Petersburg proposes area-wide property tax to balance FY27 budget

The Petersburg Borough Assembly reviewed a proposal that would raise property taxes for all borough residents to cover a 5% increase in expenses.

The borough proposes to add 1.71 mills for area-wide operations to the existing 5-mill education levy. That would bring the total area-wide mill rate to 6.64 mills, or $164 per $100,000 of assessed value. Service Area 1 property owners would see their total mill rate rise to approximately 11.93 mills, an increase of $13 per $100,000 of assessed value.

Finance Director Jody Tow said the borough is allowed to levy the area-wide rate under charter section 1405. The area-wide rate would fund assembly operations, the library, cemetery, hospital, and other services previously paid only by Service Area 1 residents.

Borough Manager Steve Giesbrecht said the proposed approach was reasonable and defensible. He warned that property owners outside Service Area 1 would likely object to the new charges.

Expenses are rising 5% over the current year. A 5% health insurance increase adds roughly $90,000 to the borough's $1.8 million annual health insurance costs. The budget also includes vehicle replacement costs and a 2.5% wage increase, though union negotiations could require a supplemental appropriation later.

Sales tax revenue growth is slowing. The borough collected $26,000 more in sales tax in January than the prior year and $22,000 more in February, but the trend is flattening.

The borough is also reducing its reliance on Secure Rural Schools funding, which provides about $600,000 annually but faces uncertain federal reauthorization. The proposed budget uses $660,000 from that fund, down from $770,000 in the current year.

The assembly will introduce an ordinance at its next meeting Monday to increase the marine passenger fee from $5 to $8 per head. The increase would take effect January 1, 2027, and generate an additional $30,000 annually.

An ordinance to raise the sales tax cap will be introduced at the second meeting in May. In 2025, businesses exempted over $25 million in sales due to the current $1,200 cap.

The budget includes $3.25 million for the local contribution to the school district, the same as the current year. The school district has requested $3.45 million but indicated it could accept the lower amount if the state approves a base student allocation increase.

The assembly will hold a second reading of the budget at its second meeting in May. The third reading is scheduled for June 1.