Transfer tax plunge pinching budgets

From the BCCT.

Transfer tax plunge pinching budgets
By: JENNA PORTNOY, Bucks County Courier Times

Bad news keeps coming for local governments and school districts that rely on real estate sales to generate revenue.

Taxes and fees collected by the Bucks and Montgomery counties' recorders of deeds were uniformly down in 2008, according to year-end figures released last week.

"We all know the economy is in a bad situation and that's reflected in the yearly report," said Bucks County Recorder of Deeds Ed Gudknecht.

Every time a property changes hands, the counties' elected recorders of deeds office levies a tax of 2 percent on the property's market value. Of that number, 1 percent goes to the state. The municipality and school district where the property is located split the other 1 percent. This levy is called the real estate transfer tax. A drop in overall sales has meant a dramatic decrease of nearly 20 percent for local governments.

The total transfer tax remitted to Bucks townships and boroughs was down about $4 million in 2008, compared with the 2007 total of $21 million. The same goes for 16 school districts.

In Montgomery County, school districts and municipalities lost $10 million - about 30 percent - in transfer tax collection.

The Hatboro-Horsham School District will bring in about 55 percent less transfer tax, for a hit of nearly $910,000, bringing the 2008 total to about $728,000.

Montgomery County Recorder of Deeds Nancy J. Becker said the school district is far from alone.

"It looks like the economy hit everyone, with an across-the-board decrease in the number of transactions and tax revenue, although the growth areas, such as the North Penn area, were hit the worst financially," she said.

New Hope-Solebury School District took the biggest percentage hit of Bucks' school districts. In 2007, the district brought in more than $1 million, but last year the number nose-dived more than 40 percent to about $600,000.


Gregory Hogg, the district's business administrator, said the number is significant considering current fiscal year revenues should total about $31 million.

"It is going to be reflected in next year's budget because we have to make up for that loss," he said, adding that he will present these and other numbers to the board Jan. 21.

Municipalities, however, have already had to grapple with decreases in various taxes and revenue streams in 2009 budgets passed last month.

Based on monthly transfer tax checks from the county, Doylestown Township predicted within a few thousand dollars that its figure would be down about 30 percent to about $456,000 in 2008.

The 2009 budget anticipates a similarly bleak view, said finance officer Bill Wightman.

"We have a balanced budget and we managed to do it without raising taxes. We knew we were getting less money," he said. "We know that the market out there is not too good."

Dismal sales affected other revenue streams collected by recorders of deeds. For example, in Bucks, about $3.4 billion worth of property changed hands in 2008, compared with $4.3 billion in 2007. Last year's figure represents the biggest drop since 2002.

Interest on the office's various bank accounts was down to about $38,000 last year, compared with four times as much in 2007. Finally, the office recorded 102,199 documents last year, the lowest figure since 1997.

"Times are bad," said Gudknecht, "but we just keep going on and hope things will improve."