City adopts budget with tax hike

New millage to bring in 10 percent more revenue than last year

The city adopted a 2017 budget Wednesday with property tax millage calculated to produce 110 percent of the revenue the city received last year -- the maximum allowed by the state after a county reassessment.

The millage -- 5.129 mills -- will generate about $10.5 million, $908,000 more than the city collected last year.

The city based the new millage on a total assessed value of $2.71 billion, as certified last week by the county, according to City Manager Marla Marcinko.

The city expects, however, that it won't actually realize all that revenue, because of tax appeals that will reduce the base, she said.

The appeals will probably continue into the summer, according to Mayor Matt Pacifico.

The city will probably end up refunding $300,000 or $400,000 to successful appellants, guessed Councilman Michael Haire.

The city aimed for 110 percent upon the urging of its Act 47 distressed municipality recovery team, said Councilman Dave Butterbaugh.

"We had no choice," Butterbaugh said.

The spirit of state laws on general reassessment pushes municipalities toward "revenue neutrality," and the city was generally aiming for that, officials said.

But the appeals threat makes it prudent to shoot higher, to ensure the city doesn't lose money, they said.

The new millage makes it easy for an individual property owner to calculate how much tax is owed the city.

For a property valued at $100,000, the tax would be $513, for example.

But it's difficult to generalize about the coming bills, because reassessment has radically altered base values for everyone.

Still, there are guideposts.

Countywide, new assessed values average about 10.5 times as much as old values, so if a property owner's new assessed value is more than 10.5 times the old one, an owner is probably going to pay more.

That uncertainty with comparisons is compounded for city residents by Altoona's move away from land value tax.

For the last several years, the city has based all  property tax on the value of land -- and none on the value of buildings.

But for 2017, the city is returning to the standard practice of taxing both land and buildings equitably, according to the assessed value of each.

Under the old system, the city's total assessed value of buildings was about seven times the total assessed value of land.

That meant city millage last year was about seven times as high as it would have been under standard property taxing practice.

Property owners who were "land heavy" -- whose land was more than the typical one-seventh of their building values -- were penalized.

Those are the ones who will benefit from the switch back to the traditional levy.

The budget includes earned income tax of 0.7 percent for general purposes and 0.4 percent for pensions on residents of the city.

The city is levying 0.5 percent of that general-purpose tax based on Act 511 and the rest based on its home rule government.

The budget also includes earned income tax of 0.1 percent for general purposes and 0.4 percent for pensions on those who work in the city but live elsewhere.

The city is levying the general-purpose tax -- the commuter tax -- on those non-residents based on its Act 47 plan.

It is levying all the pension tax on Act 205.

The budget predicts revenues of about $33.6 million.

It predicts the city will generate an operational surplus of $2.3 million by the end of this year, for an unassigned fund balance -- a surplus -- of $7.7 million, according to Marcinko.

It predicts an operational surplus of $1.8 million for next year, which means that the city should end 2017 with a cushion of $9.5 million.

Mirror Staff Writer William Kibler is at 949-7038.