BELLEFONTE — Centre County’s tax rate will remain at 7.48 mills for the 16th straight year under a tentative $120 million budget approved Tuesday by county commissioners.

The budget is 11 percent smaller than last year’s, reflecting the end of pandemic-era American Rescue Plan funding and the completion of the new Community Services Building. A modest 2.2 percent rise in real estate tax revenue also helped avert a millage increase.

“As most of the county’s costs to deliver services are increasing faster than the 1-2 percent annual growth of county real estate tax revenue, this does become more difficult every year,” said Centre County Commissioner Chair Mark Higgins.

Meeting the challenge required the county to tighten its budget and draw from the General Fund Reserve to close the projected nearly $2 million shortfall.

“We have taken tough positions during the budgeting process this year and will reduce the county’s operating budget by one percent in 2026,” said Higgins, but added that “(county government) will continue to stay focused on meeting the needs of the 160,000 people in Centre County.”

Although draft budgets for the county have consistently projected deficits over the past decade, the county has only actually experienced deficits about one-third of the time, and those shortfalls have been substantially smaller than originally forecast.

“This is an indication that we budget fairly conservatively,” said Budget and Finance Director Richard Killian, who presented the tentative budget before the board.

Even after drawing from the reserve, the county maintains a General Fund Reserve that is 15 percent of the total operating budget, as recommended by the Government Finance Officers’ Association.

Of the total proposed budget, $116.9 million is allocated for operations, with $3.1 million set aside for capital projects.

This accounts for ongoing increases in group health insurance and retirement contributions. In 2026, the county will contribute $12.6 million, which is an increase of 7.7 percent from last year.

In all, $48.2 million is earmarked for personnel related costs, including salaries, taxes and benefits, which have increased more than five percent. 40 percent of those costs are expected to be reimbursed through grants.

Overall, personnel costs account for 41 percent of proposed expenditures by category. Contracted services follow at 31 percent, operational costs 13 percent and debt service, internal charges, capital and transfers, each accounting for less than five percent.

When evaluated by function, the largest shares of the budget are allocated to human services (37 percent), public safety (21 percent) and judicial costs (17 percent).

“These categories reflect not only local priorities but also the county’s role in delivering programs and fulfilling responsibilities established by the Commonwealth of Pennsylvania,” said Killian.

The remaining funds are allocated to debt service, conservation and development, public works and culture and recreation, by order of share.

In terms of revenue, grants are the county’s largest contributor, making up 43 percent of the $115 million in proposed incomes. Real estate taxes follow, projected to provide about a quarter of revenues. The remaining revenue comes from charges for services, other contributions, interest and rent, and court costs and fines, in decreasing order.

“Delivering 117 million in services with only 31 million in property tax revenue would not be possible without the generosity of the people and providers of Centre County,” said Commissioner Higgins, thanking the community.

He added that all the commissioners are grateful to the many county employees and officials who helped shape the budget proposal.

In her comments, fellow Commissioner Amber Concepcion acknowledged the external challenges complicating this year’s budget process, notably the stagnation of the Human Services Block Grant and the significant delay of the state budget.

“It was especially challenging putting this budget together when the state budget was so incredibly late. Not knowing what we’re going to have to work with from the state added an extra level of challenge,” she said.

Commissioner Steve Dershem, who has helped curate two decades of county budgets during his time in government, said he hopes that during the 20-day public comment period, which has officially begun, the board can continue thinking about long-term finances.

“You can’t sustain structural deficit after structural deficit and keep your tax rate level,” he said, but he described the budget overall as “pretty lean” and “optimistic in many ways.”

Final adoption of the 2026 County Budget is scheduled for the Centre County Commissioners meeting at 10 a.m. Tuesday, Dec. 23.

“For the 225th year in a row, Centre County government is planning to pass the county budget on time,” Higgins said.