This post is follow-up to Tredyffrin Township’s preliminary 2015 budget discussion, at both the Board of Supervisors meeting and the recent budget workshop. At the November 5 supervisors meeting, Township manager Bill Martin presented an overview of the 2014 to date and the 2015 preliminary budget presentation included updates from each of the department heads.
Martin presented a positive financial picture for the township – his forecast indicates that 2014 includes $416K more in general fund operating revenue than anticipated; suggesting that the increase is due to better than expected permit revenue from commercial land development projects. Additionally, the general fund expenditures are expected to be $30K under budget for 2014 – the explanation was that salary and budgetary savings offset the 2014 winter expenses. The budget surplus was $6,265 and when added to the operating results, Martin expects the township to finish out the year with a $450K surplus.
Tredyffrin Township has not raised taxes since 2012 and the preliminary 2015 budget includes no tax increase. While acknowledging the improving economic signs (real estate transfers and permit revenues are up), Martin did temper his remarks with some caution. The 2015 budget, to be approved at the December Board of Supervisors meeting, is still a draft and can be changed. An annual budget workshop was held on November 13 which allowed residents the opportunity to sit down with township manager, staff and supervisors to discuss the proposed budget in greater detail, ask questions, etc.
I was unable to attend the budget workshop; however, Ray Clarke attended and contributes the following details from the November 13 meeting:
First, though, many thanks to Supervisors Heaberg and Wysocki, and staff Bill Martin, Joe DiRocco (especially) and Matt Baumann for their time and for a completely frank and straightforward discussion. Anyone with an interest in Township affairs should make a point to attend this meeting every year.
– The 2014 surplus will be significantly higher than the $450,000 projected last week, due to additional permit revenue and transfer tax receipts beyond the earlier forecast. (Note that the surplus was not driven by a tax increase).
– In general, changes in state law in 2012 have meant that it is harder for commercial transfers to be structured to avoid the transfer tax
– 2014 permit revenue benefited from one-time large projects particularly at Vanguard. Although this revenue will not recur and other big projects such as Chesterbrook and Wayne Glen are moving at a modest pace, there is a good level of economy-driven construction activity in the Township that will keep residential and commercial permit revenue at a healthy, albeit lower, level in 2015.
– The result, then, with no property tax increase, will give 2015 budgeted revenue – before transfers – down half a million dollars or more to about $17.3 million. Expenses, though, will increase by $0.8 million of contractually driven compensation increases to a budgeted $18.2 million. The gap to be filled from $0.9 million of general fund reserves.
– Since that’s about the likely surplus this year, since there is the newly adopted reserve policy in place, and since reserves are by my estimate as much as $10 million over the target level of 30-35% of general fund expenditures, that does not seem too alarming. However, it’s not sustainable in the long run to fund cost increases from a declining fund balance, I estimate that contractually driven compensation costs will be increasing by half a million dollars a year. The Administration and BOS seem suitably alert to the need to manage this very carefully. In the Township’s favor, too, the current debt repayment schedule will have the township debt free by 2020, which will free up $2 million a year of principal and interest. (TESD, take notice!!)
– An important final point: the Township is now funding the post-employment benefits fund with $25,000 for each new officer. Assuming that and a regular commitment of $500,000 from the operating budget, we are getting closer to recognizing the true cost of employing a police officer for a year. As it is, in 2015 retiree health costs charged to the general fund are forecast to increase 14% to over $900,000.
– This includes $1 million a year for road repaving. Here, the recent PA Transportation Bill is a huge benefit to the Township. $0.725 million (53%) of this year’s $1.375 million came from Township funds. In 2015, the Township will fund $0.3 million of the $1 million, in 2016 $0.2 million, in 2017 $0.1 million, and in 2018 $0.05 million. A cumulative four year saving to the Township of $1.35 million versus a 50/50 split. Our gas tax dollars at work saving property taxes!
– The 2015 budget includes $130,000 to “oversee/review/bid” a stormwater project in Crabby Creek and $60,000 for one stormwater basin retrofit. I completely agree with an impassioned plea to the meeting from Bill Bellew that it’s time to do more – or actually to do SOMETHING, since there seems to be no firm plan for any shovels in the ground on anything.
In general, it’s time for the Township to take recent surpluses and invest in tangible improvements that residents have asked for, and been promised, for years. Prudent management and fortunate circumstances have put the Township in a good position. Residents need to see some benefit.
Thanks Ray for your comments from the meeting. An interactive meeting between elected officials, township staff and taxpayers is refreshing. Seemingly, no questions were considered ‘off limits’ and thoughtful responses given. Following up on the use of the budget surplus in the township — can we get the front steps of the township building adequately repaired. Beyond the appearance, the uneven and cracked steps and walkway pose a safety hazard.