Questions Raised About Need for Proposed Tax Increase
Some State College Borough Council members are now doubtful about the need for a tax increase as part of the 2014 budget plan.
At Monday night's meeting council members James Rosenberg and Ronald Filippelli raised questions about whether the proposed tax increase is necessary.
Rosenberg went so far as saying that when council votes on a final budget Dec. 16 he will make a recommendation to defer the tax increase.
"I think it's good for the borough for not being seen as an excessively high cost area in this climate where housing is being built everywhere around us," Rosenberg said.
Under the proposed $23.4 million budget, the millage will increase from 11.04 mills to 12.54 mills. That means the average taxpayer's annual property tax bill would increase from $613 to $696, which is an additional $83, according to borough officials.
For taxpayers who qualify for the Homestead Exclusion, the increase would be reduced from $83 to $46 a year.
Rosenberg said voting against the tax increase would send a symbolic message to the public.
"Those costs are passed right onto the tenants. What we don't want are forces against the borough for places to live," he said..
Filippelli agrees. "We don't need a tax increase and we don't need to cut anything," he said.
Administrators said the borough has roughly $1.3 million in reserve funds – in excess of the required 12 percent balance. Filippelli says the borough should look to use those funds instead of increasing taxes.
City Manager Thomas Fountain says the borough has relied on the reserve funds to fill a deficits already this year. Additionally, the 2014 draft budget transfers from the reserve funds along with the hike in real estate taxes.
Fountain says the goal of the 2014 draft budget is to phase in gradual tax increases instead of one dramatic increase down the road. Council can defer the tax increase, "but you'll be bleeding your reserves dry," he says.
Assistant Borough Manager Roger Dunlap says two factors are behind the recommended tax increase – the fact that 2013 is ending in the red and that 2014 would end in the red without a tax increase and transfer from the reserve funds.