LEWISBURG — Union County Commissioners plan to eliminate debt tax after purchasing the last parcel of land at Great Stream Commons. Chairman of the Board of Commissioners Jeff Reber previously called the sale a “big day”.
Union County took ownership of 444 acres in January 2014, taking title when the half-thousand tax increase was needed to cover property bond payments. The plan was that the county would issue bonds on the land as it was sold to tenants, and the economic development corporation would pay the county, in turn covering the bonds.
According to Union County Treasurer Diane Reigle, the opportunity to eliminate a tax doesn’t come up very often.
She said Union County had three taxes on the property tax bill: general fund, library tax, and debt service tax.
The debt service tax encompasses more than a portion of the county’s debt.
Reigle explained that the county could not function without the general fund, which funds general services such as public safety and other essential government services.
She said the library tax goes to Union County libraries and unless they get funding from another source, that tax could not be eliminated.
The debt service tax “funds are set aside to pay the debt,” Reigle said.
She said now that the property has been sold, a major contributor to Union County’s debt, “we now have the resources to pay off what we owe.”
Reigle said once the debt is paid, the county no longer needs the tax and the mileage rate will drop to zero.
In late 2021 the commissioners agreed to reduce the mileage rate on the tax bill for debt tax due to the sale of part of the property to Great Stream Commons. Reigle said that after the debt is paid, the commissioners will have to decide whether to reduce the mileage rate.
“It would be done later this year. Ratepayers would see a reduction in their county/municipal bill if the mileage was lowered or brought down to zero,” according to Reigle.
Reigle said his office works with the finance department in all transactions. “We don’t have the power to repay the debt. Only commissioners have this power.
Reigle explained that the treasurer’s office will make transfers, payments and keep records for “whatever direction the commissioners direct us to.”
“There is a timing issue,” Commissioner Stacy Richards said. She said the commissioners first hinted at eliminating the debt tax in the fall of 2021 when they lowered the mileage rate.
Richards said commissioners had been advised not to take action on eliminating the tax until this summer, but had yet to discuss the underlying dynamics.
“It was the wishful thinking phase,” Richards said. “We commissioners need to take action.”
Reber suggested that the commissioners approach the elimination of taxes in a direct way. He noted that in 2023, debt tax will not be part of the budget-making process that year.
“When budget time comes, we just won’t put it (the debt tax) in the budget. It’s part of the process,” Reber said.
Reber said the county’s debt on Great Stream Commons is expected to be paid off this summer. The tax refund will be for the 2023 tax year.
Reber said any return of taxpayers’ money has nothing to do with personal income, but with assessed property values.
“It has nothing to do with income,” Reber said.
“Each year, as part of the budget process, county commissioners must set tax mileage rates for the coming year,” according to Shawn McLaughlin, Union County’s director of planning and economic development.
“They can’t change that mid-year. Most likely in December of this year they will vote on the county’s 2023 tax mileage rates,” McLaughlin said.
McLaughlin said that if all goes as Reber predicted, the debt tax will be set to zero, eliminating the current 0.50 mill debt tax.
“For taxpayers, the portion of their Union County property tax that was spent on debt tax will disappear. It will not impact their municipal or school taxes,” McLaughlin said.
“The easiest way to explain it is that for a homeowner, they will save $50 for every $100,000 of assessed value.”
Residents can calculate the impact of mileage rate changes on a taxpayer based on the assessed value of their property at unioncountypa.org/tax-calculator.