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Borough's financial health tied to Wall Street

February 27, 2000|By DON AINES

CHAMBERSBURG, Pa. - A healthy national economy in 1999 buoyed Chambersburg's financial well-being, but one councilman remarked last week, "If the Dow Jones gets a chill, I believe the borough will get pneumonia."

The 1999 financial review the Borough Council received Wednesday was mostly positive, but Councilman William F. McLaughlin, chairman of the Finance Committee, said, "If there's a downturn (in the market) there will be a tax hike in Chambersburg that is significant."

"The borough has a lot of investments in stocks, mainly in pension funds. ... Our stocks have done well and we have not had to contribute tax money to those funds," McLaughlin said Sunday.

On Friday the Dow Jones industrial average was under the weather, falling 230 points to close under 10,000 for the first time since April 6, 1999.

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The borough's general fund did well in 1999, with income exceeding the $6.1 million budget by 10 percent and expenses falling 7.7 percent below budget, according to Borough Manager Eric Oyer's report. Real estate tax revenues, however, increased just 0.6 percent to $1.7 million. Earned income tax revenues were up a robust 9.5 percent and the occupational privilege tax, paid by people working in the borough, was up 7.7 percent.

"The problem is structural with the law. Industrial and commercial property depreciates" and residential property generally appreciates in value, McLaughlin said. While commercial properties depreciate at a scheduled rate, homes generally gain in value, even though half the houses in town are more than 50 years old, he said.

McLaughlin said periodic reassessment of properties would bolster real estate revenues, but said there also needs to be "a recognition of what it costs Chambersburg to be the primary employment center of Franklin County."

"The strong local economy brought us record employment within the borough with almost 20,400 people working here," Oyer's report said. "However, approximately 15,000 of those people live outside the borough and pay only $5 per person to support Borough services," the report said.

McLaughlin said the borough splits the $10 occupational privilege tax with the Chambersburg Area School District. An advocate of a municipal services tax for those who work in the borough but live elsewhere, McLaughlin said, "We spent the money to make it possible to create the jobs," by providing water, sewer, electric and gas services to support industrial and commercial development.

Borough utility revenues were uneven last year, the report said. Natural gas sales increased 7.3 percent and water revenues were up 0.5 percent, but electric sales fell 6 percent and sewer revenues dropped 3 percent.

The decreases were due in part to the loss of the Van de Kamp and Fort James plants, the report said.

The report indicated a water rate increase will be necessary this year to help pay for $6 million in improvements to the system, including a new transmission line and storage tank. Even with an increase, McLaughlin said rates would remain the lowest in the area.

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