Update: State College Borough Council approved the 2023 budget and tax rate at its Dec. 19 meeting.
State College Borough Council on Monday will vote on a proposed $80.5 million budget for 2023 that includes a real estate tax increase for the first time in three years.
The 8.9% increase of 1.623 mills will bring the borough’s total millage to 19.833. For a property valued at $300,000 — the median value for single-family residential properties in the borough — the increase equals an additional $104 a year for properties without a homestead exclusion and $64 for properties with a homestead exclusion.
A $500,000 property will see an increase of $174 without the homestead exclusion or $133 with the exclusion, while a property valued at $700,000 will have an increase of $243 without the exclusion or $203 with the exclusion.
State College avoided tax increases for 2021 and 2022 in an effort to soften the financial impacts of the COVID-19 pandemic. But that has come at the cost of a structurally unbalanced budget requiring use of reserves to balance the general fund budget.
This proposed 2023 general fund budget has expenditures of $35.7 million and recurring revenues of $33.7 million, with $2 million funded from reserves.
Borough Manager Tom Fountaine said during a budget review in November that the use of reserves is meant to “smooth the increase in taxes that is required to continue to provide the service levels that have been historically provided by the borough through the general fund.”
“This isn’t new programs this is basically continuing to provide the service levels that we have in the past…,” Fountaine added. “In general that is intended to allow us to smooth and phase this in so that we can get caught back up and have a structurally balanced budget in the next two to three years. We’re trying to phase those in at lower levels rather than doing it all at once.”
Fountaine and Finance Director Dwight Miller noted that the borough has built a significant fund balance and Fountaine felt it would be appropriate to use some of that to lessen a tax increase. The 2023 budget projects a year-end balance of $18.9 million.
The borough anticipates a combination of reserve funds and tax increase will be required again in 2024 with continuing inflation and expected major increases in pension contributions based on market conditions.
Inflation has had an impact on the 2023 budget, with the Municipal Cost Index at 10.2% for 2022.
The proposed budget includes $25.5 million in capital projects funded from prior years. Among those is a $6 million Calder Way improvement and infrastructure project between Fraser and McAllister streets funded by American Rescue Plan Act money.
Other capital budget highlights include $5 million for a new parking structure to address a deficit of downtown parking spaces, with land acquisition possible in 2023. Another $3.5 million is designated for a surface lot on Nittany Avenue to replace the Allen Street lot that was sold as part of the still-pending State College Town Centre redevelopment project. A $1.1 million state grant funding also will be used for a shared-use path on Easterly and Westerly parkways and from Blue Course Drive to Whitehall Road and $250,000 will be used for Orchard Park bike path improvements.
Real estate taxes, meanwhile, are not the only increase borough residents will see. Sewer bills are also set to go up as a result of a the University Area Joint Authority increasing the borough’s sewage treatment rate by 17.5%. State College and UAJA are currently suing each other over the rate increase. Fountaine said sewer fees for residents can be adjusted during the year if conditions change.
As it stands, the 2023 rate will be $11.82 per 1,000 gallons per quarter, with a minimum charge of $35.46, up from $10.75 per 1,000 gallons and a minimum charge of $32.25 in 2022. Residential tapping fees will increase by $341 to $11,264.
Refuse rates also will increase by 2.75%. The increase amounts to between $5 and $9 semi-annually for residential customers, depending on residence and collection type.
Borough council will vote on the 2023 budget, tax rates and fees during its meeting at 7 p.m. on Monday in the Municipal Building
State College 2023 Budget Summary
| Fund | Expenditures | Revenue |
| General Fund | $35,740,936 | $33,721,945 |
| Centre Tax Agency | $1,092,665 | $1,100,000 |
| Insurance Reserves | $1,022,328 | $310,000 |
| Bus Terminal Fund | $39,651 | $39,651 |
| Bellaire Court Fund | $202,601 | $202,601 |
| Parking Fund | $13,142,115 | $10,864,004 |
| Compost Operations Fund | $1,139,533 | $883,432 |
| Sanitary Sewer Fund | $8,622,264 | $8,061,400 |
| Refuse Collection Fund | $5,284,889 | $4,522,275 |
| HOME Fund | $643,599 | $643,599 |
| CDBG Fund | $527,254 | $527,254 |
| DCED-HOME Fund | $330,000 | $330,000 |
| Capital Fund | $15,735,503 | $6,376,532 |
| Asset Replacement Fund | $633,375 | $525,852 |
| Fleet Services | $744,110 | $606,413 |
| Highway Aid Fund | $2,319,065 | $923,816 |
| Interfund Transfers | ($6,648,990) | ($6,648,990) |
| Total Expenditures | $80,570,898 | $62,989,784 |
