On Thursday, Elizabethtown Borough Council -- and only a small handful of the public, two of whom were reporters -- got its first look at the proposed 2011 budget. And it doesn't look pretty.
The borough faces deficit of $338,890 -- and that is on a budget that is bare bones just covering the essentials and keeping services at their current levels. To the borough staff's credit -- from the borough manager and police chief on down -- they have held the line in costs and expenditures to the point that the proposed 2011 budget expenditures are less than 2008 and 2009.
In terms of revenues, such as the earned income tax, the Lancaster County Tax Collection Bureau has advised Elizabethtown to budget less than 2010. For this current year, he borough projects that it will receive $997,000 in earned income taxes -- that is, the tax on the income from people's wages. Because of the unemployment rate and the economy, the tax collection bureau projects that Elizabethtown will receive $903,000 next year -- an 11 percent drop.
Consider that in 2008, the earned income tax brought the borough nearly $1.2 million in revenue, and the drop has been precipitous.
Consider, too, that the borough's capital reserve fund is virtually broke. That means there is no extra money set aside for a "rainy day," so to speak. So here's the philosophical rub on that: Isn't it fiscally prudent for the borough to plan ahead and set aside money just in case?
Based on the conversation that my fellow councilmen and I had at last Thursday's council meeting, Elizabethtown residents are going to see some kind of tax increase. All of us are pretty much resigned to that. The question is, how big is the increase?
The borough's millage rate for property taxes -- which generate $1.8 million in revenues -- is set at 4.2 mills right now. The average tax bill on a home assessed at $150,000 is $630.
If Borough Council were to cover just the deficit and not set aside money for the future, the rate would have to increase to 5 mills, which would generate an extra $350,576. That would increase taxes on that average $150,000 home by $130, bringing the total average tax bill to $750.
Increasing the rate beyond 5 mills, to say 5.1 or 5.2, would generate more revenue that the borough could set aside for the future -- in my mind, a move that keeps the long-term vitality of the borough in mind.
Last year, at this point in the budgeting season, the deficit was even more significant -- and Borough Council asked staff to find places to cut 5 percent from the budget. Which they did. If we ask for more cuts, it will mean cutting services. Speaking as one councilman, I am determined to maintain services at the current level.
One more thing: Let me remind you that the work that is happening in Elizabethtown now, and will happen soon, such as the train station work and the extension of West College Avenue, is all funded through grants. Those funds are dedicated to those projects and can't be used for our general operations -- and we are fortunate to have them. If Elizabethtown didn't receive them and take advantage of them, then some other community in Pennsylvania or elsewhere would just as gladly as we are.
These are the questions and issues that we are wrestling with now. This is a budget that impacts you every day, from the time you flush your toilet to providing police protection. What is your response?