Palmerton Area School District’s board of directors seemingly share the thought that a property tax increase is necessary in 2023-24 to keep revenues within striking distance of expenditures, but how much the hike will be remains in question.

When a vote on the preliminary budget takes place in two weeks, the increase will stand at 2 mills, which is short of the maximum 3.46-mills the district is allowed to raise property taxes according to the state’s Act 1 index.

“I think everyone understands we have to raise taxes somewhat,” director Stacey Connell said during a board workshop Tuesday. “While we could get close to a balance budget by raising them to the max, I don’t think that would be great for the community.”

As of Tuesday, Palmerton’s budget stands at $39.06 million in expenditures and $37.69 million in revenue before any tax increase. A 2-mill property tax increase would bring in around $600,000 in additional revenue and cost a Palmerton property owner, on average, an extra $88 per year.

Based on five-year projections, Palmerton would spend its $8.7 million fund balance and be out of reserves by 2027-28 if the district never raised property taxes over that period. On the flip side, max tax increases would have Palmerton out of deficit spending, with revenues outpacing expenditures, by 2025-26.

Palmerton Business Manager Ryan Kish said the major cost increases from 2022-23 to 2023-24 are an extra $448,000 for salaries, $136,000 for Public School Employees’ Retirement System contributions, $425,000 for medical benefits and $612,000 for charter school tuition payments.

Since the initial 2023-24 budget presentation earlier this year, Palmerton has added several expenditures including $95,000 (inclusive of salary and benefits) for a long-term kindergarten substitute at Towamensing Elementary due to increased registration and the need for an extra class, and $78,000 for an expected increase in electric costs. The district is expecting an additional $75,000 in revenue in Pre-K Counts grant money and $14,000 due to a Title IV grant increase.

New teaching positions budgeted for 2023-24, in addition to the long-term sub, include a high school music teacher.

Retiree medical expenses are projected to decrease $150,000 and the district’s debt service is also expected to go down $210,000 with the payoff of an M&T Bank Johnson Controls loan.

“Our unknowns for next year at this point are the teachers’ contract, updated assessment information from the county, medical rates and state funding contributions,” Kish said.

Palmerton is expecting to receive 95% of real estate taxes owed to it in 2023-24 as opposed to the 94% it projected for 2022-23, and a 3.5% increase in earned income tax.

“If that projection hits, the district would see an extra $819,000 in revenue,” Kish said.

Federal revenue, however, is expected to drop $64,000 as COVID-19 grant money falls off.

Within 5-7 years, Palmerton expects to have at least $2.4 million in capital expenditure projects become necessary. A large chunk of that, around $2 million, would be renovations to S.S. Palmer. Other expected projects during that time include parking lot and lighting work at S.S. Palmer; boilers, water heaters and lighting at Towamensing Elementary; and lighting at Parkside Education Center.

Palmerton’s preliminary budget will be up for vote May 17, with a final vote scheduled for June 20.