LOCK HAVEN — A potential tax increase has been put on the table as Lock Haven City Council continues to discuss its budget for 2024.
City Manager Gregory Wilson provided an updated version of the budget on Monday night, which includes a 1 mill increase to General Purpose (Land) and 1.4 mill increase for General Purpose (building/improvements). If the increase were to be adopted by council at its Monday, Dec. 18, meeting this would see land at 29 mills and building/improvements at 6.5 mills.
Wilson said the proposed increase is to ensure the city has $2.7 million in tax funds to ensure the budget is properly balanced.
With the original proposal, the city would be collecting $2.4 million in real estate taxes for its General Fund.
Wilson provided a breakdown of the city’s major funds — General, Water, Sewer and Airport — to explain the reasoning behind the proposed increase.
In the original budget, Wilson said each fund was showing either low funds or a deficiency. This included $19,000 in the General Fund; $652,000 in the Water Fund; $115,000 in the Sewer Fund and $20,000 in the Airport Fund.
“With the changes that have been made and proposed, the General Fund will now have, if agreeable to council, $142,000 surplus; Water will break even with a General Fund allocations; Sewer will have a surplus of $250,000 and Airport will break even with a General Fund allocation,” Wilson said.
With the tax increase, Wilson said a 15 percent sewer rate increase was also factored into the budget.
The increase, Wilson said, was included in the updated proposal to battle deficiency within the budget.
“The exact amount and start of the increase will be determined by the rate study completed by Raftelis,” Wilson said.
Ratelis previously completed a water rate study for the city. However, the Pennsylvania Utility Commission did not approve a water rate increase until 2025.
To combat the deficiency in its Water Fund, Wilson said the budget shows a transfer from the General Fund.
“The Water Fund does not include any recommended improvements beyond leak detection and fixing those leaks in the most cost effective way possible,” Wilson said.
For the Airport Fund, Wilson said the transfer of General Fund taxes of about $88,000 to the fund will help balance its budget.
Funds that were allocated will pay for 842 part-time hours at the Airport. According to Wilson this would provide an 8-hour shift on Saturdays and Sundays throughout the year.
“The airport manager will have to determine if year-round that is the best use of those hours,” Wilson said.
In terms of the purchase of fuel, $45,000 was allocated to purchase F100 Low Lead.
“This represents 50 percent of the average fuel of this type purchased per year over the last six years,” Wilson said. He noted 7,000 gallons was already purchased on Sept. 19 and will be carried into 2024.
As for jet fuel, Wilson said it will be sold as current inventory permits. He added that if the state, which conducts Spongy (Gypsy) Moth spraying each year, were to request a jet fuel purchase that would be reimbursable.
In its General Fund, Wilson said some projects were placed on hold to balance the budget.
“The General Fund Capital Projects originally included the award and local share for the replacement of traffic signals at Fairview and Walnut Street intersection and Second Avenue and Bellefonte Avenue,” Wilson said.
The fund, he said, has enough to cover only one, with the plan to replace the Second Avenue signal.
Pushing back the other replacement, Wilson said, would allow the Capital Projects fund to retain a balance.
“Half of the remaining unallocated value of the Capital Projects Fund is shown as returned to the General Fund, which donated it, leaving a final balance in general projects of $143,000 – at the end of 2024 while still enabling the share of particular projects moving forward,” he said.
The budget also includes a reimbursem*nt of $115,000 from the city’s Liquid Fuels Fund which can be used for snow removal and street sweeping.
During council discussion, Councilmember Richard Morris questioned if a water rate increase to just city residents – which is permitted under the PUC – might assist in alleviating the proposed tax increase.
“I haven’t done the numbers, but it seems to me that if we were to propose an increase in the city’s water rate that would alleviate some of the pressure,” he said. “To be clear… (I’m) not proposing an increase in the water rate as a substitute. Simply as a way of balancing the two.”
Councilmember Steve Stevenson noted that the increase would still be felt by city residents.
“I don’t think it makes much difference whether you did an overall tax increase or you just increased costs to the city. It’s still an increase,” Stevenson said.
Stevenson said he felt the continued supplementing of the city’s Sewer, Water and Airport using General Fund allocations is not sustainable.
“I don’t think there’s enough balance left there to do all of that without seeing some type of a rather small increase this year, rather than a large one next year,” he said.
Stevenson noted that, in previous years, council discussed adding small increases over time instead of a large one at once.
“We always say it’s time to do a little bit at a time, smooth it in, so it’s not as much of a sticker shock,” he said.
Stevenson said the increase could potentially carry the city’s funds into 2025, when the PUC allowed a water rate increase to its customer base.
Councilmember Rick Conklin said he’d looked at the budget almost daily and mulled over the idea of a split-rate tax compared to a single rate. Wilson said he provided the council with both figures in the event they choose to change from split-rate to a single one.
“I think the move to a single rate is difficult right now, as much as I would love to see us do it from a time standpoint,” he said. “But I think the split rate recommendation… is the recommendation I would make.”
“If we can stay where every couple of years we’re taking a look at the millage and moving it half a mill, I see us in the future coming to a stable rate,” he said. “But not until we’ve settled some of the water and sewer (costs) that are currently on the table.”
Morris noted moving to a single rate would require a county-wide property reassessment.
“There is never a county wide reassessment,” he said. “That is at least three years away.”
However, Morris agreed with Conklin’s suggestion of a potential slow increase to get to the point of a single rate.
“If we can make an arrangement that incrementally closes the gap between the land rate and the improvement rate, that’s probably realistically the only way you can do it,” he said.
Councilmember Barbara Masorti turned attention to the proposed sewer rate increase, asking when Raftelis could have its study completed.
“If I get a hold of them this week and get a proposal, then we could probably start on it in the new year after January,” Wilson answered. “I think it took them four weeks to complete the water one. Sewer is much less complex.”
Wilson said the updated proposed budget will be available for the public’s view online at www.lockhavenpa.gov.
Council will consider adopting its 2024 budget at its meeting on Monday, Dec. 18, at 7 p.m., in council chambers at City Hall, 20 E. Church St., Lock Haven.
Today's breaking news and more in your inbox
