Our neighbors in Easttown Township are faced with a 2010 budget that includes a 12% real estate tax increase which includes a new $52 Local Service Tax (LST) for all those who work in the township. The budget deficit facing the township for 2010 was approximately $500K and the LST will provide approximately $135K revenue. Easttown Supervisor Ed Strogen was the sole dissenter on the 2010 budget and has doubts that the full estimated LST will actually be collected. Supervisor Strogen was also a strong supporter of instituting an Earned Income Tax (EIT) in the township; raising the point of how much revenue residents are currently paying to other municipalities (who do have an Earned Income Tax). A tax collection company suggested that imposing a 1% EIT in Easttown Township would have provided $1 Million revenue in 2010, and $3 Million the following years. Unfortunately, the support was not there for the institution this year of an EIT. However, passing their 2010 budget with a 12% tax increase to the taxpayers is going to be difficult for many of their residents. This increase will certainly be challenging to those retired individuals on fixed incomes.
In the aftermath of the 2010 budget passage, Supervisor Strogen contends that an EIT will need to be implemented in the next few years. Let’s remember that Tredyffrin residents are currently paying $3 Million to other municipalities (which have an EIT) and it was determined that the implementation of an EIT in Tredyffrin would result in revenues of approximately $8 Million. The difference between Easttown and Tredyffrin Townships on the subject of EIT, was that Easttown provided an open town hall forum for thorough discussion of the subject, whereas Tredyffrin did not.
Easttown’s primary budget problem stems from their loss of real estate transfer tax which accounts for approximately 18% of all its budgeted revenue. Like Tredyffrin, Easttown’s budget has suffered with the downturn in real estate transfers, increased cost of services and the severity of our economic times. Easttown and Tredyffrin Townships need to become more proactive in their long-range budget forecasting. In both of these municipalities, what has played out in this budget cycle has been a short-term Band-Aid approach. These townships should not wait until 2nd or 3rd quarter to begin to look at 2011, but rather they need to start in January with focused, out-of-the-box exploration of all possible revenue sources. Easttown and Tredyffrin Townships barely got by with the 2010 budget round and I think it’s going to be far more difficult to pull off an 11th hour ‘quick fix’ save for the 2011 budget!