Northgate plans tax increase

Despite financial projections that indicate the Northgate School District will be operating in the red in just a couple years no matter what tax increases are levied, the district’s school board voted 6-3 Monday evening to approve a proposed 2019-20 budget that includes nearly the maximum tax increase allowed by state law.

The tax hike, if approved as part of the final budget that must be adopted in June, will increase the district’s millage rate from the current 24.7867 mills to 25.3 mills. That increase will cost the average property owner about $70 more next year, officials said, and will produce about $320,000 in revenue for the district.

Northgate is proposing a 2019-20 budget of $26,670,028, and has estimated that without a millage increase, the district would have to pull $3.1 million from its reserve fund balance that will total an estimated $7.6 million by the end of June. The fund balance is used to reserve money for mandated state retirement fund contributions, capital improvement projects and general fund budget deficits.

Of the $2.7 million the district expects to withdraw from the fund balance in the current year, some $1.6 million covers capital improvement projects such as the new roof installed at the high school. Of the $3.1 million officials say they will need from the fund balance in 2019-20, nearly $2 million ($1.8 million) is dedicated to capital improvement projects such as the $1.6 million stadium rehab work that will be done this summer.

With the tax increase, however, the amount that will have to be withdrawn from the fund balalnce descreases to $2,882,611, with all but about $1 million of that allocated for capital projects.

At a budget presentation meeting held in late April, financial projections indicated that even if Northgate increased taxes by the maximum allowed by the state, it would no longer be able to cover budget deficits by 2022. This was true even though officials considered a 3.2 percent increase in the presentation materials, when the state Act 1 index limits Northgate to raising its millage rate by only 3 percent for the coming fiscal year.

That is one of the reasons why board member Tim Makatura opposed raising taxes. Noting that over five years the millage increase will produce only $1.5 million in additional revenue, he asked, “Is that really going to make a difference?”

“It’s not the type of solution we’re looking for,” Makatura said.

Board member John Gratner agreed. “We could raise taxes to 100 percent and it wouldn’t get us out of the hole,” he said, “I don’t think it buys us enough.” He suggested that it would be worth more to the district to avoid frightening potential home buyers with an increasing millage rate, and instead launch a campaign to attract new property owners.

Board member Christine King also agreed that a tax increase would not come close to solving Northgate’s financial dilemma.

The majority of the board, however, voiced the sentiment that the additional $320,000 would help, even if only a little.

Board member Dr. Shannon Smithey said it would be irresponsible of the board not to increase taxes, given the district’s financial situation.

Board member Gary Paladin noted that the board has not increased the millage rate in five years. “We’re doing the best we can with a bad hand,” he noted, adding that the millage rate should be raised the full amount allowed by the state.

Board member Michael Rajakovic said the tax increase could be a part of a bigger plan that could include lobbying Harrisburg for changes in school funding, applying for grants, and possibly moving towards replacing some of the property tax revenue with increased earned income tax revenue.

“It does start to work out,” Rajakovic said.

Three other board members who voted in favor of the increase did not explain their reasoning. Amy Joy Robinson noted that “This tax move is not going to solve our problems,” while Jennifer McWilliams said, “To do it worries me, and to not do it worries me.” Dan O’Keefe said that the finance committee had not reached a consensus on whether to recommend an increase, or how much that increase should be.