 -- barring any adjustments in taxation or spending.

Should the borough not adjust its financial habits, the forecast shows, its general-fund reserves will be able to cover the budget deficit through 2012, but not much further beyond that.

Borough expenditures next year are expected to top $19.5 million; by 2015, they will exceed $24.1 million if current trends continue unmitigated, according to the analysis. Police expenses, the largest single chunk of the budget, would climb from $8.6 million to $10.7 million. Public-works costs would grow from nearly $3.8 million to $10.5 million.

"In order to balance the budget, staffing levels will continue to need to contract," the analysis reads. "As staffing levels continue to decline, programs and services performance will likely be impacted."

The council meeting tonight, to be held on the third floor of the municipal building, will be open to the public. StateCollege.com will post full coverage, with more details, after the meeting.

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