Monday was township’s budget workshop as well as the T/E School Board meeting. I attended the school board meeting and fortunately for us, Ray Clarke attended the budget workshop. Thank you Ray for attending and for providing your notes to Community Matters readers.
The long-range budget and economic situation continues as a major discussion of the school board directors. During the school board meeting, we were reminded of the Citizen Tax Study Group. The group was set-up to study the “possible effects of an earned income tax and presenting research to the school board and community”. The Tax Study Group meetings are open to the public. Here are the meeting dates and times from the T/E school district website:
Thursday, September 8, 2011 – 7:00 p.m.
Based on Ray’s notes from the township budget workshop, we can certainly see that our township is not exempt from the worsening economic climate. Township staff and services have seen major cuts so I’m not sure how the supervisors are going to manage to hold the line on no tax increases. On the revenue side, we do not see any significant commercial real estate transfers in the near future, so …what’s the answer?
According to Ray, there will be another township budget workshop (date not confirmed) that will focus on capital projects. This budget workshop had no mention of the township building’s HVAC system — I remember discussion between the supervisors and Steve Norcini that there were major problems with the current system so it will be curious to see if the HVAC system is on the capital project list at the next budget workshop.
Here are Ray Clarke’s notes from the township budget meeting:
The Township held a Budget workshop on Monday night to present a base case context for development of the 2012 budget. A good event – short, focused, and with significant implications – it was disappointing that very few residents attended. My takeaways follow; I recommend that anyone interested pick up a copy of the materials, hopefully Monday’s extras are still available.
1. The slumping economy is taking its toll on the Operating Statement. For 2011, instead of the budgeted small surplus, there is now a projected deficit of $422,000. Revenues are unfavorable to budget by $373,000, due essentially to a $191,000 shortfall in licenses and permits (especially a mis-budgeted road opening rate and volume??), an $87,000 shortfall in transfer taxes and a $77,000 shortfall in other revenues like camp fees. Expenses are unfavorable by $96,000, with $205,000 overspending in supplies (road salt), offset by $115,000 favorable in personnel costs.
2. Things are likely to get worse next year, based just on what’s knowable at the present time. Revenues will be down a further $124,000, largely due to reductions in state transfers. That’s before any impact of a reduction in real estate assessments. (And of course, before any changes in tax rate). Expenses will continue upward, driven by an increased pension contribution (due to a minor reduction in assumed return to a level that’s still ridiculously high……), offset by a hoped-for better snow clearing experience and reduced repairs and maintenance. Now, the key here is that all employee contracts are currently being negotiated: the base case assumes no salary increase and the current benefits plan. (A similar approach to that of the School District). I leave it to others to judge the realism of this. The base case does include a 3% increase in contributions to the fire companies. Bottom line: 2012 General Fund Operating Deficit of $667,000.
3. On the capital side, the Township is on track to spend about 60% of the capital budget across all the funds (General, Sewer, Trunk Sewer, Vehicle and Equipment). There are reasons for this; one seems to be that the township always budgets generously to assure that it is correctly positioned for grants. Another might be that we simply don’t have the resources to get done everything that needs to be done. The capital plan information that was presented was acknowledged to be very rudimentary, and it was agreed that another workshop be held (I think a Saturday in early October?) to discuss the projects and priorities in detail.
So, what’s the answer for the Operating Statement? Are there more cuts to be had? Seemingly it would be tough to make the staff any leaner on top of the layoffs of recent years. The crumbling state of the front steps to the township building does not indicate that recent repair and maintenance spending has been effective. Unlike the School District, it’s not clear that there’s much room in benefits. On the revenue side, the property tax rate has been unchanged since 2009 and has increased at an annual rate of less than 1.7% for the last decade.
Paul Olson contrasted recent property tax rate increases in Easttown (my data for 2010, 2011: +12%, +4%) and Radnor (+11%, +9%). Of course, rather than just layer on more property taxes, the net cost to Tredyffrin residents would be lower if the township took a percentage of any EIT that a large number of residents are already paying and that the School District may possibly put to referendum ……