Proposed New Kensington-Arnold budget has $1.2M deficit, 2.3% tax hike

New Kensington-Arnold’s proposed budget for the 2020-21 school year now includes a 2-mill property tax increase, but some board members are asking if it should be higher.

Such a tax hike amounts to 2.3%.

The school board discussed the budget during a virtual finance committee meeting Tuesday. It is scheduled to vote on the spending plan at the May 26 meeting, also to be held virtually.

An increase of up to 7 mills had been possible after the state Department of Education approved the district’s request to increase the tax rate beyond its inflation limit, 3.32 mills, based on special education costs. But, until recently, no tax increase had been worked into the budget, Business Manager Jeff McVey said.

A 2-mill increase would raise the district’s property tax from 85.27 mills to 87.27 mills. The owner of a property assessed at $20,000 would see their school tax bill increase by about $40, from about $1,705 to $1,745.

With a 2-mill increase, next school year’s budget has a deficit of about $1.18 million, with the district spending about $38 million on revenue of $36.83 million, according to McVey.

McVey said the district will end the current school year with about $1.4 million in reserve.

The projected $1.18 million deficit for the 2020-21 school year would reduce the district’s reserves to $225,000.

School Directors Steven Sorch and Tim Beckes each suggested that a higher tax increase should be considered — Sorch suggested 3 mills — to give the district more “wiggle room.”

A 3-mill increase would take the rate to 88.27 mills, increasing the bill on a $20,000 property by $60 to about $1,765.

McVey said a higher increase is an option. “Obviously it helps you out in the long run,” he said.

Beckes said he isn’t convinced the district will collect the property tax it’s anticipating because of the economic impacts of the covid-19 pandemic. Board member Bob Pallone said some observers are expecting property tax collections to fall by 10% to 15%.

McVey said he doesn’t know how the district would cope with a revenue loss that severe.

Bob Pallone said he worries about the impact of hiking taxes on property owners.

Spending in the proposed $38 million 2020-21 budget is down by $716,000 from an earlier proposal. McVey attributed the reduction to “personnel changes” and “personnel moves,” but did not detail them.

Bob Pallone hinted at personnel changes that he said the board could not discuss in public.

Superintendent John Pallone on Wednesday said “the district has received several retirements” and that staffing changes may have to be implemented because of enrollment, scheduling and/or specific funding limitations.

McVey said the district is getting almost $1.2 million from the “CARES Act,” federal coronavirus relief fund. The school board and administrators discussed using it to buy computer equipment.