Municipalities in York and Adams counties could lose about $2 million in income taxes if Harley-Davidson relocates its York manufacturing plant.

The York Adams Tax Bureau compiled a report to analyze the effect of the Springettsbury Township plant's closing, which the company said it intends to do if it can't make the facility more efficient.

Tax Bureau administrator Lois Kashner said the township asked for the report after the company announced plans to study the potential of relocating to another state.

In 2008, Harley employees paid $2.07 million in local taxes, which are paid to their township or borough of residence, the report shows. That figure does not include income tax paid to York County.

Last year, the plant had more than 3,300 employees paying taxes to municipalities in York or Adams counties, she said. The taxes generated for 2009 will be lower than those for 2008 because hundreds of employees have been laid off.

Split tax: Employees pay a 1 percent tax, which is typically split evenly
between the school district and the municipality of residence.

The loss of income tax would affect the municipalities more because their budgets are smaller than the school districts', Kashner said.

Of the municipalities reported, Dover Township would stand to lose the most tax money, $169,623.

Township manager Laurel Wilson said the township's Board of Supervisors is aware of the deficit it could face if Harley leaves, but the members haven't decided how they would address it.

There are really only two options -- cutting programs or raising taxes, she said. It's not clear whether programs could be cut, because budget discussions won't begin until September, she said.

Earned income tax is the township's largest revenue source, and $169,623 of a $5.6 million annual budget is a sizeable amount, she said.

"In today's economic times, it's not a small amount of money to be losing," she said.

Others would lose: Springettsbury Township would lose $101,177 in income taxes along with another $33,000 it collects from a $10 occupational privilege tax levied against employees of township businesses, Kashner said.

Figures on the amount of property tax the company pays to the township and Central York School District were not available.

Kashner said the municipalities would have to make up the loss somewhere, and under state law they can't increase the earned income tax.

"Every penny is important to the municipalities," she said. "Raising taxes is their only alternative. There's no reason to panic, but, worse-case scenario, that's their alternative."

She said it was likely some of the employees would find other jobs and would continue to pay some taxes to their municipality. It is not clear, though, how many of the employees would find work or whether they would be making the same amount of money and paying the same amount of taxes.

Kashner said she was asked to compile a similar report when a Caterpillar manufacturing plant left York in 1996.

That report is too old to be retrieved in the Tax Bureau's system, but she said the impact would be expected to be about the same if Harley leaves.

"The difference is, the economy was not quite in the situation it's in now," she said.

-- Reach Christina Kauffman at 505-5436 or ckauffman@yorkdispatch.com.