Proposed Newtown Township Tax Increase is a “Little Troubling”

Newtown Township Manager Micah Lewis presented his “recommended” 2021 budget to the Board of Supervisors (BOS) at a public meeting on October 19, 2020. Mr. Lewis’s presentation was a verbatim, word for word reading of an 8-page synopsis of the highlights of the actual 58-page budget.

Troubling and a Little Stressful, But Don’t Worry

Board members had surprisingly few questions to ask or comments to make. Supervisor Kyle Davis said the tax increase was “a little troubling, a little stressful. Nobody wants to see that. One the flip side there are a lot of good things in the budget that I think are necessary.” He expressed the need for more time to look it over before asking any questions.

"It's not a budget approval. It's not even an official budget,” said Chairman Phil Calabro. “If anyone has seen this, they need not be worried right at this time."

If not now, when?

Residents must wait for the official “preliminary” budget to be adopted on November 10, 2020, and advertised to see the details. That version of the budget may or may not be the same as the “recommended” version presented on October 19. The “final” budget is scheduled to be adopted on December 9, 2020.

The synopsis, however, contains sufficient detail about property tax increases, revenue projections, new hires, and capital expenditure projections to fuel interesting discussions at upcoming public meetings. You can listen to my 26-minute audio recording of Mr. Lewis’s presentation below or view the 76-minute video archive of the entire meeting – including supervisor questions and comments - here.

Property Taxes

The proposed 2021 budget features a 7.5 mill increase in municipal real estate (RE) tax revenue that will be deposited into the township’s General Fund (GF), which pays for personnel and other operating costs. In addition, the 1.0 mill RE tax previously dedicated to paying down loans for repaving 5 miles of roads also will be redirected to the GF. Thus, a total of 8.5 mills will be deposited into the GF. Note that 1.0 mill of property tax equates to about $350,000 in revenue.

Supervisor Dennis Fisher asked for an explanation of how the real estate tax millage works in terms of assessed value and how the increase in millage will impact the typical homeowner in Newtown Township.

Mr. Lewis responded that he estimated that the 7.5 mill increase will cost an owner of a residence with an average market value of $400,000, approximately $374 per year, $31.68 per month, or about $1.03 per day.

But residents should know that the proposed TOTAL in property taxes in 2021 is 12.49 mills, which includes increases in dedicated millage for the Fire Chief’s salary, fire hydrant maintenance, and the Newtown Rescue Squad – in all, a 178% increase over the current 4.5 mills. For my modest 35-year old 3-bedroom house, that works out to be an increase of $272.

[Go here to calculate the total township RE tax for your property.]

Percentage-wise, the municipal property tax increase seems perhaps more worrisome than it is – especially for those who can afford it. But unfortunately, it has a greater impact on residents on a fixed income or who have been furloughed from their jobs. In comments before the Board, Delancey Court resident Frank McCarron expressed what many residents told the supervisors in email comments: “Any tax increase will be a lot more palatable for residents if you are seen as doing your part to keep expenses under control. Every department head should be pursuing revenue and cost saving strategies” (see his complete comments here).

FOLLOWUP QUESTION: It seems the proposed budget follows recommendations of Econsult Solutions’s (ESI’s) Scenario 2 (read “Newtown Supervisors Review Interim 5-Year Financial Plan”), which included a 1.5 mill increase in the millage rate in 2024. If Scenario 2 is being implemented, will we see this increase in 2024 as well?

Figure: RE Millage Rates of Local Municipalities.

Road Repaving

I am concerned about what the residents are getting, or rather, NOT getting, for the proposed increase in municipal property tax. According to the Newtown Township Citizen Survey, most residents would like to see better maintenance of roads, including more miles of repaved roads (see Figure below), but I’m not convinced this budget will satisfy that need. Having good roads and infrastructure is a positive factor to entice new businesses to come to Newtown and current businesses to stay. The same applies for residents.

Figure: Citizen Survey Results. Q9: Rate the two top services the township should focus on improving. N=545. Source: “Newtown Residents Cite Need for Infrastructure Improvements”.

The new plan calls for scrapping the 1.0 mill dedicated road tax and instead to set aside $350,000 in the General Fund for the “Road Program.” That plus an anticipated $536,000 in liquid fuels funding will allow the township to repave about 3.7 miles of roads in 2021 and future years, which is JUST enough to keep up with the current condition of our roads (given 71.3 miles of roads that must be repaved every 20 years).

There are two problems I see with this plan: (1) I contend that this program does NOT allow us to get ahead – it merely maintains the “status quo” of many roads that are currently in need of repair, and (2) money in the General Fund can easily be diverted to cover other expenses, whereas it took an emergency declaration to divert the dedicated millage to cover expenses during COVID-19 (read “2020 Road Program Falls Victim to COVID-19”).

