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Middletown council now says no property tax hike for 2018

Dan Miller, danmiller@pressandjournal.com
Posted 12/5/17

Middletown residents may not be looking at a borough property tax increase in 2018, after all.Borough council by a 5-1 vote during its Dec. 5 meeting voted to re-advertise a proposed 2018 general …

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Middletown council now says no property tax hike for 2018

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Middletown residents may not be looking at a borough property tax increase in 2018, after all.

Borough council by a 5-1 vote during its Dec. 5 meeting voted to re-advertise a proposed 2018 general fund budget that does away with the 0.5 mill hike that council had tentatively approved on Nov. 8.

That proposed increase - the first since 2008 - would have meant a $50 hike in the annual borough property tax bill for an owner of property in Middletown assessed at $100,000.

Instead of closing a projected $271,000 general fund deficit with a tax increase, council is now looking to cover the entire spending gap by transferring money from a surplus in the electric fund.

The change was proposed by Councilor Ben Kapenstein, who had initially proposed the 0.5 mill tax hike that was tentatively approved a month ago.

But since then, Kapenstein said he has learned that the surplus in the electric fund is much larger than originally projected - now about $1.7 million as opposed to the earlier figure of about $400,000.

Kapenstein also said he believes the borough may be “overestimating” expenses in the electric fund.
“The tax increase wasn’t that much, which was why I was for it in the first place,” Kapenstein said. “But it’s hard for me to vote for it when I see the potential surplus.”

Council Vice President Dawn Knull voted against getting rid of the tax increase, saying that even with the additional surplus the borough still has plenty of needs for the money - such as close to $10 million in capital improvement projects that have been identified by Public Works Director Greg Wilsbach.

“I would rather have excess than to start digging,” Knull said.

No funding for the capital improvement projects is included in the general fund budget. Some of the surplus money may be needed to cover debt service in 2018 if council decides to borrow to fund some of the capital improvement projects, Finance Director Kevin Hartman pointed out.

He didn’t have a vote, but Mayor James H. Curry III also spoke in favor of keeping the tax increase.

“On a $100,000 house we’re talking $50,” the mayor said, later adding “I’m not in favor of just constantly dipping into one-time cash because sooner or later, it’s gone.”

However, Kapenstein said that the borough should be generating the same amount of electric fund surplus for the next few years unless something changes “drastically,” in that the price the borough pays for wholesale electricity is fixed through Dec. 31, 2022, under a five-year contract that council approved in October, 2016.

“There’s a lot of good with our financial situation right now,” Kapenstein added.

Councilor Diana McGlone, who also voted to reject the tax increase, noted that the borough still has $6 million in unrestricted cash, and that “significant” revenue growth will be coming to Middletown with the long-awaited Woodland Hills housing development finally coming to fruition.

Others voting to reject the tax increase were councilors Anne Einhorn, Ian Reddinger, and Robert Reid. Council President Damon Suglia was absent.

Council proposes to consider final adoption of the newly-advertised no-tax increase budget on Dec. 20. The meeting may be held in place of council’s originally scheduled meeting for Tuesday, Dec. 19.

 

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