Bad News for Easttown Township – Our Neighbors Receive a 12% Tax Increase

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!

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  1. Pattye, are you still running for office? If not please give up that “retired individuals on fixed incomes” trope. None of us working individuals has unlimited income, and unlike retirees we don’t have *guaranteed* fixed incomes from the federal government in the form of social security, medicare, and (in many cases) government-backed pensions. Nor do we have disposable time that we could devote to earning extra income to make up a shortfall, as do retirees.

    As for Easttown’s budget problems: I seem to recall the BAWG suggested there would be economies of scale to merging the township governments, as we did with the school district. If people are really unhappy about the increasing cost of government we should stop duplicating so many services.

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  2. Lysander illustrates exactly why an EIT is worth considering.

    Expenses of the Township and School District will inevitably increase due to contracted compensation increases, unless programs and services are cut or unless employees agree to trade pay for jobs – see Upper Merion police.

    Each one of the citizens of Tredyffrin has their own circumstances: more/less income, property owner/renter, urban/suburban, defined benefit/defined contribution pension, volunteer skills or not, dependence on savings or on employment, and so on.

    Is it equitable that the Township assess only those with property to cover those increases? And, the higher the assessed value of someone’s property, the more they have to pay to cover employee compensation increases? Or should we look for a diverse tax base to help ride through different economic cycles (growth, inflation, recession, asset bubbles, etc.).

    I guess a position on this depends on where the individual lies on the above spectra.

    That’s why we depend on our elected leaders to form a sense of the community at large by having the kind of dialog that Pattye has advocated. Not by summarily dismissing any discussion, and ignoring BAWG survey data that ranks increasing property taxes DEAD LAST in a list of possible actions to balance the budget. In the survey, imposing an EIT is the preferred action, after cutting expenses.

    The 2006 TESD Tax Study Commission noted many of the pros and cons (without actually quantifying the millions a) already paid by residents and lost, and b) payable by non-residents) and concluded that its recommendation (against a very expensive to administer PIT) could have been different in different times.

    We just had a 6.6% property tax increase, via the sewer fee. TESD is going for a similar number this year, and the near term outlook there is for another 25%. There is only so much money to go round. The higher property taxes, the less available for mortgage payments, the more house prices will be depressed.

    Merging with Eastown would be interesting. I imagine that there would be a way to deal with the fact that their tax rate is 70% higher than ours?

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  3. If the Arc Wheeler proposal about Daylesford had been accepted, this would not have happened, at least to this extent. Perhaps those with the green signs who were so vocal then may wish to ask Arc Wheeler and/or related entities to come back with new proposals if and when the economic downturn abates.

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