Given that this may be a good time to finance infrastructure projects due to low interest rates, I think the township does its tax-paying residents and businesses a disservice by not maintaining the dedicated debt financing millage, which in my opinion should be increased NOT eliminated! In other words, if residents are being asked to pay more taxes, the money should be dedicated to what the residents feel needs the most attention – our infrastructure!

New Personnel Hires

The Manager’s “recommended” 2021 budget contemplates the establishment of five new positions in accordance with the 5-year ESI Financial Report, which include:

• Re-establishment of the Assistant Township Manager Position
• Establishment of a full-time Director of Zoning and Code Enforcement
• Addition of three (3) new Police Officers
• Promotion of Supervisors within the Police Department

Police Department

The proposed budget calls for 3 new police hires in 2021, although ESI recommended spreading this out over 2 years; i.e., one new hire in 2021 and two in 2022. In addition, $20,000 has been set aside for a “Police Building Study.” According to Mr. Lewis, this would be a “broad stroke look at our facility” with the goal of renewing the current police building or constructing a totally new police facility.

FOLLOWUP QUESTION: What’s the rush to hire all three in 2021, especially when residents gave the Police Department a rating of 3.5 stars on a scale of 1 to 4 in the Citizen Survey (see chart below)?

Firefighters

The ESI Financial Report recommended that 5 new firefighters be hired in 2021 in order to provide 7-day coverage by the career Emergency Service Department (read “The Volunteer Newtown Fire Association is at a Turning Point”). However, the township did NOT get the SAFER grant that it applied for and the next round of grants (FY 20) won’t be made until the summer of 2021.

When asked, Newtown Emergency Service Department (NESD) Chief Glenn Forsyth said he plans to ask the township to apply again for a SAFER grant in 2021. If awarded, the grant would pay all the expenses - a salary of $67,877.80 and benefits of $57,713.63 which includes FICA/Medicare, Family Medical/Visionl/Rx/Dental, Life& Disability Insurance, Worker's Camp, and Pension Contributions - of each new hire for the first 3 years. After that the township would have to pay these expenses. To cover those costs, ESI suggested that Newtown Borough pay 20% of NESD's costs and that the township implement another 1.5 mill increase in property taxes in 2024.

The proposed 2021 budget calls for an increase in salary and benefits for the NESD Chief. To pay for this, the budget calls for a 0.125 increase in the Fire Fund millage (up from 0.875). The new total 1.0 millage dedicated to the Fire Fund will thus be about $350,000. In addition to the Chief Forsyth's salary and benefits, the fund includes $160,000 to be contributed to the volunteer Newtown Fire Association. That represents a decrease in $15,000 from the $175,000 contribution budgeted for 2020.

Figure: Citizen Survey Results. Q8: Rate each service provided by Newtown Township. 1=Poor, 4=Excellent. N=533.

Comments From Residents

The following is a sample of comments from Delancey Court residents sent to the Board of Supervisors via email to comments@newtownpa.gov

“Newtown Township should focus more on cutting costs rather than putting unnecessary tax burdens on homeowners. The only cost cutting exceptions may be to provide all reasonable new spending for: (1) Police and First Responders and (2) Road paving and Road repairs.”

“These types of increases are unrealistic and will have a significant impact on the property values and businesses in the area by stunting economic growth in the township. To even consider such an increase during a pandemic is financially unrealistic. The township should put a hold on all hiring and non-essential projects until the pandemic has been curtailed.”

“The hiring of additional personnel at this time should not occur as none of us are suffering with the current level of services.”

“Such a dramatic jump could discourage seniors from moving into our community, as well as the retention of our current senior residents.”

“The Jointure is pushing commercial development to Newtown Township and should be asked to contribute to the cost of our police and fire budgets rather than force residents to pay to protect these establishments.”

“We cannot support a property tax increase at a time when many property owners are suffering the financial effects of the pandemic and/or helping some of our young-adult family members, who are either furloughed or need to remain home with young children due to Covid-related day care and school issues.”

What Would You Cut From the Proposed 2021 Newtown Township Budget?

Many residents are understandably upset about the originally proposed Newtown Township “Manager’s 2021 Budget.” At the October 28, 2020, meeting, the BOS voted 3-2 to request that Township Manager Micah Lewis come up with an alternative budget that only increases property taxes by 40 percent – a 1.8 mill increase (read “Newtown Residents May See Steep Tax Hike In 2021...Or Not!”).

This survey asks you to select the cuts you would support in order to reduce the originally proposed tax increase, whether you think there should be a 0% increase or 40% or whatever. The list of items to cut includes many – but NOT all – of the expenditures in the originally proposed budget.

DISCLAIMER: This is not an official Newtown Township Survey. It’s purpose is solely to inform John Mack, a Newtown Supervisor, of your opinions. The opinions expressed here are solely those of John Mack and do not represent the opinions of any other person or entity.