In a separate vote, council set the maximum millage rate for 2011 at 5.4 mills, which is a 1.2 mills increase. State law requires that council set the millage rate now -- but it is not locked in place. Council can lower that rate, but it can't set the rate higher than 5.4 after the vote last week.
Council approved both the draft budget and the millage increase unanimously.
If you read this blog regularly, you know I've written about the budget already and the predicament that Borough Council is in when it comes to lower projected revenues.
Here's a word about the millage increase. If council keeps the millage increase at the level approved, a homeowner with an average assessment of $150,000 would see his taxes increase by $180 next year. This would generate nearly $526,000 in additional income, more than covering the deficit.
- A 1 mill increase to 5.2 mills would mean a $150 increase to the average homeowner, generating $438,200 in additional income.
- A .9 mill increase to 5.1 mills would mean a $135 increase, generating $394,398 in additional income.
- A .8 mill increase to 5 mills would mean a $120 increase and $350,576 in additional income.
- A .7 mill increase to 4.9 mills would mean a $105 increase and $306,754 in additional income.
Now a word, in this one councilman's opinion, about a tax increase: Borough residents did not see a tax increase last year, thanks to spending cuts. We held the line and were able to squeak by for a year, but the economy has not improved enough to make up the difference. Any additional budget cuts would mean cutting services, and personally I am not willing to cut beyond the current level of services.
So although Borough Council set the millage rate at 5.4 for 2011, we can decide to lower it Dec. 16 when we approve the final budget. I am not in favor of an increase of more than 1 mill -- and I could be convinced of a lower rate that covers the deficit.
However, we also have to take into account some soft costs (such as engineering costs for work on extending West College Avenue) for some of the projects the borough is able to do thanks to state and federal grants. It would be irresponsible for Borough Council just to cover the deficit and not plan for covering those soft costs.
Do you have other ideas or thoughts? Let's hear them!