Centre County’s Board of Commissioners this week adopted a final 2025 budget that includes no real estate tax increase for the 15th consecutive year.
The $135 million budget approved on Tuesday remained unchanged in its total expenditures from the tentative plan adopted earlier in December. It keeps the real estate millage rate at 7.84.
“Really appreciate that we’re able to pass another budget without a tax increase this year,” Commissioner Amber Concepcion said. “We’re using some general fund reserves to do that but we are continuing to maintain a fund balance that is well within a healthy recommendation. Going forward we’’ll have to think about some of the structural factors that are making county budgets really challenging. But this looks like a good effort for this year and we’ll do our best next year as well.”
The county’s operating budget includes $118.5 million in expenditures, a 4.8% increase from 2024. The operating budget has $116.3 million in revenue, a 3.7% increase. It uses $2.2 million in general fund reserves and maintains a fund balances of 15% of total expenditures, which is in the range recommended by the Government Finance Officers’ Association.
The county’s capital budget, funded by the capital reserve fund is $16.5 million, down from $28.6 million in 2024. Completion of major capital projects like the courthouse retaining walls and progress on the renovations to the former Centre Crest property for a new human services building, which is expected to be completed mid-2025, account for the decrease in capital fund expenditures, Richard Killian, budget and finance director, said on Dec. 3.
The primary drivers for the rise in expenditures are increases to employee insurance coverage, a rise in overall costs and unexpected capital repairs.
Personnel costs of $45.8 million constitute the largest portion of expenditures at 39%. Nonunion employees are slated to receive a 2% pay increase.
Contracted services — primarily partner human service agencies —are the next largest expenditure at $39.77 million, or 34% of the budget, followed by $15.5 million for operations (13%), $5.4 million for debt service (5%), $5.2 million for internal charges (4%), $3.7 million for capital items (3%) and $2.95 million in transfers (2%).
Revenues include $45.97 million from state and federal grants, or 39% of the budget, $30.4 million from real estate taxes (26%), $20.9 million from departmental earnings (18%), $17.2 million from internal services and transfers (15%) and $1.8 million from interest earnings and rent (2%).
Though there will be no property tax increase in 2025, real estate tax revenue is projected to rise by 1.6%, Killian said.
Board of Commissioners Chair Mark Higgins noted that a “majority” of Pennsylvania counties are enacting real estate tax increases this year ranging from 10% to 41% as American Rescue Plan funds run out and property tax revenue has remained stagnant.
Commissioner Steve Dershem credited strong budget planning and financial management for Centre County’s ability to provide services without raising taxes.
“A budget is not a final document. It is a guideline for us to move forward, but being able to find efficiencies and opportunities for savings and new revenue is really what makes a budget work,” Dershem said. “Just because it says you’re going to spend X doesn’t necessarily mean that it’s always X. It can be significantly less than that. That’s where we provide the savings. How we’ve actually built the fund reserve that we have over the years is not just smart budgeting but smart administration of our finances.”
Higgins added that the county budgets “pessimistically” for items such as grants and payroll expenses.
All three commissioners praised the work of county staff and administrators for delivering an on-time budget with no tax increase.
“We have a lot of folks in the room that depend on a strong structural budget and I think this one is gonna be a good one,” Dershem said. “There’s always challenges and those will continue to arise and as we wrestle these alligators we’ll make sure that we get a satisfactory result. But we couldn’t do it without the hard work of a lot of folks in this room that have made it all possible.”
While residents will see no real estate tax increase at the county level, some will see a hike at the local level. Four of the six municipalities in the Centre Region — Harris, Ferguson and Patton townships and State College Borough — adopted budgets with property tax increases for 2025.
