(Credit: Alexander Mils / Unsplash.com)
Though much of the nearly five-hour meeting on June 11 of the Upper Dublin Board of Commissioners was consumed by talks over what, if anything, to do with 530 Virginia Drive, there was another important open space topic also up for debate. Under its “Action Items,” the board was set to discuss in more detail the option to put a question on the November Ballots 2024.
In its May 14 meeting, the board discussed options for funding open space initiatives. One option that was considered included a tax hike for those paying an Earned Income Tax, or EIT. While the board has the power to decide where local tax dollars are spent, regardless of the public’s opinion, the commissioners weighed the benefits of such a tax increase and if the residents would want a voice in that choice.
Officially listed as Ordinance #24-1391.035, the commissioners had to decide whether or not to authorize an Open Space EIT Ballot Referendum for the November 2024 ballots. Board President and Ward 4 Commissioner Ira S. Tackel moved to approve the ordinance as he announced the item in the agenda. It was immediately seconded by Ward 3 Commissioner Gary V. Scarpello.
Following the second, the board opened the topic up for discussion. Meredith L. Ferleger, board vice president and Ward 2 commissioner, had some questions.
“My first question is that, this EIT tax, would be considerably restricted, considerably so,” she said. “It can’t be used for a single piece of ground that we currently own. It can’t be used for any improvements to a single piece of open space that we currently own. It has extraordinary limited use for even creating critical connections throughout the township. We can acquire the easements. But, we can’t put a significant amount of these funds towards construction.”
With such limitations, Ferleger asked why this was not a real estate tax millage question, and not one to be added to the EIT.
“Why aren’t we just creating a real estate tax millage of the exact same amount that is unrestricted? That we can actually use to benefit the vast majority of the township, and not be restricted in what we can use it for?” asked Ferleger. “If this is something that the township believes is something they want, why we would go down a path of picking the option that is the most restrictive option that we have out there?”
Ferleger said, instead, that the township had many other, less restrictive options for raising funds for open space.
“Not only is it restrictive [in use], but it is being subsidized by a small portion of the township,” she said. “Real estate taxes are incurred by the vast majority of Upper Dublin residents; not all but most.”
Ferleger asked if an increase in real estate tax could be earmarked specifically for Open Space Use. Township Finance Director and Assistant Township Manager Jonathan Bleemer said that there are ways to make that happen.
“Commissioners, under the first class township code, there is a provision that real estate taxes can be enacted or levied for a permanent improvement fund, and this would fall under that,” said Bleemer. “The restrictions are that you can only impose a five mills, so a lot, so there are not restrictions.”
The board laughed and agreed.
“That’s way, way more … we’re talking about a fraction of that,” said Tackel.
Township Manager Kurt Ferguson asked if some calculations could be made. The board had previously discussed an increase of income for the township of $260,000, which the EIT would have garnered with the increase of 0.035% for the coming year.
“It’s an easy calculation because, if you know that on a yearly basis a million raises the taxes a half a percent in a general real estate tax, this is going to equate to about 0.25% across the board for real estate,” said Tackel. “It’s just simple math.”
“I believe the EIT on 0.035 would be about half a million,” updated Ferguson.
“Right, so if you want to match a half a million in revenue, you would do it by raising the general tax by 0.25%,” said Tackel.
Harm J. Scherpbier, the Ward 1 Commissioner, reminded the board that, during last month’s discussions, the commissioners were leaning toward having Open Space Funds generated from multiple sources, so the burden was not on one particular group of taxpayers.
“One is grants, which of course Derrick is very successful at; one is this limited but small but ongoing, ongoing funding through the EIT, and the third funding source would be bonds for larger projects, which is similar to what you’re describing, so where we would raise the real estate tax to fund larger projects,” said Scherpbier. “I think it is not ‘either or’ it’s all of the above. I think this is a good, strong, ongoing funding mechanism.”
Scherpbier said that to fund multiple projects, many sources of funding would be crucial.
“There are many projects in the Open Space Plan, sitting right here next to me, that require both the acquisition of the land or the easement and the project itself,” he said. “This money will be very well used for many of the projects in the current Open Space Plan.”
Tackle reminded the board that an EIT increase only impacts “a portion of the population versus the real estate tax,” a topic that was also noted during the May meeting.
“You’re right, we talked about that last time, I’m just reiterating the point,” Tackle said to Scherpbier.
“Whatever method of taxing you use, you lean more on one group of the population and less on the other,” said Scherpbier. “There are many ways to look at that.”
Tackle argued, however, that the change in a real estate tax may not have to go through a ballot referendum.
“The board has full responsibility and authority to simply implement,” said the president. “What we’re talking about here would be ballot referendum, and let the residents decide. Now, let’s be clear, the residents could decide that they’re not in favor of an EIT. The board could still go ahead and say ‘we’re going to tax you anyway.’”
Ferguson let the board know that, via rough calculations, the millage percentage increase would be around 3.5%, to bring in around a $500,000 total.
“No where near five,” said Ferguson.
Alyson J. Fritzges, Ward 6 Commissioner, asked if that money raised by a millage increase would still be designated specifically for Open Space.
“Is there some sort of special thing we do to do that at budget time, or how does that work,” asked Fritzges. “I just want to make sure when we get to budget seasons, we’re not saying we don’t want to do the 3.5% this time because of all these other things.”
