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Middletown Area School District warns of potential tax increase

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 2/6/19

Middletown Area School Board is putting residents on notice that the school district property tax could go up by 4.37 percent for the 2019-20 school year.

The school board has until June 30 to …

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Middletown Area School District warns of potential tax increase

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Middletown Area School Board is putting residents on notice that the school district property tax could go up by 4.37 percent for the 2019-20 school year.

The school board has until June 30 to adopt a final budget for 2019-20. However, the board under Act 1 state law must tell taxpayers in January if the board intends to raise taxes by more than 3 percent.

Just because the board is obligated to tell residents by now that it might raise taxes by 4.37 percent does not mean that taxes will go up by that amount when the board adopts the final budget, school district Chief Financial Officer David Franklin said during the board’s Jan. 22 meeting.

Every year since 2007-08, the board has proposed a tax increase exceeding the 3 percent cap. However, in none of those years has the school board approved a final property tax increase that actually exceeded the projected amount.

For example, the board in 2008-09 projected a tax increase of 10.43 percent, but the amount approved was an increase of 5.27 percent — which is also the biggest property tax increase that the board has approved since 2007-08.

The board has not raised taxes since 2014-15, when property taxes went up 1.56 percent.

A 4.37 percent tax increase for 2019-20 would raise the annual tax bill by $96.75 for someone owning property in the district assessed at $100,000, Franklin said.

The projected increase includes .42 mills to start setting money aside for adding more space so the district can handle projected future growth in elementary enrollment, Franklin said.

The budget does not include funds for the proposed 759-seat “mini-stadium” the district is planning to build in front of the high school. Currently estimated at $3.2 million, it will be funded using money from the capital reserve, Franklin said.

The board has given consultants authority to move forward with plans for the mini-stadium. However, the project is months away from going out for bid, and the board has not approved any construction contracts. The mini-stadium could be in place by August 2020.

Franklin emphasized that the budget presented on Jan. 22 is very preliminary, with a long list of unknowns starting with how much the district will receive in funding from the state for 2019-20.

But at this juncture, spending is estimated to go up by $3.5 million over current year budgeted levels, a 7.3 percent increase.

Revenues are not keeping pace, with local tax dollars — the district’s largest revenue source at about 63 percent of the total — projected to increase by only $1.1 million in 2019-20 compared to 2018-19.

The district will lose $110,000 in yearly tax revenue from Penn State Harrisburg buying the Nittany Village student housing complex in Lower Swatara Township in September and taking the property off the tax rolls, according to Franklin’s presentation.

The preliminary budget shows a $3 million deficit, even with the 4.37 percent tax increase.

The district is looking to qualify for an exception allowed under Act 1 to exceed the 3 percent tax increase cap, by citing special education expenditures for 2016-17 and 2017-18 that have exceeded the amount of offsetting state revenue received in those two years.