Date – September 14, 2010

Tredyffrin’s Financial Workshop . . . How to Close 2011 Budget Gaps

This Saturday, September 18, 8:30 AM at the township building, there will be a public Board of Supervisors financial workshop.  The agenda includes:

  • 2010 Review
  • 2010 year-to-date revenue/expense review and end-of-year projection – Tim Klarich, Finance Director
  •  Budget Advisory Working Group implementation update – Mimi Gleason, Township Manager
  • Five-Year Capital Plan (2011 – 2015) – Mimi Gleason, Township Manager
  • Public input about priorities for 2011 budget

We know from the TESD finance committee that the school board is planning a public meeting to discuss an EIT in October.  How does the township intend to address what could be a looming 2011 financial deficit in the township budget?  Hold the line on a tax increase because it’s election year?  Or, as the supervisors did last year, will the decision be to continue to cut jobs and services.

Is it possible that the same supervisors who cut the fire funding in the 2010 budget will restore the fire funding in the 2011 budget?  Can the township function with further cuts?  Is it possible that the band-aid solutions of 2010 will continue to work in 2011?  Perhaps the new finance director will offer some creative approaches to cost reduction. At least one of the newly elected supervisors ran on the platform not to raise taxes . . . the 2011 budget will be her first to review.  I look forward to her budget analysis and recommendations.

Devon resident Bill Bellew offered the following letter to the supervisors that appears in this week’s Main Line Suburban newspaper:

Message for Tredyffrin board

To the Editor:

The following letter was delivered to the Tredyffrin Township Board of Supervisors.

Ladies and Gentlemen:

On Sept. 18 you are conducting an open meeting for financial planning as you put together the 2011 budget for Tredyffrin Township. I do not envy you the task at hand as more potential cuts appear to be coming.

The stepping-off point for 2011 is the removal from the Sewer Budget of anything to do with streetlights and signage. Before I go another word: this has a tax-increase impact, and some politicians do not like to say they raise taxes. Well, for a number of years this has worked and we who pay into the sewer fund have borne the brunt of “no tax increases.” Once you get the streetlights/signage line item out for all to see, then you can do real budget preparation.

I have paid into the sewer fund each year since it was first established. The fee hardly ever changed since the ’80s until recently because it was well planned up front. That changed “x” number of years ago, about the time the board decided to put streetlights and signage in the sewer-fund budget. It has gone up and down a few times this decade.

The change in the sewer budget is needed for two reasons: first, lights and street signs have absolutely nothing to do with sewers; and second, only those hooked up to the sewers are paying for lights and signs for every household in the township. For sure, everyone north of the turnpike is not hooked up and that is not of the residents’ doing but rather the BOS.

Our sewer fund stipulates that any dollars collected for the fund can’t be transferred to another budget item. The fund is meant to provide the reserves necessary to keep the sewer infrastructure strong year after year. This year’s Board of Supervisors needs to make a resolution to return the fund to its original state of sewer-related items only.

Start with this, and then deal with the consequences of a tax increase. Try this on: return the sewer fees to the original amount and offset it with a tax increase if necessary. You did the opposite last year, so why not make it right this year?

Sincerely

William F. Bellew, Devon

Notes from Tredyffrin’s Supervisors Meeting & TESD Finance Committee Meeting

Last night was the Board of Supervisors meeting and unfortunately I was unable to attend due to regularly scheduled DuPortail House Board meeting.  Although the supervisors meeting was short, there was a notable issue from resident John Petersen under the resident comment section.  Petersen asked for relief from the township on stormwater damage to his property and cited neighbor’s property where stormwater damaged was repaired by the township.  It is my understanding that the township manager claimed that the damage to the neighboring properties is different, and as a result, the township is not responsible for Petersen’s driveway stormwater damage.  What recourse does Petersen and other homeowners with similar stormwater damage have with the township to receive repairs?  I’m not sure what the difference was between the two properties, but if there was stormwater repair to a resident’s property, does that now open the floodgates for other residents to ask (and receive) the same type of consideration from the township?  Perhaps John can explain the difference between his damage and his neighbors stormwater damage. I know that we support fair and equal treatment for all citizens.  

Follow-up:  I spoke with John Petersen and he will not be commenting on his stormwater damage.

