Tredyffrin 2011 Budget

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

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Updates from Tredyffrin’s Board of Supervisors Meeting Last Night

Summer Board of Supervisors Meetings are traditionally sparsely attended and last night’s meeting was no exception.  In fact, Chairman Bob Lamina was absent and Vice Chairman Paul Olson presided.

From my standpoint, there were 3 noteworthy discussion topics from last night’s supervisors meeting.  The first I mention for selfish reasons . . . I am a member of the township’s HARB (Historic Architectural Review Board) and each year we select a residential and non-residential property in the township to honor for historic preservation.  The HARB award for residential historic preservation was awarded to Margie and John Sacharok, owners of Upper Stream Farm in Berwyn.  This beautiful circa 1760 home was featured on last year’s 5th Annual Historic House Tour and has been wonderfully restored.  The award for non-residential historic preservation was awarded to Montessori Children’s House of Valley Forge.  Montessori Children’s House created a partnership with Valley Forge National Historical Park and the school’s new home is in the southern corner of the park on Thomas Road.  Restoring a historic house and barn for the nonprofit school was a unique pairing and one of the few partnerships in a national park in the country. I gave a brief historic overview of each property and showed a PowerPoint presentation featuring the before and after journey of the new home of the Montessori school in Valley Forge park.  

The second item of interest from the supervisors meeting had to do with the 2011 township budget.  During the liaison reports, Phil Donahue updated on the Finance Committee.  Supervisors Donahue, Paul Olson and John DiBuonaventuro sit on the Finance Committee along with the township finance director and township manager.  In his committee update, Donohue suggested public meetings in September and October to discuss the  revenues and expenses in the 2011 township budget. This type discussion would be useful prior to  the formal township budget process in November.  I applaud Donahue’s suggestion, however there was very little further discussion from the other supervisors.  So I’m guessing the discussion of the planned public finance meetings now moves to the August Board of Supervisors meetingI have a feeling there may be more to the 2011 budget discussion than we saw last night!

The third topic from last night and the one that generated the most discussion was in regards to the township building’s failing HVAC system.  Public Works Director Steve Norcini asked the Board of Supervisors for an additional $111K (not contained in 2010 budget) to perform needed HVAC retrofitting.  If I understand the discussion correctly, the 2010 budget contained $85K for the necessary work but an early estimate has determined that the total cost of retrofitting the HVAC is significantly higher than in the budget — approximately $193K (thus requiring the extra $111K). 

There were many questions from Supervisors DiBuonaventuro,  Kichline and Donahue concerning the HVAC issue including (1) why would the prospective HVAC contractors know the estimated cost of the project in advance of their bid, (2) why was the project estimate so substantially lower in the 2010 budget than the actual estimated cost; (3) why did the project require a complete retrofit rather than repair; (4) why were the 2 rooftop units installed 2 years ago if the controls and ducts were known to be failing, etc., etc.

Initially Olson made a motion and Kampf seconded to move the HVAC project move forward to bid, however after further discussion from the board and citizens, a new motion was made to table the discussion until the August Board of Supervisors meeting, allowing for further investigation.  This topic must have been discussed for at least 30 minutes and afterward there remained many more questions than answers.  It seems so curious to me that the HVAC retrofitting estimate in the 2010 budget would be less than half the estimated ‘real’ cost to do the project. 

 

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Montgomery County’s 2011 Budget Will Require ‘Radical Changes’ – Is this Handwriting on the Wall for Chester County, and Specifically Tredyffrin Township?

I just read the following in  Norristown’s Times Herald referencing radical changes needed by Montgomery County government to either drastically cut expenses or increase revenue to fill the $22.5 million funding gap expected in their 2011 budget. 

 OK, I know that we are not in Montgomery County; and I understand that this is county government vs. township government.  But is it possible that the crisis facing our neighboring county’s budget for 2011 could be similarly recognized in Chester County, . . . and then ultimately Tredyffrin?

I don’t think it’s much of a stretch to suggest a correlation between Montgomery and Chester County government funding issues.  We can only hope that Chester County does not face the enormity of the budget gap for 2011 as forecasted by Montgomery County. 

