The Jim Thorpe Area School District is facing a 2026-27 budget that would raise property taxes by 4.1%, the most allowed without seeking a state exception or voter approval, and still spend nearly $3 million more than it expects to take in.

The budget, according to a discussion during the district’s committee meeting Wednesday, totals $55.99 million in expenditures against $53.1 million in projected revenue, leaving a gap of about $2.9 million that would be covered by reserves. The district’s unassigned fund balance, money available without restriction, is projected to fall to $618,113 by June 2027 from roughly $4.5 million at the start of the year, or to 1.1% of total spending.

“We can go to the allowable increase of 4.1%, which will generate just under $1.3 million in new tax dollars and decrease our shortfall to about $2.9 million,” said Brian Off, who presented the budget figures Wednesday.

According to administrators, under a 4.1% tax increase, 57% of taxpayers would see a $78 annual increase or less.

Director Mary Figura defended the increase as overdue, blaming years of flat tax rates for the district’s current position.

“I’m actually for the tax increase,” she said. “I hate taxes, but I have to think about the future. If we would have made those little raises each year, even if it was a quarter of a mill or a half a mill, it would have compounded every single year, and we wouldn’t be in this situation.”

Figura warned that inaction would have steep consequences.

“We are going to be in trouble in three years if we don’t raise taxes,” she said. “We’re going to be hanging on by a thread, because the government isn’t giving us any money, and we’re losing money constantly. Every single district is raising taxes. They have to. We’re all in the same boat.”

Off attributed part of the financial pressure to shrinking federal aid and rising costs. “Title I is down $67,000. Title II is down at least $6,000,” he said.

Health coverage costs are also climbing.

“Medical insurance increased 9% last year and 11% this year,” Off said. “We negotiated medical, so there’s not much we can do.”

A new health savings account program has helped only modestly.

“There is a net savings for this year, but that net savings is $15,000,” he added.

Superintendent Robert Presley said the state cap on annual tax increases keeps tightening, narrowing the district’s options each year.

“Our index is only going down, so each year you’re going to have less and less of a chance to cut into that deficit,” Presley said. “That’s the problem.”

Spending down reserves carries its own penalty, he added.

“If you reduce that fund balance, our rating goes down, and we get worse interest rates when you go to borrow,” Presley said.

Jim Thorpe meets Wednesday at 7 p.m. when it is expected to vote on its final 2026-27 budget.