Taxes Category

Category: Taxes

Newtown's "Volatile" Sources of Revenue

Ferguson Talks About Taxes at the January 10, 2018 BOS Meeting

For the benefit of "newbie" Township Supervisors John Mack and Linda Bobrin, Town Manager Kurt Ferguson discussed the "volatile" nature of the taxes the town depends upon to meet its expenses.

To sum up: Ferguson suggested that Newtown is unique in that it does NOT have a property tax (see below) and the lion share of it’s revenue sources depend upon “volatile taxes.” These taxes include resident and non-resident Earned Income Taxes (EIT), which account for about 54% of the yearly revenue. These are “volatile” because people may lose jobs and other municipalities may enact their own EIT. That means that Newtown can lose the taxes collected from residents of those municipalities who work in Newtown. This would have a "devastating effect" on the Town’s financial stability and credit rating.

The Truth About “Real Estate” Taxes

What’s often quoted as “Real Estate” tax millage of 3.50 is actually composed of a 0.875 Fire Tax millage plus a 2.625 Debt Service millage. This income does NOT go into the General Fund to cover ordinary/general ongoing expenses. The former goes into the Fire Protection Fund, which pays for the Fire Chief’s salary, health insurance, etc., and contribution to the Newtown Fire Association. The latter goes toward paying off loans for road improvements, etc. Other towns have a property tax that pays for the general expenses of running and maintaining a town.

Resident and non-resident EIT accounts for 54% of Newtown's annual revenue.

No New Tax Hike Does Not Indicate a Stable Local Economy

According to an analysis prublished in the Bucks County Courier Times this morning, more than half of Bucks towns will not raise taxes in 2018. However, that does not mean that these towns will not face a financial crisis down the road (see clip below). File this under "Don't ever believe a politician who says 'Read my lips. No new taxes!' or the equivalent."

Newtown Township may soon be added to the list. At a contentious public meeting on December 13, 2017, the Board of Supervisors debated whether to cut spending for essential services (again) or to approve the 2018 budget with new taxes to pay for Emergency Medical Services and Fire Hydrant Maintenance. In the end, they were unable to reach a consensus. Read "Newtown's Looming 2018 Budget Crisis."

According to the BCCT, perhaps a quarter of Bucks County towns have not seen a tax increase since 2013 (see the following table).

Note that Newtown Twp raised taxes by 1 mill in 2017 for debt service, which allowed the Township to borrow $1 million for roadway improvement every three years. If another tax increase is necessary down the road, at least that road is likely to be in good condition!