With budgets looming, counties seek to close gaps

Across the suburbs, counties are finding that the harsh economy has translated into shortages of cash when it comes to forging 2010 budgets.

After encountering stagnant property-tax revenue and leaping costs for health-care and pension obligations, counties also are finding that a potential solution - raising the tax rate - does not seem viable, at least politically.

Bucks, Chester and Montgomery Counties released preliminary budgets today. Delaware County's was introduced three weeks ago.

In Montgomery County, Commissioners Chairman James R. Matthews ticked off a list of national and local economic concerns - from the cost of health-care reform to raises in utility bills - as reasons to back off his earlier contemplation of a property-tax increase.

"Everybody is scared right now," Matthews said.

County levies typically make up only a small portion of a homeowner's total tax bill, often as little as 20 percent. The bulk of property taxes go to school districts. Townships and boroughs also levy a tax.

The suburban counties are grappling with ways to cover millions of dollars in shortfalls while eluding a tax increase - a task made all the more difficult with candidates for statewide office occupying commissioners' offices in three counties.

Should their final budgets include tax increases, Montgomery County Commissioner Joseph M. Hoeffel III, also a Democratic candidate for governor; and Republican lieutenant governor candidates Carol Aichele and Jim Cawley, county commissioners in Chester and Bucks, would have to defend the moves to voters statewide next year.

Bucks County

Bucks County commissioners announced a shortfall of $7.1 million in their proposed 2010 budget.

"We are continuing to look for further cuts in the budget, and look for additional revenue sources," said David Boscola, the county's deputy finance director.

One of the shortfalls was in grants from the state used by the county's health department.

Along with cuts in state funding, the two biggest issues the county faces involve increased costs related to pension and health-care benefits.

"We are holding the same benefits, but they cost more," said Brian Hessenthaler, county finance director.

The county has three options, he said: Raise taxes, take money from the $69.7 million surplus in the general fund, or a combination of the two.

If the county does not dip into the general fund, the tax increase would be $31.75 on an average assessed property of $35,766.

Hessenthaler said he did not think dipping into the rainy-day fund would affect the county's bond rating.

"The general fund is up well in excess of what bond companies want," he said.

The county is not projecting cuts in services, or layoffs.

Bucks County did have some unanticipated revenue this year. Real estate tax collection was better than expected, and there was a bump from gaming money at PhiladelphiaPark in Bensalem.

The commissioners will vote on the budget at 10 a.m. Dec. 16 at the Bucks County Conference and Visitors Bureau in Bensalem. The county will have a public hearing on the budget before the vote; no date has been set.

Last year, the county narrowly avoided increasing taxes by dipping into the general fund, cutting spending by a half-million dollars, using gaming revenue from PhiladelphiaPark, and other sources.

It was the county's third straight year without a tax increase.

Chester County

Chester County residents could face a tax increase - or not.

The $428 million proposed operating budget that the county introduced would require a 3.85 percent rise in the real estate tax. That would amount to $25.48 in additional tax on a house assessed at the county median of $166,495.

But Aichele said that she and her colleagues on the three-member Board of Commissioners were determined to whittle the tax hike to zero by year's end.

"I am confident that we will be able to approve the budget without a tax increase," she said. "The county is going to manage this recession the way our families and businesses are."

Most of the county's 2,500 employees will get no salary increase. Their benefit package also will change slightly.

Employees hired this year were offered a lower-cost medical plan than the one available to other workers. Starting with the new budget, all workers will be under the same lower-cost plan. Mark J. Rupsis, the county's chief administrative officer, said there would be little difference in coverage.

Under an $84 million capital-improvement fund, the county will proceed with plans to use $4.6 million in borrowed money for land acquisition to preserve open space in 15 communities. That will be paid back, at interest, over 20 years. Only a portion of the cost will come from 2010 expenditures, Rupsis said.

The county plans to redo its emergency communications system at a borrowed cost of about $9 million.

Aichele said she believed that the commissioners could offset part of the need for the tax increase - which would generate about $5.3 million - by getting the state to restore most of about $2 million that it proposes to cut from aid for child protection services.

She said that, with the recent rise in the stock market, the county also might not have to pay as much into the employee retirement system for 2010 as was expected a few months ago.

Delaware County

Homeowners learned early this month that their county taxes could go up as much as 7.4 percent.

Marianne Grace, the county's executive director, said today that the County Council would set a tax policy after a public hearing Dec. 9.

"That's really going to be the County Council's decision," she said.

The proposed budget calls for about $10 million in additional revenue resulting from the increased levy on real estate. The county's general fund will be about $309 million next year.

Much of the additional revenue will pay for increased costs in the court system and higher contributions to the county pension program. Grace said taxpayers also might have to make up for a reduced return on investments caused by the slump in capital markets from a year ago.

The proposed budget estimates that the county's 3,200 employees, about half of whom are under union contracts, will get 3 percent pay increases in 2010.

Capital fund projects planned for next year include about $400,000 in improvements to the county's 911 emergency communications system.

Montgomery County

Montgomery County posted a budget proposal to spend $403.9 million in 2010 while collecting $392.9 million - a shortfall of $11 million.

In earlier discussions, the county's shortfall had topped $50 million before a wage freeze, changes were made to the county's plans for paying employees' pensions, and other cutbacks were factored in.

Matthews said over several months that he saw little way around increasing property taxes to undo one or more of the county's rate cuts, but on a three-commissioner panel, he appeared to lack a second vote: Neither Hoeffel nor Commissioner Bruce L. Castor Jr. spoke in favor of the tax rise.

Matthews said the remaining $11 million shortfall would be closed "with no tax increase" for the county to produce its required balanced budget.

He said the county might spend down its $46 million fund balance to a level below what some auditors recommend to make up the bulk of the savings.

Commissioners also voted today to require employees to begin paying part of their health-insurance premiums, though no amount has been set.