By a 6-2 vote, borough OKs budget, tax hike

By on December 21, 2011

By: GARY P. KLINGER Review Correspondent, Staff Writer

"Have we done all that we could? I’m afraid not."

Those comments by council member Bob Good underscored the rough sailing seen Monday night as Ephrata Borough Council voted on its 2012 municipal budget and the .19 mill tax increase it contained.

Initially the budget was contained as but an item on the borough council consent agenda. However, Good asked that the vote on the budget be pulled so that there could be further discussion of the matter prior to the final vote.

In the end, Good and fellow council member Russell Shirker voted "no" but the motion to raise taxes to 2.07 mills was passed with six members voting for the increase.

The vote means an additional $28.50 in taxes on the average $150,000 property.

While certainly not a banner night for attendance by residents, most of those who were there chose to remain silent the entire evening.

Nancy Reese was the first to speak, taking issue with The Review’s story from last week in which it was reported that "Currently, Ephrata enjoys the third lowest municipal real estate tax rate in the county. There is some speculation that once all the dust settles with this year’s round of municipal budgeting, Ephrata may find itself with the lowest tax rate in the county. Of course, much depends on what the final shape of other borough budgets currently being considered."

Reese pointed out that Ephrata ranks perhaps 40th out of 62 municipalities statewide. President Anthony Kilkuskie and Council Member Susan Rowe both explained to Reese that what had been discussed last week was Ephrata’s ranking among boroughs and was accurate. Rowe further explained that some of the key distinctions between boroughs, townships and cities have to do with the programs mandated on each by the state and local governments, often in the form of "unfunded mandates," which has the effect of increasing the burden on local leaders to find the funding for programs thrust upon them from higher levels of government.

Resident Brian Hoffman called on council to delay any tax increase for the time being.

"These (economic) times by far are not over in my opinion," said Hoffman. "Sitting across from the pool renovation project, I asked council to hold off and keep those funds in reserve. Now here we are in the 4th quarter of this year with a deficit. I just ask you to look at the hard choices of increasing millage rates at this time."

Lois Freitag urged the same.

"I understand things have gone up but couldn’t there be some programs that are unnecessary that could be eliminated," questioned Freitag. "What about vehicles? I realize that important things cannot be cut but if there is any way to not increase at this time (it) would be appreciated. All of us are having to hang in there during these tough times. Maybe the borough can hang in there a little longer like the rest of us."

Randall Gockley was also present and said he was of a different opinion with regard to the budget.

"I think an additional millage increase would be the correct thing to do," said Gockley. "I work for government, too. This is not just a one-year process to cut, cut, cut. Each year you give the staff the same instruction to keep the budget as low as possible. But I am concerned that as things go in the future we are putting off things with streets, infrastructure needs. If we put these off and they do not get done — if we don’t do the preventative maintenance, then when the time comes that something must be done we’ve saved nothing because it will all cost more."

Gockley added that he was sure there was no fluff in the budget along the way.

"As politicians you don’t always need to do the popular thing but I do feel you need to do the right thing."

In a prepared statement, Good detailed the amount of consideration he had given the 2012 budget.

"There will be those who will say it is only a small increase," said Good. "The fact remains that our budget is not balanced and our labor costs continue to get increases while the rest of us do not. Costs have increased. Yet other factors have changed as well. Those without income, those experiencing foreclosures and those struggling to make ends meet have all increased. People cannot get loans to build new homes or fix up the homes that they have. They do not have money to spend. This makes it increasingly difficult to draw businesses to our central business district.

"Many in our community are suffering," Good continued. "I feel I know the thoughts of those I represent. They will sacrifice to help their neighbors if asked to do so, but they are adamant against a tax increase. And I cannot support this tax increase. No matter how small, a tax increase at this time is bad timing."

Outgoing council member Russell Shirker explained that the budget shortfall was over $100,000.

