Final budget proposal has slight tax hike

PHOENIXVILLE » With a 5-4 vote Monday night, the Phoenixville Area School Board adopted a $103.5 million proposed final budget for the 2022-2023 school year that begins July 1 and would raise taxes by .99 percent.

Voting in favor of the budget plan were board members Jerry Weiss, Caitlyn Carminito, Michelle Schamis, Betsey Ruch and school board President Susan Turner.

Voting no were school board Vice President Scott Overland, Ayisha Sereni, David Golberg and Victoria Walker.

During a presentation prior to the vote, Finance Director Jeremy Melber outlined several options for closing the $892,000 deficit between the projected $102,628,436 in revenues and $103,521,355 in projected expenses.

All options revolved around one central question — how much of the district’s surplus to use for tax reduction, versus transferring to reserves. The higher the tax increase, the more of the district surplus that would be diverted to the reserves, capital and otherwise, Melber explained.

The median assessed value

of a property in the school district is $138,000, which translates into about $308,000 in current market value, said Melber. And so a tax hike of 1.3 percent would translate into a $58.36 tax hike for the coming budget year.

Under the .99 percent tax hike the school board adopted, that median property would see the annual tax bill rise by $44.45. Other options included a .85 percent tax hike that raised taxes on that property by $38.17; or a .77 percent tax hike that raised that property’s annual tax bill by $34.57.

“We’re talking about a $24 difference between the highest and lowest tax hikes,” observed board member David Golberg in suggesting that the board discussion was irrelevant. “That doesn’t really blow my skirt up.”

Overland, on the other hand, said he is uncomfortable raising taxes at all when the district’s undesignated fund balance is more than $7 million. “I think people watching this would ask if this isn’t a time to not raise taxes, when would we ever not raise taxes?” he said.

But the surplus from the current year cannot be counted on to be repeated, Melber warned. It is largely due to the financial impacts of Covid, including a 16 percent increase in earned income tax receipts due, Melber suspected, to district residents who work in Philadelphia working from home during the pandemic. They, therefore, paid their taxes in Phoenixville rather than the city. That is not, he said, a situation that the board can necessarily expect to be repeated as pandemic restrictions ease.

Another factor to keep in mind, Melber said, is the potential impacts of the court case brought by the owners of Phoenixville Hospital, which lost its non-profit, and thus tax-free status, in Chester County court last year. The company has appealed that decision.

Hospital owner Tower Health has been paying the $750,000 annual tax bill “under protest” since 2017, said Melber. If the district loses the appeal, not only will it immediately lose an annual infusion of $750,000 in tax revenues, but will also have to pay back the $3.7 million Tower Health has already paid, he said.

Thirdly, the district will likely take out a bond to pay for the planned new East Pikeland Elementary School and should the reserve funds be diminished by payments to the hospital or other circumstances, the interest rate district taxpayers would pay on that bond could well be higher, Melber warned.

Now that the proposed final budget has been adopted, it must be made available to the public for the next 30 days. By law, the final budget does not have to be adopted until June 30, but Phoenixville is poised to take its vote in May. Up until the final vote, the proposed tax rate can be further lowered, but not raised, Melber said.