Palmerton Area School District’s 2023-24 operating budget, passed unanimously by directors Tuesday night, features a 3.2% property tax increase.

The budget calls for $38.96 million in expenses and $38.71 million in revenue, with the gap covered by the district’s fund balance.

The tax increase will bring in around $600,000 in additional revenue and cost a Palmerton property owner, on average, an extra $88 per year.

“I didn’t think it was necessary to go above the 3.2% property tax increase,” Palmerton Business Manager Ryan Kish said earlier this month. “We usually end the year with a surplus so we have not entered deficit spending yet in recent years. We, like most districts, budget worst case. Without increasing your mills, knowing that salaries, benefits and supplies will continue to rise, you could find yourself like we have in past years trying to play catch up with large tax increases or cuts to programs.”

Kish said the budget was created without a settled teachers’ contract, with staffing representing 63% of the total expenditure budget, or without a passed state budget, which represents 37% of the district revenue.

Based on five-year projections, Palmerton would spend its $8.7 million fund balance and be out of reserves by 2027-28 if the district never raised property taxes over that period.

“I think everyone understands we have to raise taxes somewhat,” director Stacey Connell said during May’s board workshop. “While we could get close to a balance budget by raising them to the max, I don’t think that would be great for the community.”

Kish said the major cost increases from 2022-23 to 2023-24 are an extra $448,000 for salaries, $136,000 for Public School Employees’ Retirement System contributions, $425,000 for medical benefits and $612,000 for charter school tuition payments.

New teaching positions budgeted for 2023-24 include a long-term substitute at Towamensing Elementary because of increased kindergarten registration numbers and the need for an extra class, and a high school music teacher.

Within 5-7 years, Palmerton expects to have at least $2.4 million in capital expenditure projects. A large chunk of that, around $2 million, would be renovations to S.S. Palmer. Other expected projects during that time include parking lot and lighting work at S.S. Palmer; boilers, water heaters and lighting at Towamensing Elementary; and lighting at Parkside Education Center.

Palmerton voted Tuesday to move $500,000 from its general fund to its capital reserve fund to help prepare for the those big ticket items.

“When Dr. (Al) Lonoconus was here, he kept the budget amount for interest earned at $70,000 because of years of low interest rates,” Kish said. “We’ve been working this year with our bank and two other investment firms and we’ve been able to bring in about $556,000 so far in interest. I think we’ll see this high interest continue until at least 2024. We are averaging a rate of about 5.6% return.”

Because of the better than expected interest numbers, Kish said the district likely would not have to dip into its fund balance to make the transfer to capital reserve.

“This gives us a great opportunity to build the reserve to cover hopefully the entirety, but at least a majority, of the S.S. Palmer renovation,” he said.