Plum school officials say 4% tax hike might be needed for next year

Plum School District property owners could see their real estate taxes jump by more than 4% as school district officials try to plug a $1.3 million budget shortfall in next year’s budget.

Instead of adopting a resolution to keep any tax increase at or below the state’s Act 1 index for the district, which would have capped any tax increase at 3.5%, school directors chose to present a preliminary budget that calls for a 4% tax increase.

The move would raise taxes from the current 21.0757 mills to 21.923 mills. The approximately 0.85 mill increase would hike taxes by about $97 for a home with the district’s median assessed value of $113,700.

School board members said the vote Tuesday does not necessarily mean taxes will go up by 4% because the district hasn’t yet gotten figures for state and federal aid for the next school year and because district officials plan to seek new revenue streams for the district before having to adopt a formal preliminary budget on Jan. 26 and a final budget by June.

The move does paves the way for the district to apply for pension and special education exceptions through the state Department of Education in February. The exemptions would be necessary to raise taxes above the Act 1 index.

District Business Manager John Zahorchak said he recommended the district raise taxes beyond the index this coming school year due to about a $1 million increase in pension obligations, salaries, health care and charter school costs.

“There’s mandated costs that are out our control,” he said. “If we hit the tax raise this year, it’s our intention to skip the next two years and be able to absorb the mandated cost increases.”

Projected revenues were listed at about $66.06 million and expenses at approximately $66.16 million, an estimated $100,000 shortfall even with a maximum tax hike.

Zahorchak said administrators plans to pull from the district’s $4.5 million reserve fund, which contains about $3.8 million in borrowed money, to close that gap.

He also noted diesel fuel and pension costs may come in less than budgeted, which could lower a potential tax hike.

“There’s a need to go out and try to find other sources of revenue other than consistently going to the well and asking the taxpayers to support the school district,” Zahorchak said. “We do that by revitalizing the Plum Foundation. We do that by adjusting some of our policies to bring in some more rentals of our facilities. There’s got to be a real concentrated effort to engage the business community in funding some different initiatives that we want to do”

The proposed 2020-21 budget contains no furloughs or program cuts. It will be posted this month on the district’s website, pbsd.net.

“At this point we have a lot of unknowns,” said school board member Amy Wetmore. “It just seems like good common sense to give ourselves that option if necessary. That dosn’t mean that we need to take it.”

Board member Michelle Stepnick echoed Wetmore’s comments and noted the district will explore all options besides raising taxes.

“We’re not raising taxes tonight,” said Stepnick. “We’re giving ourselves the opportunity if needed … It does mean, if it becomes May and we have to have that conversation, then we’ll be able to have it.”

Board member Scott Kolar said a resolution vowing to keep within the Act 1 index would have given senior citizens and others piece of mind knowing a possible hike would be capped below 4% and encouraged his fellow board members to minimize any additional taxpayer hardship.

“I think the previous board put the school district in a good financial position with all the things that were done,” Kolar said. “I don’t think this is the time to reach out and burden the taxpayers with a potential tax increase beyond the limit.”

District officials did not raise taxes as part of the current school year’s budget.

The board increased taxes, closed Regency, reduced kindergarten from full- to half-day and furloughed more than 20 teachers for the 2018-19 budget.

Those in favor of the preliminary budget were President Michael Devine, Vice President Michael Caliguiri, Angela Anderson, Stepnick, Wetmore and Adam Hill. Kolar, Scott Coulson and Joe Tommarello dissented.