Souderton Borough expects tax increase

Last week, it was Telford looking at this year’s numbers in preparation for next year’s budget. This week, it was Souderton. In both towns, the bottom line sounds similar.

“I think realistically we’re going to have to look at a tax increase. We’ll just have to keep it as minimal as we can,” Borough Manager Mike Coll said at Souderton Borough Council’s Oct. 8 public works work session.

Just as in Telford, one of the primary reasons for the tough budget numbers in Souderton is that both the earned income tax and the real estate transfer tax are bringing in less than expected.

In Souderton, both seemed to be roughly in line with what was budgeted for the first half of the year, Coll said, but then took a dive in the just completed third quarter of July through September.

Sales of property and income from the real estate transfer tax has “come to a screeching halt,” Coll said. As of the end of September, only $37,801.62 — 47.25 percent of the $80,000 budgeted to be received this year from the real estate transfer tax — has come in.

“We’re really low in that category and I don’t see it recovering in that last quarter,” Coll said.

The earned income tax, meanwhile, has brought in 69.19 percent of what was budgeted, with $518,900.11 received in the first nine months, compared to the $750,000 budgeted for the entire year.

“I think we’re going to fall short and it could be about $50,000,” Coll said.

Historically, the amount being received from those two taxes has increased most years and helped keep up with increasing expenses, Coll said after the meeting, but that is no longer the case.

“Your revenue sources are actually going in reverse,” Coll said.

That means other taxes will have to be increased to make up the difference, he said.

Property taxes in Souderton increased about 7 percent this year, rising from 4.665 mills to 4.9925. Each mill equals $1 of tax for every $1,000 of assessed property value. The increase in this year’s tax bill was a little less than $50 for properties assessed at the average amount

for Souderton properties, according to borough information.

With 75 percent of this year completed, the combined per capita, real estate transfer, earned income and local services taxes have taken in $633,271.35 — 68.17 percent — of the $929,000 budgeted for the entire year. That leaves a balance of $295,728.65 to hit the target.

“There’s almost $300,000 here that we’re going to be hard-pressed to get,” Coll said.

Although not a large part of this year’s $2.68 million general fund budget in Souderton, shrinking interest rates have taken an even bigger hit percentage-wise than many other categories, with $50.95 of interest income logged through the end of September — 9.26 percent of the $550 that was budgeted for the entire year.

There is at least one area in which income is increasing, though, council noted. The amount collected through the borough’s portion of cable television bills is $84,289.73 through the end of September — 80.28 percent of the $105,000 budgeted for the full year.

On the expense side of the ledger, the borough is running at or below budget in most categories, Coll said. Overall, a little less than $2 million has been spent from the JHnHUDO IunG GuULnJ WKH fiUVW nLnH months of the year.

Discussion of next year’s budget will continue at Souderton Borough Council’s administrative work session meeting at 7 p.m. Monday, Oct. 15.

“It’s going to be a tight budget, maybe tighter than it was in 2012,” board member Preston Miller said.

“This is going to be another interesting budget to work through, to say the least,” council President Brian doshow said.

There’s not much more that can be cut from the operating budget, he said.

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This year’s tough budgeting continues an ongoing trend, he said.

“My feeling is this is the new reality for a number of years,” doshow said. “I don’t think we’re coming out of it anytime soon.”

During the Oct. 8 discussion, board member Richard Halbom said he thinks it would be more fair to increase the earned income tax instead of the property tax.

“It would be more evenly distribut- ed across the borough,” Halbom said.

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Coll said he would check into it, but thinks the state caps the earned income tax rate for the borough’s general fund at the 1 percent rate now levied — half of which goes to Souderton Borough and half to Souderton Area School District. There are some townships, including Franconia, that have a higher EIT rate, Coll said, but WKH DGGLWLRnDO SRUWLRn LV VSHFLfiHG IRU open space. In other matters: • $ SODnnHG VuUvHy RI UHVLGHnWV’ opinions on whether the borough should change to contracting with one trash hauler will not be going out in the sewer bills at the end of October.

“We’re going to have to push that off until our February billing,” Coll said.

Two other inserts for activities connected to the borough’s 125th anniversary this year will be placed in the October sewer bills, which would put the mailing over its one ounce cap if the survey were also included, he said.

• LHDI VZHHSHU FuUEVLGH FROOHFWLRnV in the borough will begin Monday, Oct. 22.

• .HOOL 6FDUOHWW ZDV LnWHUvLHZHG IRU an opening on the borough’s zoning hearing board.

Scarlett, who said she has lived in Souderton for about 10 years, is Doylestown Borough’s director of EuLOGLnJ DnG zRnLnJ DnG fiUH PDUVKDO. She has also been a volunteer for the Souderton-Telford Main Streets Design Committee.

A vote on the appointment is scheduled for council’s Nov. 5 meeting, Coll said.