Lower Merion Township homeowners could see their real estate taxes rise for a third consecutive year after Township Manager Ernie McNeely warned commissioners that declining business tax revenue, $1.2 million in storm costs, and unresolved union contracts are all pressuring the 2027 budget.

McNeely laid out the headwinds at the township's annual budget workshop on Thursday, Sept. 10. The township raised its real estate tax rate 6.5% for 2025 and 8% for 2026, ending more than a decade of holding the millage flat at 4.19 mills.

"I will say that while this is not a complete budget, we can see that there are headwinds to this budget," McNeely said at the workshop. "We have certain things that I'll mention that may be a pressure for a tax rate increase for next year."

A key new concern: business privilege tax collections, which came in above forecast in both 2025 and 2026, may not hold up. McNeely cautioned that a couple of strong years are often followed by a dip, according to Main Line Media News. That matters because the better-than-expected business tax revenue helped narrow the 2026 General Fund deficit from a projected $5 million to roughly $2.5 million, leaving a year-end fund balance of about $21.2 million, or 24.9%, Patch reported ahead of the workshop.

If that revenue drops, the cushion shrinks.

Storm spending is another drag. Severe winter weather and a July 11 microburst that tore a 12-mile path through Lower Merion and into Philadelphia with winds of 60 to 70 mph pushed the township $1.2 million over its storm budget for 2026.

On the personnel side, both of the township's union contracts expire at the end of 2026, and negotiations are ongoing. Because Lower Merion has historically matched union pay increases for nonunion staff, the outcome will ripple across the entire payroll. Health insurance premiums jumped 19.9% for 2026, and another double-digit increase is possible for 2027. Renewals for liability, workers' compensation, property, and cyber insurance are also pending.

McNeely offered one bright spot: the 2026 budget is on track to finish the year better than projected when commissioners adopted it in December 2025. No commissioner reactions to the tax-increase warning are on the public record from the workshop.

The full 2027 budget is expected in early November, with a final vote in December. Commissioners' budget sessions are open to the public at the Township Administration Building in Ardmore.