When a proposed budget hits the desk of the Palmerton Area School District's board of directors later this month, it will include a property tax increase.

The increase, however, will not rise to the level allowed by the state through its Act 1 index.At Tuesday night's workshop, the board settled on middle ground with a 1.25 mill tax increase proposal, which would see a Palmerton homeowner with an average assessed property of $43,000 pay an extra $53.75 over the current year's tax bill.Palmerton Business Manager Ryan Kish presented the board with multiple options to fund the 2017-18 budget, projected to total $32.37 million in expenses.No tax increase would have had the district taking $2.37 million from its fund balance if budgeted numbers hold true.Even with the proposed increase, the district would still need around $2 million from the fund balance to even things out.While eventually agreeing to the 1.25-mill increase, board member Sue Debski initially wanted to see the district use the 1.88-mill increase it is allowed to levy by law without seeking an exception from the state."I don't think we have a choice," she said. "If you don't steadily increase, you have to make a big jump in a certain year. I think increasing to the Act 1 index so you can maintain things is looking out for taxpayers. I don't see anything wrong with a healthy savings account."Others, however, didn't feel the tax base could take the impact of a full 1.88-mill increase."We have a majority of elderly people in this town that we have to think about," Tammy Recker, board vice president said. "When you say an extra $80 per year to a 90-year-old grandfather, you won't get the same response as if you said it to two people working in a household. These people have invested so much in the community. We owe them respect and to do right thing. Meeting in the middle is my opinion of doing the right thing. We can't keep taxing people who don't have money to give us."Admittedly, Kish said he budgets for a worst-case scenario. There is a chance, therefore, that expenditures could be less than predicted and the district wouldn't have to dip as heavily into its fund balance."I don't understand why we have to budget for the worst-case scenario," board member Barry Scherer said. "If a situation comes up and we're under budgeted, we can move money around then."Many line items do remain consistent, Superintendent Scot Engler said, but there are others that have more fluctuation.Building and Grounds Manager Joe Faenza said the district makes a prediction on gas use every month. If it goes over that number, it then pays the market price, whether it has a locked-in contract or not."That hasn't happened yet in my time, but it's been close," he said.A very small percentage of the district's budget is flexible with most of it being locked in costs such as salaries and benefits. As has the been case in recent years, the biggest cost driver for Palmerton's 2017-18 budget is the contribution to the Pennsylvania State Employees' Retirement System, up $276,613 from the 2016-17 budget.According to Kish, salary contributions will increase by $204,708; health care benefits by $296,668; the district's debt service by $94,709.Other increases include all-day kindergarten supplies; adding volleyball ($15,000), music instruments ($8,000), tax collector bonding ($7,000), and additional electric to support air conditioning in district buildings ($67,000).The district will save $96,000 by eliminating a mid-day bus run due to the all-day kindergarten program and also save $33,000 on its textbook line item.The board is scheduled to vote on a proposed final budget on May 16, with final adoption scheduled for June 20.