Berks County may have to consider a tax increase as part of its 2025 budget.
Financial officer Robert Patrizio Jr. delivered a review of the upcoming budget Tuesday during an operations meeting that included a stark warning to the commissioners that the county is facing a future deficit with revenues failing to keep up with rising operating costs and high interest rates slowing real estate development.
Under the current forecast, Patrizio said the general fund reserve would fall to a concerningly low level in 2026.
The fiscal policy of the county has been to keep enough money in reserves to cover three months of operation. But with expenses projected to outpace revenues over the next year, the county will be forced to tap into its reserves to make up the difference.
Patrizio said that means that to comply with its longstanding policy the county would have to increase its tax revenues by about 9% or significantly cut spending on services that are not mandated under state and federal law.
The second option would be a difficult one to pursue, Patrizio said, and would likely gut the county’s discretionary programming.
Patrizio said there were several factors impacting the budget situation.
Ongoing economic pressures
High interest rates: The county continues to operate in a very high interest rate environment that has an unfavorable impact on borrowing costs, tax base growth and investment performance — particularly when it comes to pension assets.
Personnel difficulties: The county continues to face challenges in wage growth primarily driven by labor shortages, which creates inflation and requires the county to pay more to attract and retain talent. Contracted professional service providers are experiencing the same thing and that means more costs are being passed onto the county.
Higher costs: The county has been negatively impacted by higher prices for food, supplies, building materials and energy costs.
Facility and service expansion
Kevin Barnhardt, the chief operations officer for the county, told the commissioners there are also several decisions the county has made that have led to large increases in expenses.
Downtown campus renovation: The county is undertaking major mechanical, electrical and plumbing repairs to the Berks County Courthouse and Berks County Services Center for the first time in more than 30 years. That is estimated to cost $25 million over the next three years.
Berks County South Campus: The county leases the facility in Mohnton for $550,000 annually and has made about $11 million in renovations to the building to house voting system equipment and provide additional space for other departments.
Berks County Agriculture Center: The commissioners are in the process of renovating the facility to meet the contemporary needs of the departments and partner agencies housed at the building. The two phases of the project were expected to cost more than $10 million.
Berks County Youth Center: The county recently opened the Bern Township facility to provide temporary housing and services for children with complex mental and behavioral challenges who have nowhere else to go. The state will cover 80% of the annual operating budget, and the rest — around $1.5 million — will fall on the county.
Regional youth detention center: The commissioners approved an emergency declaration in February to expedite the restoration of the former youth detention center so it can once again be used to detain juvenile offenders. The county is working with Dauphin and Lehigh counties to reopen the facility at a shared price to renovate and operate the center.
On the horizon
While little can be done to change decisions that have already been made, Barnhardt said, there are future choices to make that will also impact the county’s budget.
• Reading Area Community College is asking for a $800,000 increase in the county’s annual contribution.
• There has been a request by volunteer fire companies and eligible nonprofit emergency medical service agencies for the county to establish a property tax rebate program as a way to recruit and retain first responders to their ranks. The county estimates the program could cost about $1.2 million if implemented.
• There is discussion about the county granting a 911 radio replacement loan to municipalities that could cost around $18 million.
• There is interest in opening a day reporting center for adults on probation. It would cost about $800,000 to operate, but could possibly cut costs at the county jail.
“These are things that are on the horizon that the county certainly has to discuss and deliberate on in the future,” Barnhardt said.
Commissioners’ reactions
Commissioners Chairman Christian Leinbach said that although tax increases are unpopular, the county is in a tough spot because that’s one of the only ways it can raise the revenue needed to provide services to the community.
“Nobody wants to hear about a tax increase, but we also have to be responsible,” he said, adding that incremental increases can help avoid hefty hikes in the future. “If we wait, this becomes an even larger issue and we could fall back into the trap that previous boards were in where they had huge increases.”
Leinbach acknowledged property tax increases can be tough on some property owners, particularly ones already struggling with financial pressures.
“There’s no correlation between property taxes and the personal economy of a business or household, so they get hammered,” he said, noting it can especially be tough on those living on fixed incomes. “But the other side is equally true. When the economy heats up it doesn’t affect our revenues.”
Leinbach said the only way to get additional revenue is by raising the property tax.
When it comes to property taxes, Leinbach said he has heard calls from some people to perform a countywide property reassessment as a way to make sure the playing field is level.
The last time that was done in Berks was 1994, which means tax calculations are done based on property values in that year.
For properties that have been developed since 1994 — or those whose owners have challenged the assessment through the county board of assessment appeals — a calculation is made to equate today’s home values.
Leinbach noted previous assessments show that about a third of property values will increase, a third will stay the same and a third will decrease. But, he said, it seems like seniors and farmers would be hurt the most because they tend to stay in their homes longer.
“They get unfairly hit when there’s a reassessment, and that is why I’ve publicly opposed reassessment,” he said. “I understand why it’s important, why it needs to happen but we have to figure out a better way to do it so the burden of a reassessment isn’t borne by these two primary groups within our communities.”
Commissioner Michael Rivera said he understands the frustration that people are feeling about the economy, but he pointed out that government must deal with the same challenges.
“The economy is at a point now where a lot of things are out of our control,” he said. “With that being said, there are a lot of tough decisions that we need to make. We have to take a hard look at some things and we may need to rethink our expenses.”
Source: Berkshire mont
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