BASD Board approves preliminary 2017-18 budget
Bethlehem Area Scholl Board members board approved the preliminary 2017-18 budget at a special board meeting Feb. 13. At this point, the district’s expenditures exceed its anticipated revenue for 2017-18 by $12.5 million, resulting from increased costs and lower state revenue.
Approval of the preliminary budget authorizes the board to continue budgetary discussions until June. More importantly, it authorizes them to apply for exceptions to Act 1 of 2006, which would allow them to raise local taxes above the 3.1 percent limit for certain budgetary expenditures, Superintendent Dr. Joseph Roy said. This is a measure the board is taking only help ensure that they are not “handcuffed,” Roy had stated during the preliminary budget presentation Jan. 17. The district will continue to chisel at the deficit from now until June when the final budget is scheduled to be adopted.
The cost breakdown of the deficit includes $2.7 million for salaries, $2.6 million for academic initiatives, $1.5 million for general operations, $1.2 million for student tuition and $704,056 for charter schools.
By and large, the greatest increase is the 12.73 percent jump in payments to the Pennsylvania State Employment Retirement System, which manages the pension program for state employees. The district will pay $33.7 million towards employee pensions in 2017-18, up by $3.8 million from last year.
Pension cost increases are the result of the district sharing the burden with the state to replenish the state pension fund after markets dropped years ago and employees were not contributing as much. BASD employees currently contribute 7.5 percent of their salaries towards pensions with the state and district share the remaining costs of replenishing the fund. The district will pay 32 percent of this cost-share this year, up from 30 percent last year.
Subsequent budget workshops will take place March 29 and April 26 with the tentative final budget adoption slated for May 15 and the final budget adoption for June 19.
In other news, board President Michael Faccinetto brought to the meeting a resolution drafted by the Pennsylvania School Board Association (PSBA) encouraging legislators in Harrisburg to reject the proposed property tax elimination and consider alternative forms of relief for homeowners and senior citizens. School boards across the state are adopting the resolution and sending them to their legislators and Gov. Tom Wolf.
“Legislators who are actively supporting legislation that damages our district need to be held accountable by parents and supporters of our school,” Roy said.
Some of the alternatives proposed in the resolution include eliminating the Opportunity Scholarship Program (EITC) that allows businesses to donate to private and parochial schools instead of paying state taxes. This revenue, Roy said, could be put towards the Senior Citizen Property Tax Rebate program, which provides up to $650 in tax relief to senior citizens. EITC delivers $80-$85 million annually to private and parochial schools and could double, even quadruple, this rebate, he said.
Also, all property tax payers get a discount on their taxes through the Homestead exception, which is paid for with revenue generated from casinos throughout Pa. Either the EITC, or the expansion of statewide taxes, could also be used to increase this discount substantially, Roy said.
According to the proposed Property Tax Independence Act, revenue currently from property taxes would be generated from personal income tax (PIT) increases from 3.07 percent to 4.95 percent and sales tax increases from 6 percent to 7 percent. Further, sales taxes will apply to a wider base of items including food and clothing over $50, daycare and diapers, transportation, medicine, funerals, parking, cable, trash and more.
“These are things that are going to impact young, working families,” explained business manager Stacey Gober at the January finance committee meeting. “The question is whether the savings in their property tax is going to be offset by the difference in personal income and sales tax expenses.”
Properties that are not homes generate $82.1 million, or 51 percent of the district’s tax base and $18.2 million of that comes from the 20 highest-paying commercial properties, including Sands Casino, Just Born and Lowe’s Home Centers. Because this revenue would be generated from PIT instead, this means 51 percent of Bethlehem’s tax base will not be paying property taxes, nor PITs, Gober explained.
“That’s an awful lot of commercial abatement that will exist in Bethlehem alone,” Gober said. “The fact is that property tax elimination is not elimination; it is a tax shift.” She further explained that municipal and county property taxes will remain in place, as will the school district property tax to pay off outstanding debt for things like infrastructure.
“I think there are a lot of issues that haven’t been thought out,” explained Faccinetto, who was elected President of PASB in October. “There’s a lot of hatred of the property tax, public education, teachers’ unions that make up a lot of votes, and the pension crises that wasn’t caused by anyone in a classroom or school building. Administrators in Harrisburg want to say ‘just get rid of it,’ but now we’ll have families of four or five people who already pay $800-$1,000 on daycare each month paying 7 percent sales tax on this service, too.”