There is no property tax hike suggested in Penn Hills’ 2020 budget, but the manager’s budget proposal comes with a reality check: the municipality’s finances have “a big structural problem.”

Manager Scott Andrejchak addressed the municipality’s issue head-on in his letter to council that was attached to the 152-page spending plan for 2020, which includes a $3 million gap in its general fund.

“The big secret is that the municipality does not truly have a balanced budget, nor has it had one in many years,” Andrejchak wrote. “Penn Hills has been using its total fund balance, each year, to make its budget balance. It creates the appearance of a balanced budget to postpone choices about revenues and expenses.”

The budget, which can be found on Penn Hills’ website, shows a $32.9 million balance in its general fund expenses and $29.9 million in revenue, leaving exactly $3 million. Andrejchak has proposed filling the gap by using a $3 million carry-over from the municipality’s fund balance from 2019.

Andrejchak hopes to wean the municipality off that practice of using fund balances to fill budget gaps. Last year, he said, the municipality utilized $3.7 million to do the same — along with a one-mill property tax hike.

Last year’s property tax hike was the first since 2011, when the millage rate went from 5.35 to 5.60 mills for 2012’s spending plan. In 2013, the millage was decreased down to 5.44 mills, where it remained until 2019. It currently sits at 6.44 mills.

Andrejchak also proposed the creation of a Stormwater and Flood Mitigation Flood by diverting $5 from ratepayers’ quarterly $25 sewer charge. The same charge was reduced from $30 to $25 in April.

The new fund is expected to generate $300,000 in 2020, which will be used to reimburse the municipality’s general fund for stormwater related expenses.

Half of that fund will reimburse expenses from work done to stormwater infrastructure this year. The move will also help to balance the 2020 budget.

The creation of the fund, which will need to be approved by council, comes after heavy rainfalls crippled Penn Hills infrastructure, parks, homes and businesses in July. The deluge led to municipal officials declaring a state of emergency to fast track certain repair projects.

“We have no dedicated fund for stormwater expenses,” Andrejchak said. “I don’t think raising millage to pay for that … I don’t know if there’s an appetite to do that. And it’s not necessarily the best answer. So why not take revenue we’re already getting in the form of a fee to create a separate fund?”

The proposed budget also includes a $500,000 allocation to the municipality’s capital fund and raises up to 2.5% for municipal employees.

The spending plan includes the addition of a full-time position in the Parks and Recreation Department. The current position is part-time. It also accounts for the elimination of a part-time outreach coordinator at the Penn Hills Senior Center.

Penn Hills Council will hold hearings on the 2020 budget at 7 p.m. on Dec. 2, 16 and 30 at the government complex, located at 102 Duff Road.

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