Tax Collector - Real Estate Taxes
401 Lincoln Way East
Chambersburg, PA 17201
Franklin County Area Tax Bureau - Earned Income Taxes/Local Services Tax
443 Stanley Avenue
Chambersburg, PA 17201
The Borough of Chambersburg did not raise real estate taxes between 2007 and 2013; then there was an increase in 2014 and a second increase in 2016. Therefore, there have been only 2 real estate tax increases in the last 11 years. Chambersburg did not raise the real estate tax in 2017. Taxes were raised by others such as Franklin County or the Chambersburg Area School District. In 2014 and 2016, the Borough raised taxes but only to fund police and fire services. Beginning a decade ago, and through 2017, there is a constant theme in our finances: real estate tax increases were rare and only dedicated to fund police and fire services.
“Good debt is investment debt that creates value,” says Eric Gelb, CEO of Gateway Financial Advisors and author of “Getting Started in Asset Allocation.”
Paying a tax for a bond issue, as was decided by Town Council, is not the same as paying a tax for the operation of the Borough. For example, it is a similar difference to opening a mortgage to buy a house or fix the roof in contrast to using a credit card to pay the telephone bill. Debt should only be used to add asset value. Whether citizens agree with the Town Council or their decision to not hold a referendum in 2016, the basic fact remains, the Recreation Bond Tax, the new tax starting in 2018, is not to pay for any Recreation Department operations. It will pay off, over twenty-five years, the debt to build the new Chambersburg Aquatic Center at Memorial Park and other playground and park improvements. Debt to increase asset value is a smart use of debt, is common in business and industry, and is actually a recommended practice. This new tax and its approval of Council is a decision that was made in 2016.
In 2016, the Borough Manager and consultant Kevin Post of Counsilman-Hunsacker Aquatics discussed a variety of options for the design of the new Aquatic Center and the financing of the
proposed 2016 Recreation Bond. At the Town Council meeting on February 22, 2016, Laura Kurtz from Eckert Seamans and Financial Advisor John Frey from PFM advised Town Council that a voter
referendum, under the laws of the Commonwealth of Pennsylvania, would be non-binding; but ultimately it was Council’s decision whether to move forward with a bond issue. On May 23, 2016,
Town Council authorized the 2016 Recreation Bond sale, without a voter referendum, and approved the new Recreation Bond Tax to begin in 2018.
In Chambersburg, our citizens pay no dedicated Recreation Tax, no dedicated Highway Tax, and no real estate taxes at all to support any of the Borough’s operations, utilities, or utility support departments other than police and fire/ambulance. Our taxes are very limited, yet misinformation is abundant on this topic. Until 2014, 100% of the real estate taxes collected by the Borough of Chambersburg were used exclusively to support the Chambersburg Police Department. In 2014, a small share was added to support the Chambersburg Emergency Services Department. This includes ambulance operations.
In the 2018 budget, the Town Council approved an increase in the Fire Tax for use by the Fire Department and its Ambulance operations; and an increase in the Police Tax.
All the real estate taxes collected within the Borough are used exclusively for the Police Department and to support the operations of the Chambersburg Emergency Services Department; none of this revenue is used to support any other department or operation. As of 2018, we will still only use real estate taxes to support Police, Fire, Ambulance and the debt services associated with the pool and park 2016 Recreation Bond. No real estate taxes are used for highways, streets, code enforcement, parks, or any other employees such as the Borough Manager, or any other operation or utility of the Borough other than public safety.
Of course, there are other types of taxes other than real estate taxes. However, they are set by the State, cannot be adjusted, and are currently at the maximum allowed by State law. We use the other taxes of the Borough (such as Earned Income Tax and Deed Transfer Tax) to pay for the Highway Department operations and the Recreation Department operations. The Sanitation Department is a separate utility (not unlike the Electric, Gas, Water, or Sewer Departments) and they keep the streets clean, free of leaves, and well swept. Highway construction projects are done with Highway Aid grant money (a grant from the State created by the sale of Liquid Fuels) and whatever money is left over from the previous fiscal year. Our Highway Aid grant only pays for construction on Borough owned streets and not much of that at all. Keeping up with all highway maintenance on Borough streets without a dedicated funding source has always been very challenging. Street repair is extremely expensive and Highway Aid is very small.
