Newtown Township’s Proposed Tax Increase Put Into Perspective

A recent article published in the Newtown Patch entitled “Newtown Supervisors Look To Tweak A Taxing Budget Proposal” has caused quite a stir amongst many readers of the article - at least among those who posted comments. The misleading subtitle - The Newtown Township Board of Supervisors voted to revise the 2021 budget that proposes a 178 percent property tax hike. – is the probable cause of this mishegas!

“This is a bait and switch,” noted one commenter (“RationalThinker”). “They [unspecified] will say ‘We could have had to increase by 178%, and ONLY did 40%’ like that is any comfort for having been mislead by these people.”

“Even 40% is too high in this economic environment,” said another commenter (“Francis Marion”).

I have found that many people are misunderstanding what tax the township is looking to increase. As a consequence, the often-cited percentage increase numbers are misleading.

Warning! Math Ahead!

The average Newtown Township homeowner such as myself pays about $4,800 in TOTAL property taxes each year. However, only about 3% of that – about $144 – is levied by Newtown Township. Bucks County gets $802 and the Council Rock School District (CRSD) gets a whopping $3,862! Imagine those numbers as dollars piled up next to each other as in the following diagram.

NOTE: Newtown Township has nothing to do with the CRSD property tax nor the Bucks County property tax.

If your TOTAL property tax was to increase by 178%, then you should be alarmed because that would equate to an $8,500 INCREASE! Even a 40% increase ($1,920) would be alarming.

HOWEVER, let’s make sure we are talking about the Newtown Township $144 per year property tax – that tiny pile of dollars in the diagram. A 178% increase in THAT tax equates to $256 more per year for a total of $400 per year going to the township. A 40% increase is only about $58 in additional property tax!

In summary, for the average Newtown Township homeowner:

TOTAL Real Estate Taxes Paid = $4,808.89

• Township Tax: $144.65 = 3% of the TOTAL
• Bucks County Tax: $801.96 = 17% of the TOTAL
• CRSD Tax: $3,862.28 = 80% of the TOTAL

Because the township real estate tax amount is currently very low, any increase ON A PERCENTAGE BASIS WILL LOOK ALARMINGLY LARGE, but in terms of dollars and cents it doesn't look alarming at all!

• 40% increase: $144.65/year increases to $202.51/year ($57.86 actual increase per year; an additional $0.16 per day)
• 133% increase: $144.65/year increases to $337.19/year ($192.54 actual increase per year; an additional $0.53 per day)
• 178% increase: $144.65/year increases to $402.13/year ($257.48 actual increase per year; an additional $0.71 per day)

The current draft preliminary budget – if approved – would include a 133% increase or about $193 more per year in property tax for the average homeowner.

I am not trying to sell people on this increase and have stated my opinion that we must make some cuts and at least reduce the increase. From the minutes of the November 10, 2020, BOS meeting: “Mr. Mack said that he understood that the taxes would have to be increased but he favored a smaller increase than proposed. One suggestion would be to give non-union department heads the same 3% raise that union employees will get. He would also like to eliminate the fire fund millage and the hiring of a new code enforcement officer, the police building study, the public works dump truck, a patrol car and the MS4 spending. He suggested staggering the hiring of the police officers over a few years. He would not want to eliminate or reduce the road program or the summer camps, which provide service to the community.”

How Does It Affect You?
See “How to Calculate Your Yearly Newtown Township Property Tax”

Why Higher Taxes in the First Place?

That’s a good question. To answer that question, let me cite the following list prepared by the Newtown Township Finance Committee (NTFC), which is authorized to make financial recommendations to the township supervisors who are ultimately responsible for making the final decision.

• In 2019 and 2020, the NTFC recommended that the BOS address the structural deficits of approximately $800,000 incurred annually since 2015. In the following video clip, Jack Brod, former Chair of the NTFC, offered his observations regarding deficit spending by the township over the years. He noted that the reserve funds are dwindling and suggested that at some point it will no longer be possible to draw from the reserve in order to make up for budget deficits.

• This loss of revenue was due primarily to the closing of the Lockheed-Martin satellite facility - with an attendant loss of Earned Income Tax, aka EIT - as well as other municipalities instituting their own EIT (taking that income away from Newtown).

• In 2019, the NTFC was instrumental in identifying the opportunity for the township to apply for a cost-share Strategic Management Planning Program grant awarded by the Pennsylvania Department of Community and Economic Development. This consulting project, awarded to Econsult Solutions Inc. of Philadelphia, consisted of delivering a Strategic Management Planning Program Five-Year Financial Plan, the purpose of which was to establish short- and long-term financial and managerial objectives relative to revenue and expenditure trends and policies that strengthen the fiscal capacity of the Township.

• The report concluded that the township has demonstrated tight fiscal control over expenses, to the extent that the level of staffing in several departments is below that typically needed to function properly. The Final Report recommended that an increase in revenue, not a decrease in staffing/services spending, was needed to provide financial stability.

• The NTFC supported the conclusions and recommendations of the Econsult Final Report, specifically the need for a tax increase, as well as prioritizing economic development activities to significantly increase future revenues and hopefully reduce the Township’s reliance on property tax increases.

“In the past, the township has kept a keen eye on cost control, but the bill for failing to address the structural deficit has now come due in order to set the Township on sound financial footing for the next several years,” contends NTFC Chair George Skladany. “Responsible government – acting on behalf and in the best interest of all tax payers – must make the tough decisions now to invest in the Township’s future.”