There was a TESD Finance Committee meeting and my friend Ray Clarke has provided some very interesting notes from the meeting.  It seems that EIT has reared its ugly head again and will be discussed at an informational session in October.  I about choked when I read Ray’s notes concerning the possibility of an 8% property tax increase!  Folks, we may have squeaked by last year but between the township and the school district, the picture is not looking good for 2011.  I fear that the budgets in 2010 were band-aid solutions and just put off the inevitable.  

I’ll be interested in your comments, both on stormwater damage to private property and also on the Ray Clark’s remarks about from the Finance Committee meeting.

Ray Clark’s TESD Finance Committee Meeting Notes . . .

1.  The current year P&L
 – Already $1 million in the hole because although transfer taxes are budgeted on a 7 year rolling average, there is no mechanism to bring that amount into the P&L from the General Fund or any Transfer Tax Fund, so the P&L has to reflect the actual expected amounts.  Budget $2.7 million; expected actual $1.7 million (last year $1.8 million)
 – Revenues are also under pressure from a high number of residential and commercial property appeals, with an average 20% reduction in value (see EIT discussion later!)
 – Offsetting the revenue declines and ~$0.3 million of unbudgeted teacher movement across the salary matrix (is this a surprise?) are about $0.7 million of PSERS expense deferral (thank you Harrisburg), and about $1 million of savings from a reduction of 15 teaching positions as part of last year’s strategies.
 – Also on the downside, $0.3 million of the expense savings are being rethought – money to come from the Contingency, unused in previous years

2.  Un-expensed unused vacation/sick time liabilities
 – The liability (General Fund designation) for vested employee services nearly doubled last year, to $6.2 million (fully one fifth of the General Fund balance!).  As far as I can see, the $2.8 million increase was never expensed, just a below the line item.  The increase came from a review of the liability; it’s not clear that there is any process for annually reviewing and updating the liability in a way that flows through the operating budget.  Maybe others can help me on this.

3.  Anne Crowley stands up for due process
 – There was a proposal to pay $300K for a new scheduling/report card/transcript/etc. system from the same vendor who has been severely limiting support of the current system.  The reason being, the great support provided by the vendor – until they don’t, apparently.  And annual maintenance is over 50% of the capital cost.  Of course we all know how important is is for these reports to be right (but the system doesn’t protect against the bad data that has been known to show up!), and the vendor is reputable, but at least let’s make this private equity-owned vendor just a little concerned about losing cash flow!  Mrs Crowley lead the charge on this and hopefully there will be a good market justification and maybe some cost savings before this gets passed through the Board Consent Agenda.

4.  Addressing next year’s $7 million gap – the EIT option
 – Administration’s estimate for the Act 1 cap next year is 1.4% – worth only $1.25 million.  So, we’d be looking at one or a combination of:
     a) Asking voters in May 2011 to approve “exceptions” and increase property taxes by 8% (or more to offset declining assessments)
     b) Cutting expenses (Superintendent Waters claims they are “to the bone” already)
     c) Asking voters in May 2011 to approve an EIT
 – The general attitude of our elected officials at the meeting seemed to be a regret that the cap and voter-unapproved property tax increase could not be higher
 – Mrs Fadem noted that five** School Board members’ terms are expiring in 2011 and she considered that asking for an EIT would complicate any re-election bids.  (**Bookstaber, Bruce, Cruickshank, Mahoney, Motel)
 – Although it’s known that November 16th is the deadline to notify the Townships of the intent to put an EIT to voter referendum, very little other information is available.  What is the aggregate income of the District residents?  How much revenue could be raised at what rate?  What rights do the Townships have to appropriate any of the proceeds?  How much is already being paid by TESD residents that would stay within the District?  What percentage of residents already pay an EIT?  How would an EIT or property tax increase differentially affect senior citizens and other voter blocs?  How much would the tax cost to administer?  What is the likely year-to-year variability in income?  Is there a limit to the rate that the District can impose?  Can TESD reclaim the tax paid to Philadelphia? Etc.
 – The officials seemed ready to declare the result of the referendum without answers to these questions – today’s outcome would be no different to the voter response to the (totally different) question four years ago.  However, cooler heads prevailed, and an information session/workshop is to be scheduled for mid-October.  An important occasion, I’d think.

5. CHS parking slots sold out at $100
 – up from $10.  But there are major issues with increasing student admission to Teamer Field from $3 to $5.

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