In 2018, the Borough will use accumulated balances from 2017 to have a street maintenance program, but once again not enough money to either keep up with the growing needs or to address any of the Borough-owned alleys. Alleys are not getting addressed at all and Council has been urged to take action. Further, staff is recommending a comprehensive plan be developed to address the serious condition of back alleys.
The Borough of Chambersburg receives no sales taxes, liquor taxes, business taxes, or other local taxes and they are not an option under State law. In 2015, the State proposed an increase in the hotel taxes across the State; for tourism, with a prohibition on using them by any local town for anything else. The truth is we have very little revenue, very few opportunities to increase revenue and a lot of responsibilities.
It is often said that Town Council has a toolbox with one tool inside (real estate taxes) and it is a dull and poorly honed tool; but that is the only tool given to them by the laws of Commonwealth of Pennsylvania.
Only 19¢ of every $1 paid in real estate taxes will go to the Borough of Chambersburg. The balance, 81¢ will go to support the school district, the county, and the library. In fact 64¢ of every dollar goes to the Chambersburg Area School District.
The budget and tax rates for the Chambersburg Area School District are set by the independently elected School Board and not the Borough. The Borough has no say in these issues.
The budget and tax rates for Franklin County & the Library are set by the independently elected County Commissioners and not the Borough. The Borough has no say in these issues.
Further, almost all the employees of the Borough and most of the equipment of the Borough is owned and operated by our utility departments (Electric, Gas, Water, Sewer and Sanitation Departments) and our utility support departments (engineering, motor equipment, and administrative services). Your taxes do not support any utility operations, personnel or equipment. Further, as the budget document reveals, the Borough’s utility rates are very reasonable.
Unless you own property inside the Borough, or have a job inside the Borough, you pay the Borough no taxes. Further, if you just have a job in the Borough you pay only $1 per week to the Borough and nothing else. In fact, almost no township residents contribute any tax money to the Borough. For example, the Sales Tax collected at stores inside the Borough all goes to support others, not the Borough.
The other state mandated taxes are set by law and are not changed year-to-year. They include the Local Services Tax, which is a $1 per week tax on workers inside the Borough; the Earned Income and Wage Tax, which is a set tax on wages earned by those who live inside the Borough; and the Deed Transfer Tax, which is a set tax when property inside the Borough is sold or transferred.
Together, along with fees and fines, these categories make up the only revenues of the Borough. Also, the Electric Department and the Gas Department make a Payment in Lieu of Gross Receipts Taxes (PILOTs) to the General Fund. If these two departments were private corporations, they would pay taxes to the Commonwealth. As such, they are tax exempt. So instead, they pay their taxes to support your General Fund (police, fire, ambulance, highway, and recreation) activities.
Finally, the only other revenue received by the General Fund is grants. In most years, the Borough receives very little grant money. However, in 2016, the Borough was lucky to be have an accumulated surplus of Highway Aid grant money (a grant from the State created by the sale of Liquid Fuels) available for street paving.
The Borough utilities sell a considerable amount of utility services in the new Norland Avenue neighborhood, increasing the size of the Borough’s independent utility accounts. However, these developments generate very little additional taxes to support the Borough. Most of the revenue they create is in the form of Sales Tax and in Pennsylvania, local municipalities receive no Sales Tax share. The State allows us no other type of tax. We are prohibited from collecting local sales tax, liquor tax, hotel tax, business tax, amusement tax, or any other tax.
Further, the sale of alcohol generally provides almost zero income to the host municipality. These developments have been very good for our community and create low unemployment, but they do not generate income proportional to the responsibilities they create for police, fire and traffic.
In addition, many types of properties are exempt under State law from paying real estate taxes. Those exempted properties include schools, colleges, churches, charities, and other government agencies. So, while these property owners add to the economic vitality of our community, they do not necessarily contribute any money to support police or fire services. However, some of these agencies (Chambersburg Hospital is a good example) make a voluntary contribution in support of the Borough’s public safety services regardless of their tax exempt status. We encourage all tax exempt property owners to donate to the police and fire services every year.
