Upper Dublin Township Commissioners Propose 5.9 Percent Property Tax Increase

[Editor's note: an original version of this article incorrectly estimated tax increases based on a home's "value." Homes are taxed according to their most recent assessment, not market value.]

In their third and final budgetary session, the Upper Dublin Board of Commissioners presented a proposed 5.91 percent 2012 property tax increase Tuesday night at the . The figure is 3.11 percentage points higher than the 2.8 percent increase proposed at the first budgetary session, .

How much money are we talking?

The increase of 5.91 percent represents an increase of 4.939 mills in 2011 to 5.231 mills in 2012. A mill corresponds to one tax dollar for every $1,000 dollars in real estate value. Given that number, a home assessed at $195,000 would see an annual increase of $56.94, a home assessed at $250,000 would see an increase of $73, and a $350,000 home a $102.2 increase. Township taxes account for approximately 17 percent of property taxes, with the bulk coming from school district increases, according to township officials.

"It all works out to be, to the average home, 57 dollars, and that is an increase in taxes of $1.10 a week," said board president Robert Pesavento.

"And it's important to note… that none of that is for operations," said vice president Ira Tackel. "Operations [costs] have actually went down, and services have not declined, they've been maintained nearly 100 percent."

The tax increase remains a proposal, and will not become official until the board votes on it at their stated meeting on December 13.

What are the tax increases paying for?

The 5.91 percent figure came after the seven member board of commissioners decided to invest in two capital projects: the construction of and separate "neighborhood storm water projects."

• 2.5 percent of the increase would go toward debt service on $3.5 million of borrowing for the construction of the two structures.
• One percent would go to debt service on $3 million in borrowing for the storm water projects, with an additional one percent to follow in 2013.
• 1.28 percent of the increase would go to the final portion of debt service on the new firehouse.
• .75 percent would go to capital improvements for the library.
• .38 percent to fund debt service on the township's purchase of 730 Susquehanna Road.

The commissioners reached a consensus that the two newly introduced capital projects were necessary to protect the township.

"[The capital projects] are investing in the future of Upper Dublin. If we don't fix the flood problems, we're not going to have people wanting to build here," said commissioner Rebecca Gushue.

The township now estimates that the cost of building the two flood retarding structures would be 12 million dollars. The township has been seeking a Pennsylvania state "H20" grant to pay for the structures, but stated in a that they had to begin to move forward on the projects in the face of bleak prospects for receiving a grant.

“It all comes down to ‘is the board ultimately going to find a way to fund this' and make a decision to actually build these dams?” said Pesavento in September. “If we don’t do that, we run the risk, a big risk, of losing a major portion of our tax base… If we don’t do this, we might as well move, because we’re going to become a township that has no business tax base, and it’s going to be all on the residents.”

Commissioner Derr suggests using balance funds instead of increasing taxes

However, commissioner Chet Derr voiced concern over funding the first 3.5 million dollars of the project by increasing taxes, and suggested the board consider using its current Community Reinvestment fund of $12 million.

"I understand the necessity of these, especially the storm water projects…but we have a fund of 12 million dollars," said Derr. "We're sitting on a chest full of money. Why not take the money, that was basically community money, and put it into these structures?"

Several board members voiced opposition to this suggestion, citing low interest rates and concerns over depleting the fund balance.

"I think it does the township a disservice," said Tackel. "First of all, our bond rating goes down as that fund goes down… and this only begins the [construction] process and the likelihood is that we're going to have to tap into that fund to pay for these structures and for storm water projects."

"Right now we're getting interest rates that are absolutely amazing," added Gushue. "And by doing this, we're prolonging the need to tap into that fund."

Still, Derr protested.

"But we have a pot of 12 million dollars, that we could borrow at no interest, and pay ourselves back. We're not going to get a better rate than zero," replied Derr.

Several commissioners and officials mentioned the desire to maintain a fund balance, stating that the township would need to spend at least $38 million in office park improvements down the road.

A philosophical debate over cutting services

The conversation eventually turned to township services, after commissioners voiced a concern that the fund balance could also be needed to pay for various departments.

"If you take that money out [of the fund], what are we going to have next year, a nine percent increase?" asked commissioner Ronald Feldman. "If we're not going to go in and actually start addressing different sections of the township staff."

"That's exactly what's happened to our [neighboring communities]," said township manager Paul Leonard. "Without naming names, they drew down their balances, their bills stayed the same or went up slightly, and they ended up with a 41 percent tax increase, nine, 10, 17 percent increases. What the [Upper Dublin] commissioners have chosen is to have smaller tax increases each year."

Members of the board also discussed whether or not cutting services would need to be considered in the future.

"The one thing I've heard from the residents of Upper Dublin is they don't want their services cut," said Tackel. "Not one or two, but the vast majority of residents that have talked to me."

"Maybe we have to start living within our means," said Derr. "There are some people that say that there are certain services that are not needed. If the economy doesn't improve, I guarantee you in a year or two, if people aren't getting their raises to keep up with the tax increases…that there [will be people wanting to see services cut.]

Ultimately, the board decided to leave the current proposal as is, and will hold any final discussions before voting on December 13.