Friday, May 28, 2010

Budgets and Lancings

Lance: To Mt. Lebanon. Its school board approved a staggering 10.5 percent increase in taxes this week. That's to pay for a poorly executed high school renovation project and to cover teacher pensions. And, apparently, there's a little something in there for a new contract with teachers, now being negotiated. The school tax bill on a $200,000 home will soar to more than $5,300 a year. And that great sucking you're soon to hear won't be the straw at the bottom of an empty cold coffee.

This is at least the third lance Mt Lebanon has received due to the tax increase. We got lanced when we passed our preliminary budget, we got lanced when we passed the $113 spend limit on the high school, and now we get lanced after we pass the final budget.

I can't say I disagree with the lances. It's unfortunate that for years this Board has known the day would come when taxes would skyrocket up in order to pay for the high school. Since the first day I sat down on this Board, I asked how we were planning to pay for it. The answer became so clear on Monday night. We decided to increase taxes to pay for 100% of the cost of the first set of bonds for the project.

I have been convinced over the last few years that it wasn't so much the renovation to the high school that was the problem, instead it was the way in which the District was planning to increase taxes to pay for it. This belief has been verified by the fact that there is a petition circulating the community asking the Board to cap a project at $75 million. Almost 4000 signatures later, it is clear that a we have a large contingent of this community fed up with the taxes the school board is asking them to pay. Our residents understand that the high school needs something done to it. But as they realize Bethel Park barely increased taxes to pay for their high school (3.5% increase in millage from 09-10 to 10-11) and Penn Hills will actually LOWER taxes when they are done with their project, the frustration with how we have managed the tax impact of this project only grows.

Knocking on doors in 2007 in my run for the Board, I met with thousands of residents who at the time said they were taxed enough already. The thought of a 15-20% millage increase for a $120 million new school (the idea out at the time) incensed them. This was before we knew about the tax nightmare that would be PSERS. Upon getting on the Board in late 2007, I worked with a number of members of the community and Board to come up with an alternative plan to fund the high school. It was a plan that would have paid down some of our outstanding debt and put us in position to better afford a project of this exact same size and scope. It called for delaying construction while building up a stockpile of money to move forward with a sizable down payment for a project. The more money we saved to put towards the project, the less our residents would pay in interest on any loan, and the better off they would be in the long run. There were other aspects of this plan that included using the Commonwealth's GESP (Guaranteed Energy Savings Program) and initiating a Community wide fund-raising campaign to go after private dollars from residents and alumni. Unfortunately, this plan received only tepid support from the Board. It was the strength of the message from our residents that convinced me supporting a $120 million project would be detrimental to the long term health of our community. It is the reason I ran a campaign steadfastly opposed to such a large expense.

After it was clear the plan was not going to get traction with the Board, four of us Board members got together to try to figure out how to pay for this thing. After long discussions, I was convinced that the Board majority would take action to reduce the budget in order to offset to some degree the increase in taxes that would be required to pay for the high school. Unfortunately, those reductions to the budget never materialized. Two of us on the Board kept sounding the alarm saying loudly that when this day comes, when we decide to raise taxes to the degree we just have, that it would have devastating consequences to our community. That is the "great sucking sound" referred to in the Lance in today's Trib.

You see, the tax increase we just passed is NOT $18 a month as some people would have you believe. The school district tax bill for a $200,000 home in Mt Lebanon is now $5326 per year or $444 per month. On that same $200,000 home we just increased your taxes $504 per year or $42 per month. That's not chump change. That $42 is a night out at at a restaurant for my family of four each and every month. It's a night at the movies. It's two piano lessons. Measuring the local economic impact of the extraction of more than $5 million additional dollars annually from the pockets of our residents and the private economy will be an interesting exercise. How do we measure it? Number of home sales? Businesses closing? Earned income tax receipts? We won't know the impact until it is too late.

The problem here is that we are not done. There will be a second bond float. We don't know what size it will be yet but we know it will be there. We have PSERS which is scheduled to hit in 2012 unless the state legislature does something about it.

With earned income receipts to the municipality and school district stagnant, our residents will collectively have to either dip into savings to pay for the increase in taxes or they will have to reduce expenditures in some other part of their budget. Well, I guess there is a third option. They could just decide not to pay. They would do this by putting their house on the market and getting out of Dodge before more tax trouble brews.

Thanks for reading.