York County local governments drain reserves amid pandemic
Economically, 2020 has been a difficult year for just about everyone, including municipal governments, and local leaders have had to manage the strain on their budgets with the knowledge that their residents are struggling, too.
Instead of raising taxes next year, several municipalities in York County have either cut costs or dipped into their reserves, a solution that comes with its own challenges.
In Lower Windsor Township on Thursday, supervisors adopted a $3.6 million budget for 2021 with no tax increase, but the township will dip into its reserves in the process.
"We still have to transfer money to make ends meet," township manager Sande Cunningham said.
The township will transfer about $250,000 from its reserve balance to make up the projected revenue deficit, leaving $4.9 million, Cunningham said.
Lower Windsor Township's tax rate will remain at 1.05 mills, so the tax bill on a property worth $100,000 would be $105.
Cunningham said the board is just trying to make it through the next year and hasn't discussed whether a tax increase will be on the table for 2022.
But some other governing bodies have already stated they'll likely need to raise taxes in 2022, despite avoiding it this year.
The Wrightsville Borough Council adopted its 2021 budget of $1.1 million Dec. 7 without a tax increase by reducing the percentage of revenue that will go into its reserve fund next year, Councilman Frederick Smith Jr. said.
Wrightsville underfunded its reserve fund this year, too, Smith said, and although the borough will still have nearly $200,000 in its fund balance for 2021, he said the move can't be the long-term solution to budget problems.
"We can't keep doing this forever," he said.
Smith said the council will likely have to consider a tax increase for 2022.
York Township is also using its reserve fund to balance a 2021 budget of $12.5 million and keep the overall tax rate at 1.61 mills. The tax bill on a property worth $100,000 will be $161.
Even the York County Board of Commissioners is in the same situation.
The county board adopted a 2021 budget without a tax hike thanks to a $10 million budget surplus this year, but county administrator Mark Derr has said there will likely have to be a millage increase in 2022.
For now, the county's overall millage rate will remain at 5.9 mills, which amounts to a $590 tax bill on a property worth $100,000.
Other municipalities have taken a different approach to solving budget deficits.
In West York, the borough council declined to raise taxes on residents in 2021 and instead adopted a $3.88 million budget with no tax increase.
But the trade-off for keeping taxes flat was to cut the borough's paid fire service, including two full-time and four part-time drivers.
After hearing from residents who were unhappy with that plan, borough officials announced they would hold a special meeting Monday to discuss options to move some of the money around and find a way to keep the paid fire service.
West Manchester Township avoided a tax hike by directing its staff to develop a budget with the least possible impact on township residents, township manager Kelly Kelch said.
The township's board of supervisors adopted a 2021 budget of $9.65 million with no deficit and no tax increase.
The millage rate will remain at 1.75 mills, meaning a property worth $100,000 will have a tax bill of $175 for the year.
"The board understands the impacts of COVID-19 not just to the township, but also to our taxpayers," Kelch said.
Other municipalities addressed budget shortfalls with the more traditional approach of a tax increase to boost revenue.
The Mount Wolf Borough Council adopted a 2021 budget of $487,850 with a tax increase of 0.34 mills, instead of pulling from the reserve balance.
Mount Wolf's overall millage rate in 2021 will be 4.99 mills, meaning a property owner with a home worth $100,000 will have a tax bill of $499.
"This budget does not include any raises, does not include any new equipment, does not include any new major purchases or capital improvements," council President Darryl Main said. "It is just to maintain the borough at its current level, the best we can estimate."
If the economy improves next year, the council could remove the tax increase for the 2022 budget, Mayor Maureen "Mo" Starner said.
Mount Wolf has a reserve balance of about $360,000, Starner said, but the council is anticipating other potential expenses next year, such as extra public works costs from excessive snowfall, she said.
The borough council thoroughly trimmed the 2021 budget already, Starner said, so the members are being conservative with the reserve balance in case of other unforeseen expenses.
Editor's note: This story has been updated with the correct dollar amount in the Lower Windsor Township reserve fund, which is $4.9 million.