Dec 29, 2002 By Paul Sunyak 4 min read

The Fayette County commissioners have approved a revenue-neutral 2003 budget of $16.2 million that sets the millage rate at 2.51 and takes into account the loss of about $95,000 in projected revenue from natural gas rights. A recent state Supreme Court decision, emanating from a Fayette County case, struck down all Pennsylvania counties’ ability to treat oil and natural gas as real estate for taxation purposes. In Fayette the court decision immediately shifted that tax burden to the owners of surface property, which slightly increased the year 2003 millage rate from 2.425 mills.

The 2003 budget approved Friday means that property owners will pay $25.15 in county taxes for each $10,000 of assessed value. Of each $25.15 collected, $22.72 will go for general fund revenue and $2.42 will go to paying off the county’s bond.

Property owners can now calculate their 2003 county real estate taxes by multiplying their 2003 assessed value by .0025151. That figure does not include municipal or school district real estate taxes.

Regarding the lost revenue from natural gas rights and wells, chief assessor James A. Hercik said the county plans to petition the state Supreme Court to reconsider its decision.

Hercik also said that Fayette has contacted the County Commissioners Association of Pennsylvania and sent out a questionnaire to the other 66 counties, asking for revenue loss projections from the court ruling.

“We’re scheduling a meeting for January in State College of all the affected counties,” said Hercik.

He added that the focus of that meeting would be pooling resources for a lobbying effort to get the state Legislature to “close the loophole” that permits natural gas and oil to escape taxation as mineral resources.

Commission Chairman Vincent A. Vicites said it makes sense for the county to spend “a couple of hundred dollars” to file the Supreme Court appeal.

“If they shoot it down, at least we tried,” said Vicites. “Property taxes are way too high to begin with.”

Even with the lost mineral revenue, Commissioner Sean M. Cavanagh said the county was able to pass a budget with no tax increase, an achievement made possible by saving $700,000 in health insurance premium costs by switching from Highmark Blue Cross/Blue Shield to the UPMC Health System.

“I kept a promise that I would not raise taxes,” said Cavanagh, who added that employees would benefit because all three hospitals within the county belong to the UPMC network, while only two participated in the Highmark plan.

Cavanagh noted that while the commissioners didn’t have to lay off any full-time employees to balance the budget, all part-time jobs were eliminated in the spending plan.

Vicites said he, too, had kept his word about not raising taxes. He said the health insurance premium increase was pared from $1 million to $300,000, which translated into a more manageable 15 percent increase in that line item instead of 36 percent.

Commissioner Ronald M. Nehls said that Triad, the county’s newly selected health care consultant, played a key role in whittling down a projected health insurance increase that left all three commissioners gasping at its magnitude.

“We were dead in the water before the 12th of December (when Triad came on board),” said Nehls. “They went to work and saved us.”

Nehls noted that the key for the commissioners would be to manage the 2003 budget on a daily basis to ensure that spending stays in line with allotted resources.

Vicites also noted that need, calling the 2003 spending plan “the leanest budget we’ve had in the last seven years.”

Vicites said it was not necessary to get two of the three labor unions representing county employees to reopen their contracts, as the UPMC plan is equal to or better than the abandoned Highmark plan.

Cavanagh had advocated reopening those contracts, if needed, in order to get cost savings and avoid the potential need to lay off full-time employees.