Kutztown School Board approved the 2024-25 final budget in June with a 3.5 percent tax increase and a nearly $1 million deficit covered by fund balance.
Previously, the district had not raised taxes in 10 years.
Also approved were local services tax of $5; earned income tax of 0.5%; real estate transfer Tax 0.5%; and amusement tax of 5%.
The board also approved eliminating the per capita taxes Sec. 679 of $5 and Act 511 of $5.
Superintendent Christian Temchatin said the total per capita tax at $10 per adult with the district would bring in a total revenue of $65,333 but district costs related to collection, including fees for tax collector, software and postage, cost $23,192 last year, leaving a net difference of $42,000.
“As part of the discussions related to taxes, we wanted to bring to the board’s attention that is an inefficient tax,” said Temchatin.
Prior to the vote on the budget, the board reviewed two options.
Option A : revenues of $37,059,084 and expenditures of $37,607,222 would be supported by a real estate tax of 31.5418 mils, resulting in a deficit of $548,138 covered by the fund balance.
This option included a tax increase of 5.3 percent. Increasing the millage to 31.5418 from 29.9543 would mean a tax increase of $179 annually for the average household with a home assessed at $117,000.
A motion to adopt Option A failed to carry with six board members voting against the 5.3 percent tax increase. Michael Hess, Caecilia Holt and Laurel Ziegler voted in favor.
Option B: revenues of $36,679,797 and expenditures of $37,607,222 would be supported by a real estate tax of 31.0027 mils, resulting in a deficit of $927,425 covered by the fund balance.
This option included a tax increase of 3.5 percent, which would mean a tax increase of $119 annually for the average household with a home assessed at $117,000.
The board approved Option B with a 5 – 4 vote. Hess, Holt, Ziegler and Dennis Udicious voted against a 3.5 percent tax increase.
Prior to the vote, Hess noted that the district has some big expenses coming up for buildings and the potential grade realignment that will result in needing a bond to borrow money.
Looking at the long-term fiscal health of the district, Hess said the district needs to keep as much tax money on hand as possible to try to get the best bond rate so that the long-term costs are as low as they can be.
Udicious, who voted no for both options, voiced his concerns about a tax increase.
“When we talk about a deficit, we’re talking about a deficit on what we’re proposing to spend,” he said.
Udicious noted that the district has a $5 million fund balance due to the good stewardship of the administration and a potential buyer for the administrative building which he believes would net enough proceeds to cover the budget deficit.
He also noted that Kutztown has a high tax rate in comparison to neighboring districts.
“We don’t necessarily have a revenue problem; we have a spending problem that is over the course of a long period of time,” he said.
While Udicious believes they are looking at other opportunities to reduce spending going forward, he raised concerns about a budget deficit of either $500,000 or $900,000 covered by a tax increase on a community already highly taxed amid tough economic times.
In response, Hess said, “Kutztown is a higher taxed area because we are a more rural and farming community so we do not have all of the tax revenue opportunities that areas to the east of us would have.”
Also, a large corporate tax assessment appeal resulted in about $250,000 in reduced income in property taxes for next year and in the future.
Plus, the end of temporary government funding for the COVID-19 pandemic will result in more than $1 million in reduced revenue next year.
“For a rural community, that tax burden does fall more on property owners because we just don’t have the business to tax here,” said Hess.
Temchatin also noted that while other districts are shrinking in student population, Kutztown is growing in the number of students it serves.
“Our expenditures are bound to increase because we have contractual obligations. Our only mechanism (for increasing revenue) is to local taxes,” said Temchatin.
Ziegler supported option A with a 5.3 percent tax increase because she believes it has the right balance of fiscal conservativeness while also looking ahead for future costs and considerations that keeps the district healthy in the future.
She also noted that while consumers have seen increased costs so has the district, as evident by the consumer price index, a standard set of goods and services tracked from year to year.
The index in 2000 was $172 and increased to $225 in 2011. The same goods and services purchased last year would have cost $305, Ziegler said.
Asking the district to continue to tighten the belt to make do with what we’ve got or continue to have increases in the costs for goods the district purchases is greatly outweighed by the overall consumer price index, Ziegler said.
While compassionate and concerned for those who a tax increase would be a personal financial burden, Ziegler believes the district cannot tighten its belt further.
“We’ve already heard from the community their concerns over the cutting of teacher positions. We heard concerns about class sizes and wanting to really maintain our excellence.”
Ziegler said they are here to serve as stewards for the children first and foremost.
“I want to make sure that we have the resources available to continue to support the high quality of education that Kutztown has been afforded to our taxpayers and their students within our district,” said Ziegler.
Holt supported Option A as well because she believes it is not a good idea for the district to count on the sale of the administrative building. She also feels it is important the district continue to offer its programs and does not want to see further cuts in the future.
While in support of a 3.5 percent tax increase, board president Jason B. Koch did not support a 5.3 percent tax increase and “setting the expectation that we’re willing to do max index increases because it makes our job easier.”
“Every year this should be difficult. We should be making difficult decisions. We should be making decisions with the best intentions for our students, for our community members, in the best way that we can,” said Koch.
Anticipating that costs will continue to rise, he expects there will be continued tax increases in the future but not all at once.
“We have enough funds to approach it in a more cautious manner when it comes to increasing taxes,” said Koch.
Board member Reba Hoffman read prepared remarks.
“As a new board member, I have to admit that these last few months have been really frustrating; they’ve been interesting and definitely eye opening to the fact that I had no idea of how the inner workings of our school system really functioned or our legal system,” Hoffman said, adding that she is still learning.
Before becoming a board member, she said it was easy to judge the board and wonder why they don’t just do the right thing and now understands that the board is trying to do the right thing.
Hoffman said what makes one idea right for one person might not be right for another. Her goal has been to always look at things objectively and make the right choice for as many people as she can.
“I hate the idea of raising taxes just as much as the next person,” said Hoffman. “The previous board prided themselves on not raising our taxes.”
While a great benefit to many, the district’s fund accounts have depleted year after year.
“We find ourselves in a position where we can no longer cut anything else out of our budget. There will be a huge deficit if we don’t raise taxes,” she said. “The previous board served at a different time in our history, one without record-breaking inflation, a time with relief funds from the government due to COVID.”
Hoffman said the board now has to make really hard choices.
Growing up in Mexico, Hoffman said there was no bus to take her to school and at one time there was no running water in her school to flush the toilets.
“I’m excited about all the opportunities that my children have here and the children of a lot of my friends. I realize that these opportunities don’t come free or even cheap,” she said.
If there is one thing being on the board has taught her, it’s how expensive it is to run a school, she said.
“If we want our children to grow into well-rounded adults who will be hard working contributing members of our community, we need to make hard decisions,” said Hoffman.
Understanding that raises taxes affects everyone, she needs for her children’s sake and for all of the children in the district to make the right decision for their future, which will affect everyone’s futures whether you have children or not attending the district.
“You live in this community and will inevitably share life with these children in one way or another,” said Hoffman.
Concluding she said: “I hope that as I make the right decision for our district that you will trust that I am making it out of the love for our district and all of our children. It might not seem like the right choice for you but maybe it is for your neighbor’s kids.”
Source: Berkshire mont
Be First to Comment