Tuesday, November 23, 2010

Borough Council approves draft 2011 budget

Last week, Elizabethtown Borough Council approved a preliminary version of the borough's 2011 budget that contains a deficit of nearly $340,000. This draft is now open for public review at the borough office at 600 S. Hanover St.

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.

By comparison:
  • 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.
It's a pretty drastic illustration and the reality of where things are when it comes to tax increases and what they generate in revenues.

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!


  1. Jeff, I reviewed the budget and have a couple of questions.
    #1: The proposed budget drops street light expenses from around $130,000 in 2010 to $0 in 2011. Can you explain that drop? The ladies at the office could not.
    #2: I could not find line items in the general budget for street paving projects and would like to see that budget. Again, the ladies in the office, though as helpful as they could be, did not have that information.

  2. I find it sad but interesting that Borough Council apparently was pleased about not raising taxes last year and now find themselves instituting what amounts to an extremely high percentage increase in property taxes during poor economic times.
    I have examined the proposed general budget and believe there are items that could still be cut and other ways to reduce that proposed tax increase. I accept the fact taxes must increase. I wish the Council had realized that fact last year and made gentler increases for the services we need. Taxes are the dues Americans must pay as citizens. Please make those increases easier than your current proposal.

  3. Steve -- Thanks for your comments.

    About your questions in the budget: The $130,000 for street lights that you asked about was moved to another line item. It is at the end of the General Fund budget – Transfer to Street Light Fund. We created the Street Light Fund this year to manage the new street light program and keep track of the anticipated savings the program has proposed.

    The paving costs are in the Liquid Fuels Fund -- we receive revenue from the state's liquid fuels tax, and we use that money exclusively for street paving. Street paving is not paid out of the General Fund.

    I'd like to address your second post: Last year, we had a long and vociferous discussion about raising taxes or not. Some of us were in favor of a small tax increase last year so that we wouldn't be in this situation this year. The first motion to approve the final budget last December included a small tax increase (what that was I don't remember), and the vote was tied 3-3. Former Mayor Robert Brain cast the deciding vote against the tax increase. On the next motion -- not to raise taxes -- one councilman changed his vote, and it passed 4-2.

    There was clearly disagreement last year. I was on the losing side of both votes because I felt that a small tax increase was in the best interest of the long-term health of the borough.

    This is one of those philosophical issues that comes up, especially during budgeting season.


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