East Penn School District Superintendent Thomas Seidenberger has established a direct link between Lower Macungie Township approving a controversial TIF for the Hamilton Crossings shopping center and the size of the school tax increase district residents will face for East Penn’s 2014-15 budget.

If the township’s commissioners agree to participate in a tax increment financing plan for the shopping center early next month, East Penn taxpayers will not have to pay as much in increased taxes for the new budget, explained Seidenberger.

On Monday night, the school board voted 8-1 to give initial approval to a $136.86-million budget for the coming school year.

At the moment, that budget will require a 3.86 percent tax increase.

But school officials are optimistic the size of that tax increase will be reduced before the school board adopts the budget on June 23.

Seidenberger said one way that will happen is if Lower Macungie’s five commissioners vote to opt into the TIF when they meet on June 5. He told the board that vote will have a direct impact on the new budget.

He said if commissioners support the TIF, East Penn will get $558,000 in what he called TIF revenue, which would lower the proposed tax increase to 3.16 percent.

School board member Charles Ballard questioned how that is possible, since East Penn could not start receiving increased property taxes from the $140 million shopping center until it is completely built, which won’t happen until the spring of 2016.

Seidenberger told Ballard the school district automatically will be getting $212,000 in rollback taxes, plus real estate transfer taxes.

He said Hamilton Crossings developer Tim Harrison also has told the school board he will cut the district a check for $326,000.

“It’s not the TIF per se,” argued Ballard. “One is a side agreement and one is a result of taking a piece of property that had been granted tax exemptions for awhile, putting it back on the tax rolls and rolling back some of the taxes.”

“Because of the approval of the TIF, we’ll have that revenue coming in,” said Seidenberger.

Added board president Alan Earnshaw: “The developers have said without the TIF, the transaction will not proceed. I don’t know how you want to characterize it otherwise.”

Seidenberger said an additional revenue source will be if the district gets a Ready To Learn grant through the governor’s office for $550,168.

He’s read Gov. Tom Corbett intends to release those grants, but added:
“I’ll believe it when I see it.”

He said if the district gets both the TIF money and the Ready To Learn grant, the 2014-15 property tax increase will drop to 2.47 percent.

If the governor also reduces pension costs throughout the state via a “pension collar,” East Penn will save another $635,434.

Seidenberger the total of all three possibilities would drop the tax increase to 1.67 percent.

Beyond that, Seidenberger promised his administration will continue to exam line items and revenue to try to keep taxes as low as possible without cutting programs.

“What we adopt tonight will almost certainly not be our final budget,” said Earnshaw just before the vote.

School board member Lynn Donches cast the only no vote on the proposed final budget for 2014-15.

Her husband, John Donches, told the school board it wants to raise taxes by almost four percent. He noted the board did not raise taxes last year, adding: “That was an election year, wasn’t it?”

The largest tax increase in the last several years was 3.85 percent in the 2010-11 school year, according to figures shown by Seidenberger during his budget presentation to the board. In the current school year, there was no tax increase.

$2 million cut from budget

Seidenberger told the board that the district has made more than $2 million in cuts on the proposed budget.