Lower Merion commissioners approve 8% tax hike, citing ‘looming cliff’ after 13 years of no increase
Commissioners acknowledged the “sticker shock” of the tax increase, but said that years of stagnant revenue have put the Montgomery County township in an impossible position.
Lower Merion residents will see an 8% increase on their property tax bill in 2026, a move commissioners say is a necessary remedy to the “mistake” of keeping tax rates stagnant for over a decade.
The township board of commissioners on Dec. 17 approved an 8% property tax increase for next year. The increase will bring the property tax millage rate from 4.462 mills to 4.819 mills. The median single-family homeowner in Lower Merion will pay around $1,386 in real estate taxes, a $103 increase from 2025.
The 8% tax increase approved by commissioners is lower than the 9.5% increase proposed by staff and supported by board President Todd Sinai. The board landed on the 8% hike after a protracted discussion about how much of an increase residents could, and should, shoulder in 2026.
Commissioners acknowledged the “sticker shock” of the tax hike but said years of stagnant tax revenue had put the township in an impossible position. Real estate taxes did not increase for 13 consecutive years in Lower Merion, from 2011 to 2024. The township voted to raise taxes by 6.5% for 2025, the first increase in over a decade.
“Those years of no tax increase have proven to be a mistake, given that each year we were presented with a structural deficit and a looming cliff,” Commissioner Ray Courtney said. “By holding out on increases as long as we did, we have painted ourselves into a corner.”
Under the proposed 9.5% tax hike, Lower Merion projected $83.8 million in general fund expenditures in 2026 against a revenue of $79.3 million. With the 8% tax hike passed by the board, revenue will be lower and the township will have to lean more heavily on its general fund reserves to cover the deficit.
Around half of Lower Merion’s revenue comes from real estate taxes, yet township residents continue to pay taxes calculated on property values established in 1998, the last time Montgomery County conducted a property reassessment.
The decades-old property values have kept tax revenue low, relative to the high market costs of a home in Lower Merion. The median sale price for a home in Lower Merion was $803,500 in 2024, according to data from Montgomery County.
Notably, only 10% of Lower Merion residents’ property taxes goes to the township. Around 12% goes to Montgomery County and 78% goes to the school district.
Montgomery County will be increasing taxes by 4% in 2026.
In a Nov. 7 report addressed to the board of commissioners, Township Manager Ernie McNeely wrote that, while Lower Merion has weathered the post-pandemic economy with relative success, its general fund has run a deficit multiple times since 2020.
McNeely’s report points to three major burdens on Lower Merion’s budget in 2026: healthcare premiums, staffing costs, and the Solid Waste Fund.
The township is expected to see a 20% increase in healthcare premium costs in 2026. McNeely’s report said the increase is due, in part, to the costs associated with nondiabetic weight-loss drugs and other “specialty pharmaceuticals.”
Lower Merion Township’s employment vacancy rate is also expected to fall in 2026. While a lower vacancy rate is good for departments needing to fill positions, each percentage-point improvement in the employment vacancy rate costs the township $520,000. On top of the falling vacancy rate, over 35% of township staff are set to receive a salary boost in 2026.
And the town’s Solid Waste Fund is in dire straits. Even with the 5% solid waste fee rate hike planned for 2026, the fund is set to face a $700,000 deficit. Rising costs for disposal, equipment, and personnel, as well as a declining regional market of mills able to purchase paper recycling material, were identified as the main reasons for cost increases.
The major challenges outlined by McNeely are set to the backdrop of persistent inflation, which is putting cost pressures on local governments.
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