The Feb. 8 Tabernacle Township Committee meeting played host to the first public revealing of the initial draft of the 2016 budget.
Well, the expenses portion.
One major point was missing from that presentation — the tax increase for residents.
The committee spent last week’s meeting giving the second half of the presentation and delving into this sought-after information.
The committee’s initial plan was to attempt to put together a budget with no tax increase. However, after doing its due diligence, it was clear this would be a tall task.
The township’s fund balance is down quite a bit this year, dropping from almost $1 million to about $500,000. So to get this budget down to a zero tax increase, the township would likely be looking at deferring about $480,000 in school taxes. The township has not deferred school taxes in several years.
There’s about $2.9 million available to defer, and the Tabernacle budget would require the township to use about $450,000 of that to reach the goal of keeping taxes flat.
The township is the tax collecting entity for all of the taxing bodies; it collects for the county, the local school district and the regional school district. It collects for the schools six months in advance of when the money is due, so at any point in time, it would have six months’ worth of school taxes on the books as a liability.
To keep taxes down, the state will allow the township to “defer” those taxes or wipe off the liability from its books and utilize the money it has already collected to fund its budget.
So rather than using money that has been taxed, it is able to ship this over and use it to balance the budget.
Unfortunately, there are no new revenue sources in town or being given from the state this year, officials said, so any increase in the budget requires use of surplus, leaving the township with three options. It can defer school taxes, sift through the budget and attempt to cut $450,000 in expenses or increase taxes.
One positive discussed was the unexpended funds from the 2015 budget that will go back into surplus next year, making the fund balance in 2017 significantly higher than it is now.
However, if the township defers up to 50 percent of the school tax levy like it is talking about doing, this surplus will all be going toward that.
Mayor Stephen Lee attempted to steer the committee away from deferring the school taxes due to his concern for the potential increase from the school district.
“I personally am not a huge fan of borrowing money from two years ahead of time when we’re not really due to have it. I am more inclined to look at the expense side of the budget and begin to make some hard choices,” Lee said.
Lee’s proposal of attempting to cut budget expenses to fill the $450,000 hole was met by disagreement from other parties.
“That would be over 10 percent of our budget,” Committeewoman Kim Brown said.
“$450,000 is not going to come out of this budget unless there is a major change in something we do,” township administrator Doug Cramer said. “If you’re looking to make it all up, you’re going to have to make some pretty drastic changes in how we do business.”
While Cramer was not all in on deferring the school tax, he suggested the township look into deferring a portion of it and reaching its goal through finding a reasonable combination of all three options given.
If there were a tax increase, every penny would be the equivalent of a $16 increase for owners of a home valued at $160,000. This in turn would add $66,000 per penny toward the $450,000 goal.
In the end, Cramer left it up to Lee as far as what direction the township will ultimately go in, but stood by his original assessment that there is not $450,000 of fluff in this budget.
The committee will continue to play around with these numbers and will have the first reading of the budget to be passed in March.
