Council President: Tell Penn State About Borough Budget Pressure
August 17, 2010 12:21 PM
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State College ought to make the Penn State administration thoroughly aware of the borough's budget pressures, Borough Council President Ron Filippelli suggested Monday night.

Barring any major changes in tax rates or spending trends, the borough is on track to see budget deficits for each of the next five years, according to an internal analysis. By 2015, it shows, spending would outpace revenue by more than $4 million.

Filippelli, speaking at a Monday council meeting, said the borough should continue sending its budget details and projections to Penn State President Graham Spanier and Senior Vice President Al Horvath.

In particular, Filippelli said, the borough should outline how much tax revenue a more typical town of moderate size would see -- that is, a town without as many college students. Many Penn State students who live in town don't have local jobs and, as a result, don't pay the borough's earned-income tax -- a key source of local revenue. 

A calculation showing the disparity in tax revenue between State College and a more typical town "would be a useful number for the university to see," Filippelli said. "I think it would dramatize."

Borough Manager Tom Fountaine said the staff could develop that number for future communications.

Council member Silvi Lawrence said about 67 percent of the borough population falls between the ages of 18 and 24. And while "most of those people don't pay (income) taxes" directly to the borough, she said, she believes that's fair.

Her concern appeared to center more heavily on property taxes. About 45 percent of the property in the borough falls under tax-exempt status -- including Penn State-owned and borough-owned land.

"It makes it so much more difficult to balance the budget" when no property-tax revenue is coming from that acreage, Lawrence said. Revenue from earned-income, property and local-services taxes accounts for more than 50 percent of the borough general fund.

But income from those three taxes is growing at roughly one percent a year, whereas many borough expenses are climbing much more quickly, the borough analysis shows.

"I still think something like the per-drink tax should be pressed," council member Theresa Lafer said. In past discussions, borough officials have said that more sources of revenue -- such as a local drink tax on alcoholic beverages -- would take pressure off the earned-income and property-tax rates.

That would allow the borough to spread out the financial burden more evenly, borough leaders have said.

State law, however, limits the types of taxes and fees that local governments may impose.

The borough has already undertaken a variety of cost-control measures, including careful analysis of every staff vacancy, Fountaine said. Several positions -- including those in public works, the police department, the health department and administration -- have been held open as the borough considers how best to divvy up the work load.

The police department right now counts 61 officers, down from its full complement of 65. Fountaine said at least one more officer is expected to be hired this year. The borough employs about 170 full-time equivalents overall.

In other news on Monday night, council members voted unanimously to approve a purchase agreement for Hess Field. The Centre Region Council of Governments, of which State College is a member, is planning to buy the softball complex from the local Hess family and add it to the regional-parks system.

Representatives of all Centre Region municipalities are expected to vote on the purchase agreement by September. The listed purchase price for the 20.6-acre field complex, on Shingletown Road in Harris Township, is $200,000.

In addition to endorsing the Hess Field acquisition, the State College council encouraged the COG to use revenue generated from the complex to pay for its maintenance.

Earlier coverage: Borough Analysis Warns Of State College Budget Gap

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