Doylestown Borough residents can expect to pay more for both water rates and property taxes next year, after borough council approved advertising both increases at last Monday’s meeting.
The preliminary budget passed Nov. 18 with a 7-1 vote. Council member Sue Gordon was absent from the meeting. Councilman Joseph Flood cast the loan dissenting vote. The final vote is set for Dec. 16.
The tax rate will increase to 16 mills. The average homeowner will pay $457.58 in total borough real estate taxes in 2020 an increase of $23.57 from 2019.
While the budget continues to fund services and a staff that make the borough a community-friendly place to live, there were two budget areas that required attention and change, officials said.
Those areas are the water department and the commencement of the long-awaited Broad Street Project, which includes the Broad Street Gateway Park, the Central Bucks regional Police Headquarters and a new borough hall.
Borough council has decided that water consumption rates need to cover the cost of operations for the department.
The consequence to borough residents will be an average increase of $1.54 to the quarterly bill. Fees earned through new construction and upgrades are now set aside in a Water Capital Fund for capital improvements. Even with the 3 percent rate increase in water usage, Doylestown Borough has the second lowest water usage rates in Bucks County.
Councilman Flood said he voted against the budget and water rate hike, because he feels the borough is on an unsustainable path.
“Just 10 years ago, Doylestown had a reserve fund of over $7 million, zero debt, the lowest water rates in the county and a total property tax burden of around 11 mills,” Flood said. “Now the reserve fund is down to just over $4 million, we are funding debt, water rates have increased around 30 percent in the last four years, other fees have been raised substantially, and starting in January, the total property tax bill will be around 16 mills (15.999, to be exact ... it’s 16 mills).”
Flood said all of this has occurred in a time of good economic growth and development in the borough and while the county and school district have generally been able to hold the line on taxes. Most of this has also occurred before a single dime was spent on the Broad Street Project, which will necessitate higher taxes in the near future, Flood said.
Council member Noni West said she feels that Flood’s comments about the preliminary budget are politically driven. “And frankly, his facts are taken out of context and are misrepresentations,” she said in an email sent to the Herald last week.
“He speaks about the decline of the reserve fund but omits the fact that the crash of 2008 changed the bond market and we no longer earn 6-8 percent interest rates on our reserve,” she said.
West contends that interest was used to be used to fund capital expenditures and now we no longer have that advantage.
West continued, “He talks about ‘once debt free’ but he neglects to mention that our debt has paid to shelter our public works equipment that had to be shoveled out before it could shovel out our town in a snowstorm. Or that our debt has funded increased cost effectiveness in running our community.”
The Doylestown Borough Real Estate Tax continues to be the smallest portion of a borough homeowner’s real estate tax bill, accounting for 9.27 percent of the total taxes paid.
Borough Manager John Davis also responded to Floods’s comments.
“Ten year ago the borough had the 4th highest water rates in the region, not the lowest and no reserves,” Davis said. Today, the borough has the second lowest rates in the region and a dedicated reserve fund expected to end 2020 with a balance of over $275,000.”
Davis further explained that the reserve fund is expected to end 2019 just shy of $5 million and end 2020 with $4.725 million.
“The primary reason for the reduction in the fund balance is the sustained loss of interest income from the bond market. Our rate of return over the last 10 years has been a paltry 2.36 percent. Council to its credit has reduced capital expenditures to less than $400,000 annually during this period. Council also unanimously decided to expend approximately $500k from the reserve on road repairs after the disastrous winter of 2014.”
Davis said, “The borough’s share of the overall property tax bill grew only about 2 percent over the last decade as county and school taxes rose as well.”
He said the latest bond rating report lauds the “very low debt burden” and assigns the borough a strong AA rating. “Our current debt funded, among other things, the necessary upgrade of our substandard and antiquated public works, water and parks facilities including ample new salt storage.”
Davis said the new debt in 2020-21 has been limited to less than half the actual cost of the Broad Street Park, police headquarters and borough hall project.