Update: An earlier version of this story incorrectly stated the tax increase was 35 percent. The story has been updated to reflect the tax increase is 50 percent.
Newtown Borough Mayor Dennis O’Brien broke a 3-3 tie Tuesday to pass a 2012 budget that will increase municipal taxes by 50 percent. In 2012, the owner of an average assessed home in Newtown Borough will pay $360 in municipal taxes – about $129 more than in 2011.
The $2.37 million budget passed by Borough Council increases the tax rate from 6 to 9 mills. The budget utilizes $60,000 of the reserve, which leaves about 10 percent of the operating budget in that fund.
Council member Gerard O'Malley, who is co-chair of the borough’s budget committee, said the committee spent many hours paring down the budget. However, a tax increase was unavoidable.
“We cut as much as we could,” O’Malley said. “At the end of the day, we had to make a hard choice and a hard recommendation to increase the millage. We believe it was necessary to effectively manage the budget and maintain our health going forward.”
However, Council member Mike Sellers disagreed. Tuesday was the last meeting for democrats Sellers and Julia Woldorf, who were not reelected.
Sellers said he was troubled that a lame duck council would be considering such a steep tax increase.
He suggested that council eliminate contributions to outside organizations for 2012 as well as increase the use of the reserve. “I mean cut it to the core and pass a budget that does not raise taxes,” Sellers said.
Sellers added the new council, which will reorganize in January, can reopen the budget if they wish to do so. “I am extremely uncomfortable with a 50 percent tax increase. I’d like to see us go back and literally cut to the core,” Sellers said.
A vote for the budget was tied 3-3, with Woldorf, Sellers and Perry Warren voting no. O’Brien cast the tiebreaking vote in favor of the 2012 budget.
The proposed budget calls for a 2.25 mill tax increase in the general fund. Additionally, a .5 mill increase in the lighting fund is proposed as well as a new .25 mill ambulance service tax.
“We spend our money on things that we feel are important for the municipality and the people of Newtown Borough,” O'Malley said. “First and foremost, we spend it on public safety.”
The police department is the borough’s largest expense. Fifty-six percent of the general fund, or $824,014, goes to fund the department and pay for the necessary insurance.
The borough’s main source of revenue is through the real estate transfer tax, earned income tax and the local services tax. This year, the borough expects those sources to generate $850,000.
Real estate taxes make up 20 percent of the borough’s revenue stream. This year, the borough expects to generate $276,944 from real estate taxes. Other sources of revenue include permit fees, licenses, fines, and interest and earnings.