"I cannot believe we could not cut down below that number," said Shirker. "We have become familiar. We have it but we don’t want to give it up. Maybe we did not look hard enough. Everyone would survive; we all do this with our own budget. If you have the budget it affects you and your family."

Shirker pointed out that the discussion had circled around the $28.50 added on top of the cost of a $150,000 home but he pointed out that there was no discussion of what people are already paying in taxes to live in the home.

"I must also mention, though, that everyone on this council has thought about this and thought about this," Shirker continued. "We all have our thoughts on how we will vote. I just want everyone to know that this is not just a rubber stamp. We were all concerned."

Borough Manager Bob Thompson clarified the details of the budget deficit, explaining that original drafts showed a shortfall of $275,000 which could have required millage rates to raise up to nearly 5 mills in order to overcome that figure. Through various revisions done by all committees, that number was brought down to just $20,000. Then, the borough received its revised revenue estimate from the Lancaster County Tax Collection Bureau which indicated another $104,000 projected shortfall due to changes in the way the Earned Income Tax will be collected and applied in 2012.

Thompson explained that many municipalities are just not prepared to deal with the impact of how the EIT will be collected, which could cause some cashflow challenges throughout 2012 until collected tax revenues catch up with disbursements. The tax bureau will not distribute taxes until they are received and the process of collecting funds from out of county or out of state companies could significantly delay the turn-around time.

"When we looked at the refined numbers and got them down to $20,000, I felt we could have closed that gap," explained Thompson. "But then we learned about the $104,000 revenue decrease from EIT."

With this new information, Thompson said the staff and council went to work looking at all options, from reducing services, reducing staff or both. He pointed out that the shortfall is a projected shortfall and that it would be due to a procedure change and not an actual reduction of income.

"If you are employed by someone based out of state or out of county there could be a significant delay in receiving the revenues thus delaying the what is disbursed because the tax bureau cannot release what they do not have," added Thompson."

Hoffman questioned council regarding pay increases the borough is contractually obligated to fulfill in the coming years.

"Does the collective bargaining agreement prevent the municipality from furlowing or laying off employee," questioned Hoffman. "So two employees earning $50,000 for 2012 could possibly be layed off and recalled in 2013 to overcome the budget gap?

Manager Thompson as well as Shirker confirmed that under the contract with the local IBEW, (which also expires at the end of 2012), non-uniformed employees would receive a 3 percent pay increase. They also confirmed that the new union contract which covers 2012 and 2013 provides for a 2 percent increase for all uniformed employees.

In other borough news, staff reported that a $5,000 check was received from the Ephrata ReUzit Store as a donation in lieu of real estate taxes. A note of appreciation will be sent to Ephrata ReUzit regarding their donation. Staff also reported that Lancaster County has been lowering the assessment of properties in the borough which may have a substantial impact on future real estate tax revenues.

Council also voted 7-1 to authorize the execution of a change order to Balton Construction of Ephrata in the amount of $3,400 to eliminate the demolition of the skate park roof for the Community Pool Project. Susan Rowe was the sole vote against the measure.

In committee the status of the community pool project was reviewed, including a letter dated Nov. 15, from Wade Associates clarifying that when Borough Council awarded Bid #11-16, Contract No. 1, General Contractor Alternate No. 2 Delete Skate Park Roof Demolition (accepting a credit in the amount of $3,400), it was actually accepting the demolition of the roof (versus council’s intention to keep the roof). Borough Manager Thompson advised the committee that if it wanted to keep the roof that it would need to authorize a change order in the amount of $3,400. As such, the committee recommended that council approve a change order in the amount of $3,400 to keep the skate park roof.

Check out an upcoming edition of The Review for a story on the pool snack bar vendor contract being awarded to Lily’s On Main.

For more information on Ephrata Borough, visit Gary P. Klinger always welcomes your comments, suggestions and feedback via e-mail at More BOROUGH, page A18

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