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Tax increase likely for Middletown Area School District property owners

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 5/22/19

The property tax in Middletown Area School District would go up by 4.37 percent under a 2019-20 budget approved by the school board for public display May 14.

The increase would cost another …

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Tax increase likely for Middletown Area School District property owners

Posted

The property tax in Middletown Area School District would go up by 4.37 percent under a 2019-20 budget approved by the school board for public display May 14.

The increase would cost another $96.75 a year for every $100,000 of assessed value for a property in the district.

The school board has not raised taxes since 2014-15.

Superintendent Lori Suski and Chief Financial Officer David Franklin both pledged to work toward lowering the tax increase between now and final budget adoption June 18. However, both all but ruled out chances of no increase at all.

“Zero for sure is probably not a possibility,” Franklin told the board.

One key difference this year is a district project expected to include renovation of buildings and/or new construction, to provide more space at the elementary level to meet projected future enrollment increases.

The board is looking at a range of options and has not made any decisions yet. The project could cost $35 million to $38 million, based on estimates from consulting architects to the district.

Part of the tax increase would go toward the school district starting to put money aside to repay the borrowing that will be needed to fund the elementary building project.

Of the $930,000 in new revenue the 4.37 percent tax increase is to bring in, $385,000 is to be set aside toward the building project, Franklin said.

The rest of the increase is needed to help close a budget deficit  that was $3 million in January but has been reduced to about $1.1 million, Franklin said.

Suski and Franklin said they hope to reduce the deficit further between now and June 18, by going back to budget requests from administrators and seeing which items can be put off for now.

“There are a lot of departments that asked for things that are luxuries and we just can’t necessarily do that,” Suski said.

Projected district spending for 2019-20 has been reduced from $50.7 million in January to $49.4 million currently. That’s still 4.6 percent higher than spending in the current 2018-19 year.

Revenues are projected to increase by 4.2 percent over 2018-19, from $46.4 million to $48.3 million.

Suski said the spending reductions made so far are “low-hanging fruit” not expected to have “any major impact” on district educational achievement.

No classroom teacher positions are being added or eliminated in the 2019-20 budget.

The district is eliminating its director of technology position, as the district is contracting out the position to a private company and the director is no longer a district employee. The district is also eliminating one full-time maintenance position.

The projected revenue increase includes the district expecting to receive $50,000 more in parking tax revenue from Harrisburg International Airport — $625,000 in 2019-20 — compared to $575,000 this year.

The district used the parking tax revenue to build the new high school that opened in 2016 without raising the property tax, Franklin said.

After the high school was funded, the district started using money from the parking tax to help cover general operations. As a result, the parking tax money cannot this time be put toward the elementary project to avoid raising the property tax, Franklin told the Press & Journal.

“We need to think about the fact that there will be annual tax increases going forward, but managing those is what we can try to do,” Franklin told the board on May 14.

But taxes being too high drives away investment needed to bring in property tax revenue, said board President Linda Mehaffie.

“When the taxes go sky high, people don’t buy, and if they don’t buy in your neighborhood, in our neighborhood — Middletown school district — then there’s no value to your properties, so you’ve got to be really, really careful about that,” she said.

She asked about the increase in property tax revenue anticipated from major development proposals in Lower Swatara Township such as the United Parcel Service hub, D&H Distributing, and the Wilsbach Distributors warehouse at Oberlin Road and Longview Drive.

Franklin said added tax revenue from these developments can’t be factored into the budget until the district knows how much they will increase the assessed value of these properties.

As these developments come on line, the district could “commit” the increased property tax revenue toward funding the elementary building project — as the board did by committing the airport parking tax revenue to the high school project, Franklin said.

“That potentially changes the strategy of how many mills we need to set aside (for the elementary building project) because we then have the revenue,” Franklin told the board. “As those come on board it could eliminate the need to set mills aside. We may still need a tax increase for normal operations, but not as much.”