School District Caps Proposed Tax Increase

By a unanimous vote of the Lower Merion Board of School Directors, the preliminary school district budget was passed on Monday night, Feb. 14, limiting next year's tax increase to a maximum of 3.31 percent.

The preliminary budget calls for a 1.73 percent increase in district spending, but declining revenues necessitate the tax increase to close a $5.4 million budget deficit, district Business Manager Victor Orlando said at the meeting.

The vote on Monday set the upper limit to which the district could choose to raise taxes, but does not necessarily represent what the actual tax increase will be. The final approval of next year's school budget is scheduled for June 15, Orlando said.

Pennsylvania's Act 1 legislation places limits on the size of tax increases school districts can implement, and in Lower Merion, the 2011-12 budget figure sits at 1.4 percent. Orlando said that the district believes they will be eligible for two special exemptions to the Act 1 limitations—for special education and retirement—which would enable the district to raise taxes to the 3.31 percent level proposed.

Applying for the exemptions does not necessarily mean the school district will use them in full, Superintendent Chris McGinley said, although with the preliminary budget approved, the district would be entitled to pursue the largest possible increase.

Orlando said that about 60 percent of the deficit in the budget, or $3.1 million, could be raised through money obtained by taxing to the full exemption levels. The funding gap is driven by a declining tax base, state funding cuts, loss of one time stimulus money and declining interest income, Orlando said.

The millage rate (dollars per $1,000 of assessed property value) would be raised from 22.2895 to 23.027 next year if the preliminary budget was adopted as the final budget. See the table below to calculate the impact on local taxes.

*Note, the municipal taxes listed above are for Lower Merion Township. Narberth municipal taxes are different and are not reflected in the table.