Nov. 30—The average Meadville homeowner will likely be paying $50 more in city property taxes beginning next year following Meadville City Council' latest budget discussion.
Council met Tuesday afternoon in a special meeting to discuss the 2023 budget. Of the four members present, three said they would support the 2-mill tax increase recommended by city staff. The fourth, Councilman Jim Roha, expressed a preference for a lower increase but ultimately said he would be willing to go as high as 1.5 mills. Deputy Mayor Larry McKnight was absent from the meeting.
Mayor Jaime Kinder lamented the need for an increase and described the proposed hike as the unavoidable result of an "irresponsible" approach to taxation and budgeting by prior councils.
"The can's been kicked down (the road) for so many years, right?" Kinder said. "We should have been raising taxes 1 mill every so many years, right, and we haven't done that and it has been irresponsible because now we've got this balloon payment that's coming due next year."
The "balloon payment" Kinder referred to the expectation of an even more dire budget forecast for 2024. The budget for next year, like the 2022 budget, benefits from federal pandemic relief to the tune of more than $640,000.
Without that subsidy, it's easy to imagine council considering a property tax increase of 6.5 mills for next year instead of 2 mills. And with no federal relief next year, council members and city taxpayers may not have to imagine the possibility next year. With similar levels of expenditures and revenues expected, the 2024 budget could come with a "balloon payment" deficit of over $1 million — just about the amount of tax revenue generated by a 6.5 mill increase.
As Roha put it, "The real question is, what do we do for an encore next year?"
Interim Finance Director Tim Groves offered a blunt assessment of the ongoing discrepancy between the city's recurring revenues and expenditures. "It's not a good situation — there's no doubt," he said.
Kinder's assessment echoed the one City Manager Maryann Menanno offered when she delivered the preliminary 2023 budget to council at the beginning of the month. In a letter accompanying the 106-page document, Menanno noted that city property taxes have gone up a total of 2 mills over the past 13 years — the cumulative result of increases in 2015 and 2020 and a decrease in 2013.
"Over the last 11 years," Menanno wrote, "if taxes would have been raised each year by 0.5 mills, the 2023 budget deficit would be $170,118."
Instead, the deficit facing council is $995,000, and even Roha, who voted against the 2020 increase of 1 mill and noted the increasing, said he was ready to support a hike even larger than the one he opposed two years ago.
The situation could be even worse, according to interim Finance Director Tim Groves. A new method of providing medical coverage for employees will lower expenses by $600,000, he told council, and will result in significant savings despite an astronomical increase of 48 percent to the city's medical premiums with UPMC.
Among other changes to the preliminary budget, Groves noted that the city's traditional $125,000 payment to the authority that oversees Meadville Area Recreation Complex was added back to the budget and that an expected savings of $12,000 for worker's compensation coverage was incorporated. The amount borrowed from the city's "rainy day" Rate Stabilization Fund, was also lowered from $100,000 to about $33,000 — leaving more for the city to borrow in future years, Groves suggested.
The MARC payment had initially been omitted from the budget, with Menanno expressing confidence that an alternative source for the funds would be found. With Menanno reluctant to identify the source or sources before the funds had been committed, council members called for the expense to be put back in the budget as a way of showing the city's commitment to the complex.
City Council is expected to give preliminary approval to the proposed 2023 budget when it meets Dec. 7. Final approval will come at council's Dec. 21 meeting.
If approved, the proposed 2-mill increase would bring the city's millage rate to 24.92. With the average residential property in the city assessed at about $25,000, according to Groves, the owner of such a property would see their annual city property taxes go from the current $573 to $623 — an increase of nearly 9 percent.
Mike Crowley can be reached at (814) 724-6370 or by email at email@example.com.