12 per­cent tax hike looms

The Community Connection - - FRONT PAGE - By Evan Brandt [email protected]­tu­ry­media.com @PottstownNews on Twit­ter

With its sec­ond con­sec­u­tive 12-per­cent tax hike loom­ing — and a state-spon­sored con­sul­tant try­ing to find ways to save money and re­duce fu­ture tax hikes — bor­ough coun­cil has yet to make any changes to the pro­posed $48.9 mil­lion 2019 bud­get.

If adopted un­changed, the bud­get would add about $120 to the an­nual prop­erty tax bill of a home as­sessed at $85,000.

On Nov. 13, coun­cil voted on ad­ver­tis­ing the bud­get, and a brief re­view of where the bud­get stood Nov. 7 elicited lit­tle com­ment and zero sug­gested changes from the seven elected mem­bers of bor­ough coun­cil.

The only com­ment came from Coun­cil Pres­i­dent Dan We­and, who also heads coun­cil’s fi­nance com­mit­tee.

Bor­ough Man­ager Justin Keller said one ma­jor fac­tor in the tax hike is the $1.1 mil­lion hike in pen­sion costs re­vealed in Septem­ber. A re­cent meet­ing with the pen­sion board re­vealed that such in­creases will only keep com­ing, he added.

To which, We­and added “the ac­tu­ary said its be­cause health care is too good and our re­tirees are liv­ing longer.”

Re­tired po­lice health care

Re­tirees’ ex­cel­lent health is due, in part, to the gen­er­ous health care pack­age the bor­ough of­fers re­tired po­lice of­fi­cers

Ac­cord­ing to the cur­rent con­tract, po­lice re­tirees carry their bor­ough health care cov­er­age and cov­er­age for their fam­i­lies into re­tire­ment with them, with a $100 de­ductible and a 20 per­cent co­pay.

They must exit the health care plan when they be­come el­i­gi­ble for cov­er­age from an­other health plan, say through a spouse’s plan, but can re­turn if they lose that el­i­gi­bil­ity.

Those who re­tired be­tween 1999 and 2011 get the plan that was in place in 2010 and those re­tir­ing after 2011 get the plan that was in place at their re­tire­ment for them­selves and their fam­i­lies. The con­tract’s def­i­ni­tion of fam­i­lies in­cludes chil­dren born after the of­fi­cer re­tires, pro­vided the spouse is the same, and the re­tired of­fi­cers pay no pre­mium. Cov­er­age con­tin­ues for a spouse if the re­tired of­fi­cer dies first.

But those hired after 2013 do not get that guar­an­tee of cov­er­age.

Non-uni­form bor­ough em­ploy­ees, mem­bers of the Amer­i­can Fed­er­a­tion of State, County and Mu­nic­i­pal Em­ploy­ees union, do not re­ceive bor­ough-spon­sored health care in their re­tire­ment.

In 2019, both the po­lice and non-uni­form em­ploy­ees will re­ceive con­trac­tual pay in­creases.

A $27 mil­lion li­a­bil­ity

Five years ago, the bor­ough be­gan set­ting aside money to pay for re­tired po­lice health care. The bor­ough faced a $27 mil­lion li­a­bil­ity on 2013, when it be­gan mak­ing an an­nual $250,000 con­tri­bu­tion to try to ad­dress that li­a­bil­ity.

Since then, the bor­ough has paid into that fund four of the five past years, skip­ping 2017, ac­cord­ing to Fi­nance Di­rec­tor Jan­ice Lee. With the 2018 pay­ment, that fund will have $1,250,000 ac­cord­ing to Lee.

Out­side con­sul­tants

That health care li­a­bil­ity was one of the is­sues men­tioned in the 141-page Early In­ter­ven­tion Pro­gram re­port is­sued by Man­age­ment Part­ners in 2008 as one of the things nec­es­sary to straighten out bor­ough fi­nances.

The re­port was cited as the rea­son for the lay-off of 13 em­ploy­ees in late 2008 and the 10 per­cent prop­erty tax hike which ac­com­pa­nied it.

The first phase of a new re­port is due out later this month from Econ­sult, one of three firms that ap­plied for the work after the bor­ough was ap­proached by the Penn­syl­va­nia De­part­ment of Com­mu­nity and Eco­nomic De­vel­op­ment and asked if it once again needs help or­ga­niz­ing its


Coun­cil­man Joe Kirk­land — who heads up the ad-hoc fi­nan­cial sus­tain­abil­ity over­sight com­mit­tee formed in the wake of last year’s tax hike but which has pro­duced lit­tle bud­get sav­ings this year — said he met with rep­re­sen­ta­tives of Econ­sult and said “I don’t want them to feel their hands are tied.”

In Fe­bru­ary, the ad hoc com­mit­tee put to­gether to try to find ways to lower taxes dis­cov­ered that in­stead, with­out an in­fu­sion of $1 mil­lion in re­serves to re-es­tab­lish con­tri­bu­tions to a cap­i­tal fund, the bor­ough’s bond rat­ing may be down­graded.

In prior years, the gen­eral fund’s dwin­dling re­serves were drained to plug deficits al­low­ing bor­ough coun­cil to adopt bud­gets with lit­tle or no tax in­creases.