There have been recent comments on Community Matters that Tredyffrin’s 2011 budget can (and some have suggested, should) wait until later in the year for discussion.  From my vantage point, postponing township 2011 budget discussion until November or December  is short-sighted and not fiscally responsible.

In my opinion, a mid-year discussion of 2010 budget (expenses and revenues to-date) and forecasting for the 2011 budget is a fiduciary responsibility.  My desire for a public 2010/11 township  budget discussion is not about  Warren Kampf’s political campaign or for that matter, ‘party politics’.   This country, state, county, and yes, Tredyffrin Township are struggling with finances — so instead of suggesting that supervisors and residents just wait until November or December for budget analysis,  I would simply ask why wait? 

By July of last year, the BAWG committee was well underway in their 2010 budget meetings.  Shouldn’t we review where we are with BAWG’s 2010 recommendations . . . have all the cost-saving suggestions been implemented?  I don’t know, but maybe if we started discussing the township budget situation now, there would still be time in the 2010 calendar year to correct or to implement some of the BAWG recommendations.  I just don’t understand how putting off the budget discussion helps anyone?

By KEITH PHUCAS
Times Herald Staff

COURTHOUSE — With economy still in the grips of a slowdown, Montgomery County government has to cut expenses or raise revenue to fill a $22.5 million funding gap for the 2011 budget, and officials are expected to discuss shrinking the size of government.

In a June letter to the commissioners from Chief Financial Officer Randy K. Schaible, the county can’t count on transferring funds as it did this year. For the 2010 budget, the county used $8 million from its capital reserve fund for the general fund.

Schaible said borrowing will increase the county’s debt service in next year’s budget. The county borrowed $35 million for open space in March 2010, which will push up debt by $2 million per year. As well, the government is expected to borrow for capital spending, which includes the recent prison expansion, and that will cost $4 million a year in debt service.

At the commissioners meeting Wednesday, Deputy Chief Operating Officer James Maza said officials would ask departments to draw up a proposed no-growth and no-tax budgets, and to avoid raising taxes could mean a 9 percent cut in departmental expenditures “across the board.”

“This gap contemplates that we’re going to have to make some radical changes from previous budget decision making,” he said. “We understand that’s going to call into question downsizing both the function and the size of government,” Maza said.

Also, in order to meet pensions, the county is considering issuing pension obligation bonds to fund the $20 million contribution, he said.

A major concern is state grant funding. Schaible estimates Pennsylvania is behind by $1 billion in its budget. Recently, Congress voted against sending more than $800 in Medicaid payments to the state. Officials hope the Obama administration will reconsider restoring the aid.

In December 2010, the commissioners voted 2-1 to adopt a $407.7 million budget and managed to avoid a tax increase. Commissioners’ Chairman Jim R. Matthews and Vice Chairman Joseph M. Hoeffel voted in favor; Commissioner Bruce L. Castor, Jr. voted against the spending plan.

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Why Does Tredyffrin’s 2011 Budget Discussion Have to be a Political Party Debate? Why Does Transparency and Open Government Need to be Criticized?

Wayne resident, Rob Betts wrote a letter to the editor which appears in this week’s Main Line Suburban, as a rebuttal to  a written statement by Dariel Jamieson, chair of the Tredyffrin Township Democratic Committee, delivered at the June Board of Supervisors meeting – here is a copy of the TTDEMS 2011 Budget Proposal as presented.

Although Ms. Jamieson represented herself as chair of the TTDEMS at the June Board of Supervisors Meeting when presenting her statement, I wrote the following in a June 22 post on Community Matters:  

” . . . The suggested TTDEMS 2011 budget process further includes a request that the budget discussion occur in an open and transparent manner with public involvement.

 Although the proposed 2011 budget process was suggested by the local Democratic Committee, I do not believe their recommendations are politically polarizing.  Rather, this suggested 2011 budget process encourages a thoughtful, systematic budget approach in difficult and challenging economic times; a process that many residents in the township would probably support (regardless of their political affiliation).”

