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, a second increase in 2016, and a third in 2018. Chambersburg has not raised the real estate tax rate in most years, in recent history. Taxes were more often raised by others such as Franklin County or the Chambersburg Area School District; and, that sometimes leads to confusion. In 2014, 2016, and 2018, the Borough raised the real estate tax rate, but only to fund police and fire services; and in 2018 to begin paying off the 2016 Recreation Bond. Beginning a decade ago, and through 2019, there is a constant theme in our finances: real estate tax increases were rare and only dedicated to funding police and fire services.
No real estate tax will pay for any operations of the Borough of Chambersburg other than police, fire and ambulance.
No Tax Increase in 2019
Although the 2019 Budget reflects the decision made by Town Council to invest in the infrastructure of our community, it includes no tax increases whatsoever. It does maintain the previously decided Recreation Bond Tax, a second year of a tax earmarked specifically to retire the debt from the 2016 Recreation Bond; and no other use. It includes the Fire Tax and the Ambulance Tax, same as in 2018, used to help balance the expenses of the Chambersburg Emergency Services Department, which provides fire and EMS services. It maintains the Police Tax, same as in 2018.
The entire 2019 Budget is available on the Borough Transparency Page.
Chambersburg real estate taxes remain earmarked only to police, fire and ambulance operations. No other department or employee is funded through real estate taxes. In fact, since the Recreation Bond Tax is specifically earmarked for paying off the 2016 Recreation Bond, one can reliably say: no real estate tax will pay for any operations of the Borough of Chambersburg other than police, fire and ambulance. No other department, operation or employee; not parks or streets or the Borough Manager, are paid for using real estate taxes. The only use of these taxes are police, fire, ambulance and to pay off the 2016 Recreation Bond.
For the 2018 Budget, Town Council raised the Police Tax from 23 mil to 24 mil. In this 2019 Budget, Council is not being asked to raise it at all. By keeping the rate at 24 mil, Council is committing to a steady, but manageable, rate of growth in the Police Tax rate. Overall, since 2007, the Police Tax rate has risen from 20 mil to 24 mil. When averaged out over the thirteen years, that is a growth rate of a little over 1.6% per year. While no one wants to see taxes go up, this overall growth rate seems reasonable for such an important tax, which pays for such an important service.
“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 started 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 2019, it will be year two of the collection of this new Recreation Bond Tax. Otherwise, the collection of the tax and its rate will be unchanged from the initial year, 2018.
For background purposes, 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 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 taxes at all to support any of the Borough’s operations, utilities, or utility support departments other than police and fire/EMS. 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 2018, the Borough Manager recommended, and Town Council approved, an increase in the Fire Tax for use by the Fire Department and its Ambulance operations; as well as an increase in the Police Tax. This remains the main purpose of Borough real estate taxes. In this 2019 Budget, the Borough Manager is recommending no additional changes to taxes or tax rates.
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 2019, 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 2019, the Borough will use accumulated balances from 2018 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.
In 2019, in the adopted budget, there will be no change the Police Tax rate, currently at 24 mil.
In 2019, in the adopted budget, there will be no change the Fire Tax rate, currently at 3 mil; nor change the Ambulance Tax rate, currently at 0.5 mil.
Both of these rates are now set at the State maximum. State Law does not envision that they can ever increase. While I hope that it is not necessary to someday increase these tax rates, I cannot imagine that the cost of the ES Department will not someday rise. If this happens in the future, Town Council will be forced to make a very difficult decision.
Every year, due to slight changes in the value of the real estate in the Borough, the mil rate equals different dollar payment amounts, even if the mil rate is unchanged.
2019 will be the second year of the Recreation Bond Tax. It was approved by Council in 2016. It was structured to be delayed to begin until 2018. This tax is earmarked only to pay off the 2016 Recreation Bond, but no operations of the Borough. It has nothing to do, therefore, with the General Fund.
When asked, some citizens wildly inflate the dollar value of the real estate taxes that they pay per year. Recently, a citizen said to me that the Recreation Bond Tax equated to $50 per month. That’s not likely. The median single family home pays a total (of all types of Borough real estate taxes) of $520.88 per year.
No government buildings, schools, charities or township property owners pay any Police, Fire, or Recreation Bond Tax on their property – average commercial or industrial property owners may pay more. Also, for many folks, 100% of this cost is deductible on your Federal Income Taxes, returned to you in your tax refund every year. Please understand the importance of the SALT (State and Local Tax) deduction, and when your Congressman talks of its elimination from Federal tax policy, understand the impact.
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 ½ of 1% tax on wages (not investments or retirement benefits) earned by those who live inside the Borough; and the Deed Transfer Tax, which is a ½ of 1% tax when property inside the Borough is sold or transferred. Together, along with fees and fines, these categories make up the only revenues.
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.
The 2016 Recreation Bond, which paid for the Aquatic Center, playgrounds, and other park improvements, necessitated a new tax, which began in 2018, and will be collected for the second time in 2019.
Only 18¢ of every $1 paid in real estate taxes will go to the Borough of Chambersburg. The balance, 82¢ 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. They send their own tax bill.
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.
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.
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 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.
- 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