Despite spending cuts, local, school and county taxes going up in 2011

Plummeting real estate market, loss of state aid, pension costs putting big hole in government budgets but the worst is yet to come in 2012
By Mike McGann, Editor,

Despite slashing roughly $5 million in spending, the same drops in tax revenue that are plaguing Unionville’s school district and local towns are hitting Chester County hard, meaning taxpayers can expect an increase of 3.9% in 2011, according to preliminary numbers released by the county this week.

And if the hints coming out of Harrisburg and Gov.-Elect Tom Corbett’s transition team are credible, 2011’s budget season may seem like a walk in the park compared to 2012 as the state seems poised to slash as much as $5 billion in spending in the next budget year — Corbett has pledged not to raise state taxes —  much of it funding to local and county governments.

That coupled with the school district’s increase of 2.9% for Chester County residents and the need in some local towns for either a tax rate boost, or in the case of Pocopson, a new Earned Income Tax, mean many local taxpayers across the region will be facing higher taxes across the board. The median assessed value of a home in Chester County is $166,010 (that’s the number on which taxes are based, the median market value for homes in the county is $299,657), meaning the county increase will cost the median homeowner about $26 in additional taxes in 2011, according to preliminary figures released by the county this week.

Both for the county and the school district the issue is the same: dropping property tax revenue because of declining property assessments — the county’s property tax base shrunk for the first time in decades in 2010 — as well as steep falloffs in transfer taxes and other sources of revenue, including funds from the state, which faces its own shortfall as large as $5 billion in 2011.

At the same time, expenses for employee benefits and pensions have increased. Of course, a big issue for both the county and the school district is debt service on recent construction. The county is facing an additional $4.77 million spending to pay for the new justice center, the prison expansion and the juvenile detention center, while the school district is paying for the high school renovations.

Because the real estate market is no expected to rebound in the next year, the same issues will be faced again next year — but it’s unclear what the impact of what are expected to be massive cuts in state funding to county and local and school districts (although in the case of Unionville, state funding is minimal).

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