The Octorara Board of Directors held their Facilities and Policy Committee Meetings, and the Work Session Meeting on Monday, June 12, 2017. All nine Board Members were in attendance.
With the exception of two items of note, Monday’s Committee and Board Meetings were generally unremarkable. The Facilities and Policy Committees are dealing with rather routine issues. While it is important work, most of it is also not very newsworthy.
Octorara SD’s 2.25% Property Tax Increase
During the Work Session Meeting, Board Members reviewed the changes made to the 2017-2018 Budget since the initial Draft Presentation back in December. Most can easily be described as minor and peripheral. The one major change that many people are concerned with is the lowering of the property tax increase from 3.2 percent to 2.25 percent. Next week, Board Members will vote to increase the real estate property tax millage rate in Chester County to 39.49 and in Lancaster County to 29.45.
I will be voting against both the budget and the tax increase, and here is why. First, with as high as the tax rate already is, I believe any tax increase is too much. Over the last 15 years, property taxes have grown at a much faster rate than incomes. Additionally, our retirees have it the hardest. Since 2010, their social security cost-of-living increases have been small or nonexistent. In many respects, the Board wants you to be grateful that they only punched you in the face rather than kicked you in the groin, as they originally intended.
Before the decision was made to take a lower tax increase, the 2017-2018 was projected to overspend tax revenue by almost $603,000. There has been no substantive effort to control the budget’s growth. Therefore, the tax increase of 2.25 percent will grow the District’s operating deficit to roughly $857,000. The impact of this cannot be understated.
The Consequences of Pandering
This choice by the Octorara Board means that next year, the Board will need to increase taxes by around 2.4 percent just to fill this year’s revenue hole… and that is before a single dollar is added to the next Budget. Based on our historic trends, we can reasonably project the Budget will increase next year by around 3 percent (or $1.6 million). Factoring the budget contingency and debt service credits, the Board will need a tax increase of roughly 5 percent to avoid overspending revenue.
Of course, thanks to Act 1, it is unlikely that the Board will have the power to increase taxes that high. So, there are only so many options available. Here are a few…
- First could be to tax up to the Act 1 limit and pay the balance out of the Reserve Fund. This will actually compound the problem. We can only go to that well so many times before it runs dry. Once it does, we are in a major financial crisis.
- Next option is taxing up to the Act 1 limt and splitting the difference with a combination of cuts and Fund balance. This will extend the life of the Reserve Fund. However, a large and growing hole will continue to exist, and more cuts will be required down the road.
- The third option is taxing up to the Act 1 limit, and cutting the Budget in order to eliminate the use of Fund Balance. We don’t have a way today to know what the Act 1 limit will be for next year, but if it is the same 3.2 percent, this option would mean cutting $700,000 in personnel and services.
- Another option is taxing somewhere less than the Act 1 limit or no tax increase at all. This would require finding $1.6 million to cover the cost. Any portion not covered in cuts will create a large hole in revenue.
This is the consequence of the Board making politically expedient decisions in an election year. People can spin numbers any way they want to make their arguments. However, at the end of everything, the numbers themselves don’t lie. Numbers represent an absolute reality that is not influenced by beliefs, emotions or wants.
Slow Pay on New Track
The issue of Octorara’s new track is long and complicated. I am going to try to condense it to a reasonable summary. Several years ago, the Feild Development Task Force (a Booster organization) started to push for the district’s old track to be replaced. But, they didn’t want to just replace the existing track; they wanted a completely upgraded track.
When I first started on the Board, the estimated replacement cost was projected around $100,000 in total. Becuase of Feild Development’s vision, the ultimate cost ended up being well north of $400,000. Back in 2015, the Board agreed to split the cost of the track with the Task Force. But, as a condition, no work was to begin until the Task Force had their portion of the funds in hand.
The project was split into 2 stages to make things easier. The first stage was the actual track, and the second stage was an expensive “protective” coating. Just a few months later, in the beginning of 2016, there was a request to move forward to getting quotes before Feild Development’ had their funds in hand. Why? The expectation was that by the time quotes came in, the Task Force would have the money needed. If they did, the district would be ready to go. If they didn’t nothing would happen until they did.
The quotes came in and the Board was told that the Task Force had their portion of the first stage. So, the construction began. Later, the Board was told that the Task Force had the money for the second stage. However, there were some unforeseen costs, and the Board granted the Task Force a $10,000 “loan” to be paid for before the end of 2016-2017. In fact, the expectation was that the balance would be paid by January or February.
What really happened was that the district did not receive the first installment until after the track was completed. While not making much of an issue of it and giving people some breathing room, I have repeatedly asked about the status of the remaining balance. At this week’s Facilities Committee, unsolicited by me, the Board was informed that the Field Development Task Force “expects” to have the remaining balance paid sometime this fall.
Ok, so, what does having funds in hand mean to you? If you want to buy a car, it means you walk into the dealership ready to pay for it at the time you drive it away, not make payments on it over time… and certainly not without a set payment schedule. So, when certain people said that the Task Force had the funds ready, and then it turns out they needed to make payments after the fact, how do you perceive that… especially when a balance is still owed?