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Middletown council gives tentative approval to 2-mill tax hike for 2019

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 11/17/18

Middletown Borough Council by 6-0 vote on Nov. 17 approved a preliminary 2019 general fund budget that calls for raising the borough property tax by 2 mills.The first borough property tax increase …

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Middletown council gives tentative approval to 2-mill tax hike for 2019

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Middletown Borough Council by 6-0 vote Saturday approved a preliminary 2019 general fund budget that calls for raising the borough property tax by about $157 a year for the average homeowner.

The first borough property tax increase since 2008 would support a budget that calls for adding one new full-time employee for the Public Works department, and adding one new full-time officer for the police department.

The budget that increases property tax by 2 mills also includes funds to promote one of the police department’s current full-time officers to detective. That would give the police department two detectives; one is not enough to meet the caseload, according to interim Police Chief Sgt. Dennis Morris.

Council also hopes that adding a second detective can help reduce the amount of money now being spent to cover police department overtime.

The 2-mill increase raises the tax paid by $200 a year for someone with a home assessed at $100,000.

The median assessed value of a home in Middletown is $78,700. The owner of a property with that value now pays $443.15 in yearly borough property tax. With a 2-mill increase, the owner would see their borough property tax bill go up to $600.55 — a $157.40 increase.

The tax increase and overall budget do not become final until a final council vote, likely to happen Dec. 4. The borough by state law must have a balanced budget in place by the end of the year.

The proposed budget council passed on Nov. 17 is to be posted on the borough website for public inspection. Residents can also inspect the budget by going to the Municipal Building at 60. W. Emaus St. during normal business hours.

Multiple options

The 2-mill hike for 2019 increases by 25 percent the current borough property tax millage of 5.631 mills.

At council’s request borough Finance Director Kevin Zartman presented council with multiple options for the budget, all calling for raising taxes by 1.4 mills or more.

All the options, including the one council approved, also cut spending by 5 percent across the board below 2018 budgeted levels for all “discretionary” accounts.

Discretionary means anything council has the ability to cut.

For example, council cannot cut line items for insurance premiums, or for services that the borough has already contracted for in 2019 — such as information technology — or any line items related to already-fixed pension and wage and salary increases, Zartman pointed out.

Premiums for health insurance and all other insurance line items are all going up by about 10 percent in 2019, he said.

The budget option council approved also eliminates funding for a number of projects that were proposed for 2019 by Public Works Director Greg Wilsbach, as well as some police-related items.

Council hopes to address some of these in 2020, using a projected budget surplus of $156,000 at the end of 2019.

Wilsbach and Zartman both recommend council enact a policy to require that a fixed percentage of each budget surplus from every year go into a fund to save up money for future capital improvements.

Council has yet to adopt such a policy.

However, Councilor Ian Reddinger strongly recommended council use any surplus derived from increasing taxes in 2019 to in 2020 pay for the capital improvement projects that were pulled out.

Future increases?

Reddinger also considers it likely another 2-mill property tax will be needed in 2020, to make up for the tax not having gone up at all the past 11 years.

“This is inflation. This is not our fault,” Reddinger said, referring to past councils not increasing taxes to keep pace with rising expenses. “We need to fix it. If we want to keep the community growing we have to make the hard decisions.”

“This tax increase has to happen, and it’s not going to be the last one,” said Mayor James H. Curry III, adding that telling borough residents anything else is to “lie to the public.”

Councilor Robert Reid said he can support a 2-mill tax increase for 2019, but declined to say if another one will be needed for 2020.

Also voting for the 2-mill increase were Council President Angela Lloyd and Vice President Mike Woodworth, and council members Dawn Knull and Jenny Miller.

Council is short a member until a new one is appointed, as Damon Suglia resigned effective last Friday.

The 2019 budget keeps the electric rate where it is, but calls for transferring $1.6 million from the electric fund to help balance the general fund.

Last year, council transferred that same amount of electric fund money — $1.6 million — to balance the 2018 budget and avoid a 0.5 mill property tax increase that had been advocated by Curry and Knull.

Despite the across-the-board 5 percent cut in discretionary items, total spending in the proposed 2019 general fund budget is projected to go up to $6.9 million, compared to just less than $6.1 million in 2018.

Projected spending in the proposed 2019 electric fund budget increases by about $100,000, from the current year’s $8.06 million to $8.16 million.