The average property owner will pay about $39 more in Doylestown Borough taxes next year, if a budgeted tax increase is approved as presented Monday night.
Doylestown Borough Council voted unanimously Monday night to advertise a 2013 budget that includes the town's first tax increase since the recession began, borough manager John Davis said.
The borough tax rate will increase by 1.5 mills from 11.225 to 12.725 for 2013, if approved. Council is expected to vote on final approval at its Dec. 17 meeting.
The tax increase - the first since 2009 - means the owner of a home assessed at the borough average of $26,000 will pay $330.85 in borough property taxes next year, an increase of about $39.
According to figures from borough officials, the increase is expected to raise an additional $158,000. The new revenue is needed to help close an operating budget deficit of $297,000 in the general fund. The borough also will pull about $300,000 from its reserve fund.
In the water fund, water rates will be going up slightly - an increase of about 74 cents for the average borough water customer. Those who use less than the minimum will see no increase at all, officials said.
And to help pay for three capital improvement projects, the borough proposes to borrow about $1.5 million from the Delaware Valley Regional Finance Authority. The projects include expanding and improving the borough's public works facility ($567,000), upgrading to automated water meters ($550,000) and a drainage improvement project on Hickory Drive to prevent flooding ($325,000).
Borough officials said that while none of them wanted to raise taxes, the continued drop in revenue from construction and real estate has forced their hand.
"There's not much fat left to cut. These departments are very lean," Davis said.
In recent years, Doylestown Borough has cut costs by delaying maintenance and equipment replacement, and it has negotiated savings in labor agreements. But after years of cost cutting, there's not much left to cut, they said.
Council president Det Ansinn praised the efforts of borough department heads to hold the line.
They've heard the "concerns of the council and the public to have a very lean, fiscally responsible budget that we can all be proud of," Ansinn said.
But one resident who attended the meeting disagreed.
Richard Schoenkopf questioned why the borough would borrow money when it has money sitting in its reserve fund.
"Why you’re going out and borrowing money that’s going to cost you money over time," Schoenkopf asked. "What is this all about? Why are you doing this? You can borrow from yourself and pay it back."
But Ansinn said taking money out of the borough's reserve fund would lower the principal amount in the fund, which now stands at about $7 million. The interest generated by that fund is an important part of the borough's financial strategy, he said.
"That will generate considerably less revenue," Ansinn said, pointing out that interest income on the reserve fund has generated about 85 mills worth of property tax protection in recent years. Plus, he added, "Money is cheap right now."
"The simple premise is this," Davis explained. "The borough has no debt. The proposed interest rate (of the loan) is 2.1 percent. Historically, the reserve fund has returned about 6 percent."
Over the life of the 20-year loan, Davis said he expects the borough to be able to make more money on its reserve fund investments than it would have saved by not borrowing at the lower rate.
In the end, council members voted unanimously to advertise the ordinances spelling out the 2013 budget, the tax increase and the water rate increase. Copies of the budget and supporting documents are available for public review at borough hall.