State law prohibits the levy of taxes as a fee on persons (called per capita taxes) so we cannot invoice directly for police and fire services. Instead, the law allows us only to use property as the sole means to determine how much tax to collect. So, if you rent your property, your landlord will pay the real estate tax and it will be reflected in the rent you pay. There is no other system allowed. The Ambulance Club is not a tax or fee; rather, it is more like a service. You provide us a gift and in exchange, we accept assignment from your health insurance company if you need to use the Borough ambulance service.
Although the police and fire are paid for by Borough non-exempt real estate owners, they do respond to police and fire calls in the townships. State law requires that emergency services respond to all dispatches for health and safety. The Borough’s emergency services will always support our township neighbors regardless of money issues. We also enjoy the support of the various volunteer fire companies from the townships and the Pennsylvania State Police. Mutual aid is a very important principle in public safety.
But, can the Borough afford police officers and fire fighters when the money to pay for them can only come from such a small group of taxpayers? Unfortunately, the statewide system is broken. We can envision nothing but painful tax increases in the future to pay for growing police and fire expenses.
The local townships do not have police departments. They rely on the Pennsylvania State Police. They do not have township employee fire departments. They rely on the generosity of volunteer firefighters. All of the Borough’s local real estate taxes go for these functions. And while we might wish to not have paid police and fire departments, unfortunately we cannot go back.
Therefore, under the authority of state statutes, the Borough levies the following taxes:
- Real Estate Property Tax
- Determined by Town Council, and
collected by the Borough's elected Tax Collector. Real
Estate Property Tax is based on assessment values as
established by Franklin County.
The current assessed value of real estate in
Franklin County is 100% of (1961) Market Value.
Town Council annually enacts a Mil Rate to
Borough's portion of Real Estate Tax assessed to
each parcel within the Borough.
One mil is equal to 1/1000 of a dollar, or 0.001%
of the assessed value.
For example, if your property's assessed value
equals $20,000.00, one mil equates to $20.00 in taxes.
Total assessed value of taxable real estate inside the Borough for 2018 is estimated to be $202,214,800; up very slightly. Therefore, the cash value of 1 mil would equal $202,215. However, when factoring in our average collection rate for any given year, we should expect that same mil to yield $188,060. This difference is a result of the average amount of taxes remitted on time, annually, versus the total that is levied.
So for budget purposes, 1 mil is equal to approximately $202,000 in cash. As explained, if you assume the standard percentage of tax payers will fail to pay their taxes, 1 mil would equal $188,000 in cash. If you assume some old outstanding tax liens from previous years may pay their debts in 2018, 1 mil might equal $202,849 in cash. In 2017, due to old tax liens from previous years, the Borough anticipates earning $204,114 in cash per 1 mil. The value of a mil is therefore not precise.
Real Estate Property Tax bills are distributed on or about March 1st of each year. Payment is due at a 2% discount by April 30th, at face value by June 30th, or at a 10% penalty after June 30th of each year. Payment is to be remitted to the Borough's elected Tax Collector - Brenda Hill, 401 Lincoln Way East, Chambersburg, PA 17201. (717) 263-6565
For more information regarding the Real Estate Property Tax, please contact the Tax Collector directly: Brenda Hill, 401 Lincoln Way East, Chambersburg, PA 17201. (717) 263-6565
- Earned Income - Determined by Town Council, and collected by the Franklin County Area Tax Bureau. The Borough's current Earned Income Tax Rate is one half of one percent, or 0.5%, assessed against all earned income and net profits of the residents of the Borough. Typically this tax is withheld and submitted by the employer. However, if it is not withheld and submitted on a resident's behalf, the resident is required to remit quarterly payments to the Franklin County Area Tax Bureau office, located at 443 Stanley Avenue, Chambersburg, PA 17201. (717) 263-5141 www.fcatb.org
- Local Services Tax (LST) - Determined by Town Council, and collected by the Franklin County Area Tax Bureau.
The LST is assessed to all individuals working in the Borough, earning over $12,000.00 annually. The purpose of the LST is to assist with funding
for the Borough's emergency services that are available to individuals who spend their work day in the Borough. The LST is withheld and submitted
by the employer, at a uniform rate per pay period, over the course of the calendar year.
For more information regarding the Earned Income & Net Profits Tax and/or Local Services Tax (LST), please contact the Franklin County Area Tax Bureau directly:
443 Stanley Avenue, Chambersburg, PA 17201, (717) 263-5141, www.fcatb.org
2018 Sample Borough Tax Bill