Gettysburg residents may see a tax rate increase in the next budget as the borough council struggles to close the budget gap caused by the pandemic.
The borough has spent a large portion of its reserve funds, complicating the budget process.
“The council has done a very good job putting good financial policies in place, and those policies have netted three consecutive years of low six-digit surpluses, which allowed the borough to fully fund its fund balance policy,” borough manager Charles Gable said. “However, with the pandemic and our huge budget shortfalls this year, $600,000 of that reserve fund that has been built up has now been spent or will be spent by the end of this year. So that puts us in a precarious situation when we’re developing the 2021 budget.”
Gable said last year the council spent $123,000 to close the 2020 budget gap rather than increasing taxes. This year, with funds rapidly depleting, the council is considering tax increases. The “double-whammy” of the $123,000 used to close last year’s gap and pandemic-related revenue cuts and increased expenses this year has put the borough in a tough position.
“We’re a borough of about 5,000 people who support services for about 4 million visitors,” said Gable. “The borough receives only a fraction of its budget from the pillow tax and about 40 percent of our assessed value is exempt from taxes.”
Gable noted Gettysburg College voluntarily pays property taxes on some of its properties.
The borough is planning to reduce the budget in other areas to help close the gap and minimize the increase in taxes. Gable said the budget the council is working with is “very austere” when compared to budgets from other years.
“A few years ago we had two full-time parking enforcement officers in the parking department,” Gable said. “That is now one. We started this year with eight full-time employees in our public works department. In 2021 they are being budgeted for five full-time positions. So in just those two departments the borough is minus four full-time employees. The story doesn’t stop there.”
Gable explained that changes were also made in the finance department. The police department has nine positions rather than its typical eight as it had to add one position following a court order earlier this year.
Gable said that the borough pays about $220,000 to $230,000 towards debt each year, with payments increasing to $660,000 in 2026. The borough has saved about $153,000 in a CD to collect interest and create a fund to put towards the anticipated larger payments. Gable said the council could take $75,000 of that money to put towards the debt payments next year, reducing the gap in the 2021-22 budget.
Gable said he also reduced the administrative training budget from $12,000 to $2,500 following the request of a council member.
Healthcare premiums will rise, but not as much as Gable had allowed for in an earlier draft of the budget. Rather than a 12.5% increase the borough will see a 7.2% increase, saving some anticipated costs.
“All of that said, if council is happy with all of those line items and the current staffing level in the budget as-is, we are still very much out of budget,” Gable said. “To fill that gap, there is essentially very few options left.”
With no additional cuts, the borough would still see higher millage rate increases than the council wants. Gable said that an increase of 1.0699 mills would be needed to balance the budget with no additional cuts, putting the rate at 4.9019 mills.
Councilman Matt Moon said he was uncomfortable with the lack of a safety net even with the millage passed.
“Council has already heard me say this, but I would recommend very strongly that we increase that millage to make sure that we have a safety net for something going wrong this year, whether that be a legal cost we haven’t planned for, or some sort of weather event, or, I don’t know, a pandemic of some sort,” Moon said. “I think we should have some cash in reserve.”
Gable said that the borough is at or just below the 18 percent minimum savings reserve listed in its policy.
Councilman John Lawver said he is concerned about raising taxes, particularly for those laid off during the pandemic and those on fixed income. He also predicted that landlords would make up for the tax increase by raising rent prices.
Gable said the council is considering alternatives they discussed in an earlier session, or a combination of those possibilities.
Councilmember Patti Lawson said she is also unhappy with the idea of raising taxes. “It’s going to come back to the people who are renting,” she said.
Lawson said that she’s also concerned about the staffing cuts for the public works department, particularly if the area experiences weather-related issues.
“We’re going to face a tax increase,” council Vice President Wes Heyser said. “We kind of know that. There’s no way to get this to zero. So the question is how much you want to absorb.”
Lawson said that Moon’s concern about maintaining emergency savings also needs to be considered.
“If we don’t have a cushion, we will be in more dire straits,” Lawson said, using the court-ordered additional police position and the pandemic-related expenses and losses of income as examples of reasons the borough needs reserves. “We don’t know what’s going to be thrown at us.”
The council reviewed several line items and made some changes, but determined that others could not be changed much if at all.
“I don’t think any of us is under the illusion that we’re going to cut off a huge sum here,” Moon said. “There’s not a lot of fat to trim.”
The council discussed reducing its public relations budget, but determined that the fees paid to Community Media (formerly Adams Community Television – ACTV) should stay in the budget as some community members depend on the televised broadcasts of borough meetings. Other line items were reduced, with the police overtime budget examined.
Gettysburg Police Chief Robert W. Glenny Jr. said that he is “not opposed” to trimming the budget by $10,000 to $20,000 but could not “jump on board” with drastic reductions. He suggested a few smaller changes, including reducing the ammunition budget by anywhere from $500 to $1,000.
Heyser noted that some overtime is mandatory for court and other necessities, but he was unsure how much it could be reduced, saying that overtime payments have varied over the years.
Gable said that he will revisit the budget draft with the changes suggested in the meeting, then present it again to the council at its next meeting.