Palmerton Area School District’s proposed 2024-25 budget will include a one-mill property tax increase when directors vote on it in two weeks, but district officials are hoping an increase in its state subsidy will cover the current $918,000 deficit.

During a presentation at Tuesday night’s workshop, Palmerton Business Manager Ryan Kish said if Gov. Josh Shapiro’s budget passes as proposed, the district would see a $1.2 million subsidy bump, more than covering the shortfall.

“One mill is the maximum I’d be willing to go with a tax increase,” director MaryJo King said. “I don’t think it will be necessary and hopefully by the time final budget approval comes around, we don’t need it.”

The one-mill tax increase, Kish said, would generate about $305,000 and leave the district with a $613,000 deficit if the state did not increase Palmerton’s subsidy at all. On average, a Palmerton resident’s tax bill would increase $44 with a one-mill increase.

“We did receive the entire subsidy increase that was proposed last year and hopefully that will be the case again this year,” Kish said.

Director Earl Paules, however, said he favored no tax increase and a 5% cut to each department’s budget in an effort to tighten the belt.

“Let’s use buildings and grounds as an example,” Paules said. “Their budget is around $1 million and their surplus normally is around $100,000. Let’s tighten that up.”

The only department Paules said he wouldn’t subject to the 5% cut is athletics.

“Athletics is also normally returning around $60,000 or $70,000 at the end of the year, but their director is asking for $60,000 this year for a new baseball fence,” he said. “That $60,000 would pretty much be the 5% and maybe they break even at the end of the year instead of having a surplus.”

As presented Tuesday, Palmerton’s budget stands at $39.92 million in expenses and around $39 million in revenues.

Most of the district’s budget, Kish added, is fixed with 64% of expenditures made up of staffing expenses and another 17% going to tuition outplacements.

A major change from last year is an additional $400,000 budgeted for health care.

Palmerton also has $1.97 million earmarked for cyber charter schools.

“The more than 3 million Commonwealth Charter Academy spent on advertising over a three-month period could have funded 24 classroom teachers, four reading specialists, two counselors, two school nurses and two librarians in a public school district,” Kish said.

Palmerton has three outstanding bonds on which it is still making payments. The district has a $2.42 million existing debt service with one bond set to mature in 2026 and the other two in 2036.

In terms of reserves, Palmerton is projected to end 2023-24 with $10.8 million, or 27.8% of its expenditures, in the fund balance. If the district does not raise taxes, the fund balance would be projected to drop to $9.7 million at the end of 2024-25.