One sug­ges­tion be­ing im­ple­mented by Kirk­land’s com­mit­tee is the elim­i­na­tion of the pay­ment

win­dow on the sec­ond floor which al­lows res­i­dents to pay their wa­ter bills in per­son.

Res­i­dent Ken­neth Yerger showed up Nov. 7 to ques­tion the wis­dom of that. “Not ev­ery­one has a check­ing ac­count or credit card,” he said.

If the win­dow is still go­ing to be open for get­ting other per­mits, how much sav­ings is re­ally gen­er­ated by re­fus­ing to ac­cept pay­ments for wa­ter bills he asked.

We­and as­sured him it would save money.

Po­lice pen­sion costs

Ac­cord­ing to the cur­rent 80page po­lice con­tract, of­fi­cers can re­tire at age 50 with at least 25 years of ser­vice and re­ceive 50 per­cent of their fi­nal av­er­age salary in the last 36 months of em­ploy­ment with an­other $100 per month added for ev­ery ad­di­tional two years of ser­vice.

Mem­bers con­trib­ute 5 per­cent of com­pen­sa­tion to the plan.

Base salaries for this, the sec­ond year of the three-year con­tract, range from a low of $59,155 for a pa­trol of­fi­cer to $92,227 for sergeant. the po­lice cap­tain and po­lice chief have their own con­tracts.

Base po­lice salary ranges in 2019 will range from $61,235 to $95,472.

Night work after 8 p.m. adds 2.5 per­cent to the base salary.

Longevity pay adds 2 per­cent to base pay after five years of ser­vice, all the way up to 6 per­cent after 20 years of ser­vice.

The pen­sion bonus for longevity is in ad­di­tion to any cost-ofliv­ing-ad­just­ment but can­not ex­ceed 100 per­cent of salary be­fore re­tir­ing.

The cost of liv­ing ad­just­ment de­pends on which con­tract was in force when the of­fi­cer re­tired. For ex­am­ple, those who re­tired after 1995, a cost of liv­ing ad­just­ment based on the Philadel­phia re­gion’s Con­sumer Price In­dex is capped at 7.5 per­cent in­crease of fi­nal com­pen­sa­tion, but for those who re­tired after 1997, that cap is 15 per­cent.

Of­fi­cers are vested in the pen­sion after 12 years of ser­vice.

Non-uni­form pen­sion costs

The cur­rent 43-page con­tract with the Pottstown chap­ter of the Amer­i­can Fed­er­a­tion of State County and Mu­nic­i­pal Em­ploy­ees does not con­tain specifics about pen­sion ben­e­fits for non­uni­form pen­sions ex­cept to say that it re­mains un­changed from the pre­vi­ous con­tract.

How­ever, a 2015 au­dit of the plan posted on the bor­ough’s web site spelled out the ba­sics.

Non-uni­form em­ploy­ees con­trib­ute 5.75 per­cent of com­pen­sa­tion to the plan. They are vested after 10 years.

And like the po­lice, the de­fined ben­e­fit pen­sion pro­vides 50 per­cent of the av­er­age salary cal­cu­lated from the last 36 months of em­ploy­ment upon re­tire­ment, which can oc­cur at age 55 after 25 years of ser­vice.

Cur­rent salaries range from a low of $18.98 per hour ($39,478 an­nual) to a high of $27.30 per hour ($56,784 an­nual).

Dwin­dling Prop­erty As­sess­ments

An­other im­pact on the bud­get is the bor­ough’s dwin­dling prop­erty as­sess­ment value.

Keller in­formed coun­cil that Mont­gomery County’s fi­nal as­sess­ment num­bers show Pottstown lost an­other $1 mil­lion in real es­tate value in 2018, push­ing the deficit to $1,043,286 and the pend­ing tax rate to 12.99 mills.

Not to men­tion the an­nual ab­sence of $263,000 in tax rev­enue from Pottstown Hos­pi­tal be­ing off the tax rolls.

Also im­pact­ing the pro­posed bud­get is the $360,000 the bor­ough has to pay back to the own­ers of the mori­bund Pottstown Cen­ter shop­ping cen­ter at 799 State St. after the court de­ci­sion on an as­sess­ment chal­lenge.

Once coun­cil votes to ad­ver­tise the bud­get the tax rate can be low­ered, but not in­creased, ex­plained Bor­ough So­lic­i­tor Charles D. Garner Jr. Fi­nal bud­get adop­tion is ex­pected in De­cem­ber.

Wa­ter Rate Hikes

In ad­di­tion to a sec­ond con­sec­u­tive 12 per­cent in­crease in prop­erty taxes in 2019, users of the bor­ough wa­ter sys­tem also face a 5 per­cent hike in wa­ter rates; and an­other 5 per­cent in 2020 and yet an­other 5 per­cent hike in 2021.

The in­creases will re­sult in about $4.72 more per quar­ter for most cus­tomers or $18.88 more in wa­ter costs in 2019 and a to­tal hike of $56.64 by 2021.

This ar­ti­cle first ap­peared as a post in The Dig­i­tal Note­book blog.


This slide from Nov. 7’s bud­get pre­sen­ta­tion shows the bor­ough’s er­ratic his­tory of hold­ing the line on taxes and big tax hikes.

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