State College Borough Council Passes 2014 Budget, In Last Minute Turnaround Proposed Tax Hike is Rejected
A last minute change of heart by the State College Borough Council will save residents from a planned tax hike next year.
Council approved the 2014 budget plan Monday night, but narrowly rejected the proposed tax increase by a 4-3 vote. That followed some wrangling over whether there was a need for additional tax revenue.
Council member James Rosenberger helped lead the opposition. He reminded council that, "Three quarters of the borough's residents are renters." He says a tax increase would be passed on to tenants through higher rents, adding, "I don't see anything good coming from a tax increase we don't need."
However, council member Peter Morris downplayed the proposed tax hike. Morris warns, "If we don't have a tax increase this year we'll have a bigger one next year."
Council member-elect Evan Myers addressed the council, saying, "We really need to be careful to not put the price of housing out of the reach." Myers asked council to explore other options before raising taxes.
Rosenberger pointed out that the borough's reserve fund is not supposed to exceed 12%. He says, "We've exceeded it every year I've been on the council. I think it's irresponsible for us to raise taxes without an absolute need for it."
Originally, the budget contained a 1.5 mill Real Estate Tax rate increase. It would have set the 2014 at 12.54 mills, up from 11.04 mills in 2013. If it had gone through, the tax hike would have increased the average tax payer's property tax bill by $83.
The proposed tax increase had been recommended by borough staffers. Morris says we hope and we guess that the staff is wrong about increasing expenses. But Morris also notes that, "Hopes and guesses sometimes turn out to be true."
The 2014 budget totals $23,345,032 million. That figure includes an additional $8,500 for council's professional development and an extra $8,000 for the State Theatre, bringing the borough's total contribution to the theatre to $10,000.
The cost for personnel in the tax collection department was reduced at a savings of $70,782.
An appropriation of $90,800 is earmarked for the borough's annual contribution to Centre Area Transportation Authority (CATA).
Any shortfall in revenue will mean a draw down of reserves. In the end, James Rosenberger, Ronald Filippelli, Thomas Daubert and Sarah Klinetob voted for an amendment to pass the budget without a tax increase. Donald Hahn, Catherine Dauler and Peter Morris voted against the amendment.
Asked about the decision not to raise taxes, council president Donald Hahn says, "I don't think it's all that surprising." He adds, "The reality is that four out of the last five years we've added to reserves."
Borough manager Tom Fountaine says, "There are sufficient reserves with the unrestricted and some of the pension funds to allow for the budget to be balanced without a tax increase. It increases the amount of reserve funds that will be used in 2014 to $2 million dollars."
That figure is an estimate. However, Fountaine says the proposed budget is very conservative and typically the budget performs better than the estimate.
"The short story is that the expenditures will exceed revenue in 2014 by about $2 million, he says."
In other business, borough council approved the Centre Region Council of Governments (COG) budget which totals $24,838,471. Council also voted to approve $1,502,461 to pay the borough's share of that budget which goes to regional programs operated by COG.
A conditional use permit requested for the proposed Metropolitan project was also approved. Developers plan to build a 12-story apartment building and commercial space at the intersection of West College Avenue and South Atherton Street.
That building will include three levels of underground parking, one floor of retail and restaurant space, one level of office space, seven floors of student housing and two floors of general occupancy housing.
Developers had asked for an exception to a regulation requiring the building to be 30-feet away from the street. Developer Ara Kervandjian has said at some points the building cannot meet the requirement. However, at other points that 30-foot set-back rule can be exceeded. Without the set-back, Kervandjian says they would have to reduce square footage for units and increase costs.