Bleemer said that funds raised would be “set aside, and the commissioners would decide how to spend that money.”
Ferguson said that, while an increase in real estate is “more open,” there are still some rules about the use of funds.
“It would have to be for a capital purchase,” said Bleemer. “That’s really the only restriction, which includes open space improvements, open space connections.”
Tackle asked if “grant-matching funds” was an approved use, to which Bleemer said “sure.”
Ferleger wanted to differentiate the two options more clearly.
“From my understanding of the EIT, that can be used to acquire new open space,” she said. “It cannot be used to fund anything we own currently. Real estate tax could be used …”
“Anything that you can define as capital,” interjected Ferguson.
“Including in our existing parks,” finished Ferleger. “It could be used for construction of connections. Could be used for acquisition of easements for those constructions of connections.”
“What can it not be used for?” asked Tackel.
“It cannot be used for operating expense,” answered Ferguson. Neither could EIT funds be used for operating expenses.
“On your tax bill, we do delineate several different items,” said Tackel. “This would be a line item, but we have a limited amount of space. So, while it would be a separate line item, either it shows and something else doesn’t, or it doesn’t show. It’ll be there, like Prego, ‘it’s in there.’ But it’s not going to be a line item.”
The president noted that, due to a “finite amount of room on the bill,” a special “Open Space Funds” may not fit as a unique line item.
“Whether it was a property tax provision being discussed, or it was an EIT, with that number on it, we would silo that money in a way that it would be separated in either instance,” said Ferguson. “Even the EIT, it’s a pot of money we get essentially every month, or twice a month, we would take the portion only aside, the same way we do with real estate taxes.”
Though checks may come in via large sums, the township is responsible for dividing funds as necessary.
“You can name the fund whatever you want,” said Ferguson.
Fritzges asked if that money would be earmarked and named, as she wished to have it specifically for open space only. Tackle said that all choices would be up to the board.
“It’s really the purview of the board,” said Tackel. “You make the rules. You adhere to the rules, or not. Our own rules would be ‘silo it, and only use it for [open space]. To vote for it, that is what I assume we’d do.”
Ferguson noted while the code directs that the title of the funds must read “Permanent Improvement Fund,” there was nothing to say that a subhead couldn’t be “Open Space.”
Ferleger asked that the increase be both more broadly across township residents and also that its uses would be unrestricted. She said she worried existing assets may require funding, and with an EIT increase, that restriction would be difficult.
“Having unrestricted funds is a far better use of taxpayers dollars,” she said. “If we’re going to ask our taxpayers to fund this goal, it should be unrestricted, available for use, and across the township, not just one subset.”
“I think Meredith’s [Ferleger] idea makes more sense, but I would caution the board to approve that before the budget, we’re starting the [budget] process with a half-a-percent increase right off the bat,” said Tackel. “This board, a prior board, obsessed over a half-a-percent increase to the township. And, you’re already starting with half a percent.”
Ferguson corrected that it would be a 3.5% millage increase, not just one half a percent, required to obtain half of a million. The millage that the township has now, would be increased by 3.5% millage (not in total funds).
“The dollars are the same,” said Tackel. Whether the hike in millage or the increase in an EIT, the amount was nearly the same. Ferleger noted that figures that show taking the same amount from a small group (EIT) or a large group (real estate) was even more critical.
As numbers went back and forth, adding more confusion to some commissioners than clarity, Scherpbier said perhaps the board needed more time.
“Can I make a suggestion,” said Scherpbier. “This is complicated. There’s pros and cons for every way of doing it. And I’m listening. My main goal is funding for open space, and I don’t have a strong preference as long as we somehow come up with ongoing funding.”
To have more time to collect data, Scherpbier suggested placing the vote on the July agenda, which still gives time for the board to place this on a ballot prior to the Aug. 8 deadline.
“I’m confused about the ins and outs,” he said.
Ferleger asked if the question could be put to the ballot, if a millage increase would be something they’d be in favor of, to which the administrators said “no.” A real estate tax increase could not be put to a ballot question.
“I would like to know more, and it’s complex,” said Ward 5 Commissioner Cheryl Knight. Ferguson said he could make up a memo listing pros and cons prior to a July meeting.
Tackle said that the change, around $45 per household fee (a real estate tax fee), would be received well by some residents, and still argued by others. Instead, fewer people may have to pay $80 or $90 a year out of their paychecks (EIT).
Scherpbier asked if they could try the real estate effort this year, but if they backed out in this year’s budget, the board would revisit the EIT option prior to the 2025 election.
“I’m telling you, having 22 years experience on this board, with a myriad of commissioners, this board over the years has obsessed, when the residents are out there, the few that show up, those that are vocal, and catch wind of the fact that you’re starting with 3.5% and going up from there? Are you kidding me?” asked Tackel. “And when you say, ‘do we have the guts?’ well that’s where the rubber’s going to meet the road.”
As back-and-forth conversation continued, Fritzges asked that the board table the discussion to provide the commissioners and supporting staff more time to weigh options. She moved to do so, and table the topic.
Knight seconded the motion to table a vote on the Ordinance. The board did a roll-call vote with six votes yes, and only Tackel “to preserve the integrity of the voting process, I’ll be a ‘no.’” against it. The topic will now appear on the July agenda to decide of the EIT ballot referendum should be added.
