The Tamaqua Area School Board approved a $45.02 million preliminary budget with a 5.6% tax increase to hedge against a possible decrease in state funding and a flood of tax assessment appeals.

Business Manager Connie Ligenza presented the board with three budget scenarios — one with a 5.6% tax increase, one with a 2% tax increase and one with no tax increase.

The proposal with the highest tax hike keeps healthy fund and reserve balances, which guards against fluctuations in state funding shifts and the constant stream of tax assessment appeals since the county’s reassessment, she said.

The no tax increase proposal keeps a fund balance just under 8%, but leaves the district with a $350,000 deficit, Ligenza said, noting that this was presented based on board discussions the previous month. There is no reserve fund balance with this option.

The proposal with the 2% tax increase would be a compromise between the others and “we’d essentially have close to a break-even budget with a deficit of $30,000 and a total fund balance of $3.6 million of which $59,000 would be reserved,” Ligenza said.

Superintendent Ray Kinder attended a recent conference where other school district leaders were told that they may only see 65% of last year’s increase in state funding.

Board member Dan Schoener, doing some quick math, said that could mean an $800,000 or $900,000 decrease for the district and asked if that was included in the budget.

Ligenza said that the proposed funding from the governor’s budget was included in the spending plan. Not doing so would be misleading in budget discussions, and the practice is consistent with prior years when the district did receive the funding, she said.

The current uncertainty with the state funding and the tax assessment appeals, which in past reassessment years ran upward of 2% erosion, and people also taking advantage of initiative to preserve farmland and woodlands further erode estimated tax revenues, she said.

“There will certainly be appeals,” Ligenza said. “They continue to come in continuously and I know they will continue to do so.”

Board President Larry Wittig, who opposes a tax increase and voted against it, said that he understood the reasoning behind the increase due to the increase in assessment appeals and erosion of revenues.

“That’s a legitimate concern,” he said, but added that the district had been seeking and benefiting from higher assessments and the district increased taxes last year.

Other board members corrected him, pointing out that the district did not raise taxes last year. The district held taxes level last year.

Board member Nicholas Boyle favored the full 5.6% increase, pointing out that the district wouldn’t have to worry about the shortfall in state funds or the amount of assessment appeals.

“I say we go the full Monty here. We do that and we don’t worry about if the money comes in,” he said. “There’s not going to be a tax increase for the better part of a decade,” he said.

His comment was met with some amusement, and Boyle pointed out that he said the better part of decade, not the full 10 years.

Wittig still favored no tax increase, while other board members leaned toward the higher tax increase, because of the uncertainty.

Ligenza explained that once the preliminary budget is approved, the board would not be able to increase the tax rate above what was advertised for public review. The board, however, could lower the proposed tax rate next month, if the district received better information.

The board debated the proposed tax increase during its finance committee meeting, opening the discussion to other board members.

The board, which held both its committee and regular meeting Tuesday, approved the budget with the 5.6% tax increase with Witting the only member voting no. Board members Trina Schellhammer and Thomas Bartasavage were absent.

The preliminary budget has an opening fund balance of $3,692,228; revenues of $45,575,365; expenses of $45,024,885; and an ending fund balance of $4,237,716. It also has a $635,719 reserved fund balance.

The proposed tax rate is 8.9639 mills, which is 0.4754 mills above the new base rate for the district with the reassessment of 8.4885 mills.

Per capita taxes, Section 679, are set at $5, and per capita, Act 511, $5; and real estate transfer tax at 1% which is shared with municipalities; and EMS tax is $5 and assessed occupation is $225.