New Hermitage budget incorporates merger with Wheatland

Dec. 1—HERMITAGE — Taxes are expected to hold steady under a proposed 2024 general operating budget for the city of Hermitage, a budget that for the first time will include the additional land and people of Wheatland, which is merging into the city.

The preliminary budget was introduced unanimously by the Hermitage Board of Commissioners at their November meeting. The commissioners will vote on final approval of the budget at their Dec. 20 meeting.

The proposed budget calls for total general fund expenditures and revenues of $16,242,406 in 2024, an increased over 2023's $14,771,571.

Property taxes will remain at five mills. For a property assessed at $30,400, the city's average assessed value, the property owner would pay about $152 in property taxes. Assessments are based on 1970 values, the last time a county-wide assessment was done.

The city's earned income tax will remain at 1.75%. City residenets pay an additional 0.5% to the school district as well as separately levied property taxes to Mercer County and the school district.

Hermitage City Manager Gary Hinkson said this will mark the 33rd consecutive year without a property tax increase, while Assistant City Manager Gary Gulla added that past increases in the earned income tax were beneficial as well.

Helping to keep taxes steady in 2024 will be increased tax revenue from the borough of Wheatland, which will merge into Hermitage Jan. 1.

The Wheatland neighborhood is expected to generate about $55,000 in real estate property taxes, $350,000 in earned income taxes, and $10,000 in real estate transfer taxes, Gulla said.

Wheatland has a population of 563 in its one square mile, about 1/30 the size of the land area and population of Hermitage, which has 16,230 people in its 30 square miles.

Gulla said these positive revenue indications fall in line with a study carried out by the Pennsylvania Economy League, which recommended in 2021 that a merger would benefit both Wheatland and Hermitage.

"It was comforting to see that what the economy league predicted years ago was still accurate," Gulla said.

How Wheatland residents will be affected

Even though existing Hermitage residents would see no change in their taxes, residents of Wheatland would see their taxes potentially increase or decrease.

Wheatland's earned income tax is 1 percent, and the borough's real estate tax is 24.75 mills. So while Wheatland residents' wage taxes will increase by 75%, their real estate taxes will go down by 80%. Wheatland will continue to be part of and pay separate taxes to Farrell Area School District.

The merger will have other effects on the budget as well.

Police services' revenue is expected to decrease to $46,000 from $330,000, while public works services' revenue will decrease from $90,175 to nothing, according to the city.

That's because Wheatland was previously paying Hermitage for police and public works services. The borough of Clark will continue to contract with Hermitage for police coverage. Post-merger, Wheatland would receive those services the same as the rest of Hermitage, instead of through inter-municipal agreements, Hinkson said.

However, those particular decreases don't necessarily translate to lost revenue, since Wheatland residents will instead pay taxes as city residents.

This is why real estate tax revenue is expected to increase from $1,314,000 in 2023 to $1,365,000 in 2024, and wage tax revenue will increase from $7,950,000 to $8,900,000, the city documents state.

One item in expenditures, "Wheatland," had no expenditures in 2023 but will have $141,372 in expenditures in 2024.

That will include costs such as utilities for the former Wheatland municipal building and borough garage. These costs will eventually be moved into the appropriate Hermitage department accounts in 2025, the documents state.

Hinkson said there are also plans to perform some improvements to Wheatland's neighborhoods in 2024, using about $455,400 from Wheatland's reserves that will be coming to the city under the merger. The exact projects and their costs will be determined at some point next year.

"Since these were funds that Wheatland council had saved, it made sense to use them on Wheatland's neighborhoods," Hinkson said.

"I think they did an admirable job of managing their finances," Gulla said of Wheatland officials.

Wheatland's only part-time employee, borough secretary and treasurer Danielle Wanner, is budgeted to remain in service through 2024.

Hinkson said Wanner was very knowledgeable regarding the borough's files and documents, and that more work needed to be completed even after the merger took effect, such as Wheatland's 2023 audit.

Wanner will also be available to help Wheatland residents with any questions or concerns post-merger.

As for the borough's municipal building, the Esther H. Viglio Social Hall, Hinkson said the short-term plan for 2024 will be to continue renting out the hall for public use.

The borough's other facilities, including a garage and a wastewater pump station, are already used by the city and will continue to operate, while the municipal building will undergo some upgrades in the future, Hinkson said.

More city infrastrucure work planned for 2024

Aside from the Wheatland merger, other projects will be coming to Hermitage in 2024.

The Neighborhood Investment Program, which services sections of Hermitage's older neighborhoods, will focus on phase two of Block 7, an area bounded by East State Street, the city of Sharon, the Shenango Valley Freeway and South Buhl Farm Drive.

Work will include stormwater improvements, milling and paving roadways, and new street signs on South Oakdale Avenue between East State Street and Fern Street, South Crescent Drive from King Drive to the southern end, and on Trace Street between South Oakdale and Wick avenues, the documents state.

The city's Capital Paving Program will mill and pave roadways and install new street signs on Jerry Lane and Tiffany Lane, while the Kelly Road Improvement Project will see Kelly Road milled and paved as well.

A development engineering study will also be conducted, which will involve preliminary engineering work to construct a stormwater collection system and roadway improvements on Mt. Hickory Boulevard.

New businesses, mall changes on horizon

Some new businesses are coming to Hermitage next year, including a Jersey Mike's sub shop at the Hermitage Towne Plaza and a Coney Island restaurant at South Hermitage Road and Morefield Road. One Hot Cookie in the Hermitage Square Shopping Center opened earlier this year.

This past year has already seen a new FedEx Ground distribution center open along South Hermitage Road across from the Tam O'Shanter Golf Course, while the Mercer County Community Federal Credit Union is constructing a new building along North Hermitage Road.

The Shenango Valley Mall property is another business that city officials will be closely following in 2024.

In October, the state Supreme Court ruled in favor of the mall's owners, Butterfli Holdings LLC, ending a five-year-long legal battle between mall ownership and JCPenney, the mall's last major retailer.

The litigation previously stalled attempts at redeveloping the mall property, which city officials plan to create a mixed-use town center around.

Hinkson said that officials from Hermitage and Butterfli Holdings LLC have communicated in the past, and he expects the city will hear from the company once plans on how to develop the mall move forward.

The city has secured about $5.5 million in grants over the years toward the town center project.

"Once we know what their plan is, we'll get our sleeves rolled up and we'll get to work," Hinkson said.

During the vote to introduce the proposed budget in November, Commissioners President Duane Piccirilli thanked Hinkson and Gulla, as well as the rest of the city's leadership team, for their work developing the city's budget.

Board Vice President William Moder agreed with Piccirilli, and Commissioner Michael Muha, whose term is coming to an end this year, said the staff had done a good job "every year" since Muha was first elected to the board in 2017.

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