Schools’ tax news is mixed

The cost of public education in Luzerne County is set to rise by $19.5 million next year, according to budgets approved by all 11 school districts, and the obvious question for most residents is: “How does that hit me?”

Well, there’s good news and bad news … and good news … and bad news …

For starters, that $19.5 million is a 4.3 percent increase over last year, while the average property tax increase is 3.2 percent. So overall, tax growth is not increasing as fast as spending. Two districts (Hanover Area and Lake-Lehman), increased spending with no tax hike; three more (Crestwood, Dallas and Wyoming Area) increased spending and tax millage by about the same percentages.

But many local school boards avoided bigger tax hikes by dipping into reserve funds – a sort of savings account piled up by annually spending less than budgeted or taking in more than predicted. And using reserves to avoid tax hikes can lead to disaster down the road.

Hazleton Area is a good example. The district wiped out a healthy, $13 million reserve in the past few years, and now had to jack the property tax up by 13 mills. And that was only after slashing away at a preliminary budget with a 25-mill hike.

The countywide reassessment under way has no impact on the new school tax bills that residents will see in the coming months. All districts must use the old assessed values this year, because the reassessment process won’t be complete until November, and the school district fiscal year started July 1.

Hazleton’s plight means that, while spending is set to increase by only 2.8 percent – the smallest percentage increase in the county -- the tax rate will climb 7.5 percent, by far the steepest in the county.

First, at $105 million, Hazleton has the largest budget, so a nearly $3 million budget increase from last year becomes a relatively small percentage increase. Wilkes-Barre Area’s dollar increase of $5.1 million is much more than Hazleton’s, but because Wilkes-Barre Area’s budget is a bit smaller at $96.4 million, the increase is 5.6 percent.

Second, Hazleton has the lowest millage rate in the county, so a small change can translate into a big percentage jump. While Hazleton’s 13-mill hike to 187.392 mills is a 7.5 percent increase, Wilkes-Barre Area’s 13-mill jump to 310 mills is only a 4.4 percent increase.

Translating the cost into dollars for the average property owner, Northwest Area residents have the lowest increase, where a 4-mill increase will up the average bill by $16, while Hazleton Area’s 13-mill hike is the biggest increase for the average property owner, adding $58 to the tab.

The good news for many taxpayers this year is that the state has finally delivered on the long-awaited promise to lower property taxes by using money from legalized gambling.

Luzerne County’s 11 districts will get a total of $11.7 million doled out as “homestead exemptions” to eligible property owners, which means that, while tax bills won’t actually be reduced, most homeowners will be exempt from paying part of it.

In all districts, the amount of the exemption exceeds the dollar increase in taxes for the average property owner.

Put another way, the average property owner will actually see a net decrease in taxes paid, thanks to the state money. School board members were quick to point that out when voting for the tax hikes.

Note, however, that $11 million in property tax relief available countywide doesn’t come close to matching the combined $19.5 million increase in spending.

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The temporary expedient of dipping into reserves can turn into a problem.

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