Pottstown council eyes 4.9% tax increase for 2024

POTTSTOWN — The average property tax bill would go up by about $70 under the first draft of the $16 million 2024 budget presented to the borough council.

Borough Manager Justin Keller said that number will likely go down in the coming months as cost estimates for big-ticket items like health insurance are received, but said the proposed 4.93% tax hike would balance all budget lines as the numbers currently stand.

He and Finance Director Marley Boone presented the budget draft on Wednesday and indicated the deficit between projected revenues and expenses is $504,259. To cover it, the millage rate would have to be increased to 14.93 mills, a 0.701 mill increase.

Of the borough’s 18 different funds, deficits exist in only four as the budget now stands — the general fund, which is the largest, the parks and recreation fund, the trash fund and the library fund.

The trash fund is paid through direct payments, and not taxes so that $359,000 deficit will need a 10% fee hike to balance, an annual increase of $34.71.

Although a decrease of total assessed property value of $1.4 million might seem pretty big to the average homeowner, in the context of the borough’s $758,330,808 total assessed value, it’s a drop in the bucket and indicates that the long steep decline in borough property values seems to have leveled off.

In fact, from May 2022 to May 2023, a total of 440 properties were sold in the borough and the average sale price was $220,229, allowing officials to project a slight increase in property transfer tax revenues despite the slowdown in the rate of sales, due largely to mortgage interest rates increasing.

Also on the rise are business permits, up 7.27%, and building permits, up 9.44%, according to the presentation.

One large, undecided budget factor is the nonprofit status of Pottstown Hospital, which is currently in the courts. In February, the Commonwealth Court reversed a lower court decision and ruled that the hospital does not operate as a nonprofit, and should be put on the tax rolls. The hospital has appealed to the state Supreme Court.

Borough Solicitor Charles D. Garner Jr. explained if the Supreme Court “rejects the appeal, we win” and the borough’s total property assessment would increase by $20 million.

If the court does take the hospital’s appeal, “it will be another couple of years” before the matter is settled, Garner said. Since the February ruling, hospital owner Tower Health has been paying its real estate taxes “under protest” and the money is being held aside in an escrow account should the court rule in their favor and the borough would have to return it, Keller said.

On the subject of property off the tax rolls — including those owned by the borough and Pottstown School District — two more properties were taken off the rolls in 2023, bringing the borough’s total to 332, up from 304 in 2011. Were all but the borough and school district properties put back onto the tax rolls, revenues would be swelled by more than $2 million eliminating the deficit and the possible need for a tax increase.

On the expense side, the last year of a five-year police contract provides 3% raises, although a new contract with the borough’s non-uniformed workers, represented by the American Federation of State, County and Municipal Employees union, is still being negotiated, Keller said.

The budget also calls for the purchase of two police vehicles, one paid by a grant, and a jet-vac truck which can be used to clear both sewer lines and stormwater conduits.

A new program contained in the budget is one to help pay the cost of repairing sidewalks damaged by street trees. The $100,000 expense line is half funded by federal COVID relief funding and half by the general fund. The funds will be available only to residential owner-occupied properties with a low or moderate household income as defined by the U.S. Census, Keller explained.

“I’m glad to see we’ve got something in there to repair the tree damage to the sidewalks,” said Councilwoman Lisa Vanni. “I get a lot of calls about that.”

About $2.2 million in federal COVID relief funding will be used primarily in the capital budget, said Keller to match grants and pay for portions of major projects like $800,000 toward stormwater arch repairs, another $552,000 toward the coming repairs to the Moser Road bridge and all the costs of re-paving of public parking lots 1 through 5.

And $50,000 in American Rescue Plan Act funds will go toward the cost of replacing the bridge over Manatawny Creek in Memorial Park.

“We still have work to do and I’m confident we’ll be able to bring that (tax increase) down further,” said Keller. “There are still some big numbers we’re waiting for.”