INDIANA: School board passes 2.5 percent tax increase
By the narrowest margin, the Indiana Area School District board of directors on Monday ratified the 2014-15 budget including a real estate tax increase of 2.5 percent.
A last-minute call to hold the increase to 1.5 percent fell short of winning approval.
The directors voted 5-4 on the $50.6 million spending plan and raised the property tax from 105.59 mills to 108.22 mills, increasing the average tax bill by $56.
Even with the tax increase, the budget is not balanced. It provides for raising $50.2 million of new revenues and requires taking about $397,000 from the fund balance to make ends meet.
Directors John Barbor, Deborah Clawson, Hilliary Creely, Brian Petersen and John Uccellini were in favor, while Julia Trimarchi Cuccaro, Robert Gongaware, Diana Paccapaniccia and board President Thomas Harley were opposed.
“It seems to me most people in the district have not received the same increases in their own income,” Cuccaro said, calling to amend the proposed tax increase to 1.58 mills. “In relation to the economy, we should keep the tax increase modest and take more money from the fund balance. … It’s tax money, we have to use it.”
The 2.5 percent increase is the most permitted under Act 1 without a voter referendum, and matches the local inflation index determined by the state. Some board members argued that raising the tax less than the maximum allowed would make it difficult to keep pace with expected increases in pension fund contributions.
“This would not be prudent in the long term,” Barbor said. “This will create greater problems in the future.”
Cuccaro called the increase a hardship on taxpayers. Her motion for a 1.5 percent increase failed on a vote of 6 to 3. Harley and Gongaware voted with Cuccaro for the lower rate.
On the vote on the overall budget, Paccapaniccia added a dissenting vote, saying the district had not fully explored the savings that could be achieved by closing one of the elementary schools.
Gongaware said he opposed the budget because he believes the district had not done enough to balance the budget.
The directors also agreed, without opposition, to commit $500,000 from the general fund balance to help pay future increases in pension contributions and health care costs.
Designating the money for the retirement fund was more than a hedge against later increases. It trimmed the amount of the uncommitted fund balance to less than 8 percent of the total budget, a state-imposed threshold for allowing the district to raise the real estate tax.
“If you did not commit that, you could not have a millage increase,” Business Manager Jared Cronauer told the board.
District Superintendent Dale Kirsch described it as a “short term designation” that would be reflected as a line item in the budget. The board, by a majority vote, could reallocate the money to other expenses if necessary.
In other budget-related matters, the board approved transferring $50,607 to the capital reserve fund, ratified the capital reserve budget and approved an allocation of $1,032,929 of state casino gambling tax funds to reduce tax bills by $180.08 for each of 5,785 qualifying homestead and farmstead properties in the district, all on unanimous votes.