BUTLER TWP — The Butler School Board will vote Monday on the final budget for the 2016-17 school year, anticipating a $4.2 million deficit and a 3-mill property tax increase.

The budget includes $100.1 million in revenues and $104.3 million in expenses, according to Deborah Brandstetter, director of business services.

The 3-mill tax hike is the maximum allowed by the state.

This would make the district’s real estate tax rate 97.8 mills, up from the current rate of 94.8 mills.

The tax hike will cause the average property owner to pay $1,749 a year, up $54 from $1,696 now, said Brandstetter

To cover the $4.2 million deficit, the district will take that amount out of its $10.5 million reserve fund balance, leaving $6.3 million.

This will use up about 40 percent of the fund balance

In total, the tax increase would give the district an additional $1.3 million.

Board member Bill Halle said that tax increase more than covers the district’s increasing costs for the state pension costs.

The district is mandated by the state to pay into the Pennsylvania Public School Employees’ Retirement System. For the 2016-17 school year, the district will have an increase of $804,500, bringing the total cost to roughly $12.9 million, but it will receive a state reimbursement of $7.4 million.

While this tax increase more than covers the rising pension costs, the district needs to “catch up” on previously increasing costs, according to board members Nina Teff and Jennifer Cummings.

For this school year, the district did not increase taxes but had an $883,300 increase in pension costs.

That increase coupled with ever-higher costs for basic services and salaries are driving the need for a tax hike, Teff said.

Next year, the district will spent about $72.7 million on salaries and benefits.

The district must pass a final budget by June 30.