Upper Milford Residents May Face Tax Hike

Real estate taxes in may increase in 2011, for the first time more than 30 years.

Township officials don't even know exactly how long it's been since the last tax increase. But that doesn't make the possibility of an average $40 increase any less painful.

"I don't want to be sitting here saying we need to raise taxes, especially in the economic climate we're in," said Steven Ackerman, chairman of the three supervisors, during budget discussions at the Nov. 4 township meeting.

Township manager Dan DeLong will make a 2011 budget recommendation at supervisors' 7 p.m. Nov. 18 public meeting. They could adopt his proposal as a tentative budget that night. They must pass a final budget by Dec. 31.

"Currently, we don't have a balanced budget," DeLong told supervisors. His proposed budget has $38,000 more in expenses than revenues and does not include any money to repair East Macungie Road, reduced to one lane where a culvert collapsed.

The proposed $1.9 million budget is about the same as the 2010 budget. The problem is the amount of revenue coming in has dropped $55,000 since 2007, when the national recession began, but all expenses continue to increase.

DeLong attributed that decrease to a lack of home sales, which generates real estate transfer tax revenue.

Ackerman advised DeLong to take another look at his numbers and try to find "other things we can do without."

DeLong warned supervisors: "We don't have any extra funds to fund anything…At this point, we have $892 in uncommitted funds."

The manager advised supervisors it would be unwise to "sit here and say maybe things will get better next year and they'll start building houses and we'll see eight to 10 percent revenue increases every year like we did in the past. We can all hope for that, but I don't think we can rely on it."

Ackerman said the township's real estate tax has been at a quarter of a mill for 25-30 years, while townships of similar size have tax rates of four to seven mills.

Supervisors have several options to produce a balanced budget, according to DeLong. They can raise real estate taxes. They can implement a special tax specifically to support the fire department. They can avoid any increase by dipping deeper into the township's capital reserve fund. Or they can take some money out of capital reserve and pass a smaller tax increase. "Or we can sit down and hash out what doesn't take place."

If the full increase comes from real estate taxes, property owners will see an average annual jump of $40, from $20 up to $60 -- a 200 percent increase.

However, DeLong noted, if it was school district taxes, $40 more a year would only be about a 1.1 percent increase.

DeLong said only $56,700 of the annual budget comes from real estate taxes.

Much more, about $1 million, comes from earned income tax: .5 percent of each resident's earnings. Another $100,000 comes from real estate transfer taxes. The rest comes from permits, licenses and subsidies from the state.

He said about $500,000 is in the township's capital reserve fund. "To even come close to meeting our needs, we're relying on tapping $180,000 in capital reserve funds. I don't think it's prudent to spend all our capital reserve, which is kind of the path that we're on."

The manager said an alternative to a half-mill real estate tax increase would be go with a quarter-mill increase and also implement a special levy specifically to support the township's two volunteer fire companies. "Their funding is stretched to the limit also. They're running equipment that is 25-plus years old. When they need new equipment, they're also going to be struggling. You're not going to buy a new fire truck selling hoagies."