I found Rob Betts op-ed article  interesting on several levels.   In reading the article, what first jumped out at me was a missing piece of information.  Members of the community have been quick to criticize those that write political opinion articles and do not state their own political affiliations.  Personally,  I believe that if an individual is writing on a non-political topic, such as Ed Sweeney’s letter to the editor last week as a member of the Knights of Columbus, there should be no need to identify with a political party.  However, if someone is writing on a political topic, I agree with critics that the writer should inform the reader of their political affiliation such as a committee person for either the local Democratic or Republican parties.  For the record, Mr. Betts overlooked providing his political affiliation as the GOP committeeman for E-4 in his letter to the editor. 

Reading Mr. Betts op-ed article, and of his membership on the  BAWG committee (and participation in the  subsequent BAWG report) brought back memories for me.  I recall standing in front of the Board of Supervisors last fall and asking a series of questions regarding the BAWG report and the $50K St. Davids sidewalk offer contained in the report.  If you recall, I provided the supervisors with questions in advance; one which included a question about whether any BAWG members were members of St. Davids Golf Club.  If memory serves me correctly, Tom Coleman (as chair of the BAWG committee) was asked to answer my question and he reported that Mr. Betts was a St. Davids Golf Club member, but quickly added that Mr. Betts had recused himself for any votes related to St. Davids. 

So in reading Mr. Betts letter, I had to ask myself why is he so seemingly concerned about the transparent budget process that Ms. Jamieson suggested in her proposal?  But, when I recall the St. Davids Golf Club $50K sidewalk offer, and the attempt to cover-up the offer contained in the report, I guess I have my answer.  We all remember the negative attention that our township and supervisors received over the St. Davids Golf Club offer!

Transparency from our elected officials is important to me and it saddens  me to know that people can be criticized for wanting that kind of open and honest government. I believe that the suggestions that Ms. Jamieson posed in her 2011 Budget Proposal were ones that we could all support.  I would take it a step further and suggest that rather than representing the TTDEMS with her proposal, I believe that the suggestions may have been better served if presented as a resident rather than a political party chair.  However, I understand that as chair of the TTDEMS, Ms. Jamieson probably thought it best that her remarks be with full disclosure. 

As I said in my Community Matters post of  June 22, ” . . . this suggested 2011 budget process encourages a thoughtful, systematic budget approach in difficult and challenging economic times; a process that many residents in the township would probably support (regardless of their political affiliation).”

Below is Rob Betts letter to the editor . . . you make your own judgement.

Openness plea a Dem power play

To the Editor:

I was left shaking my head at the demand from Dariel Jamieson that the Tredyffrin Township supervisors open up the budget process to more public scrutiny. I believe the request is nothing more than an attempt by Democrats to discredit the budget once it is adopted by claiming it wasn’t “open.”

The Democrats’ goal is to increase the scope of government at all levels, which requires an increase in revenue, and unlike Washington, our supervisors can’t print money. An Earned Income Tax is their ultimate goal, but without any Democrats on the Board of Supervisors, the best they can do is complain about the process. The request for openness is just their way of saying the 2011 supervisor election has begun.

As a member of the Budget Advisory Working Group last year, I can assure you that the township budget is lean. Much of the township’s budget is fixed due to debt service and collectively bargained contracts. The supervisors refinanced a significant portion of the township’s long-term debt this year (a BAWG recommendation), leaving union contracts and their benefit cost as issues to be addressed.

The current contracts with the township’s unions run through 2013 so those costs are fixed for the current budget cycle. Long-term, the defined-benefit system and free retiree health care for uniformed employees must be changed, for all levels of government, not just Tredyffrin Township. Our supervisors should be applauded for forcing arbitration with the police union on the health-care issue and maintaining the township’s AAA credit rating during the recent bond refinancing.

The Democrats are ready to start the next supervisor election. Look for lawn signs in December.

Rob Betts, Wayne

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As We Enter 3rd Quarter of 2010 . . . Where Does the Township Stand Financially? Have 2011 Budget Discussions Started?

Back on December 13th, I wrote of the need for residents to fully understand Earned Income Tax (EIT).  We are now in the 3rd quarter of 2010, and there is evidence that the 2011 township budget is going to face even greater challenges than this year’s budget.  I went back and found the post; below is an excerpt.  Nearly seven months later, I think it is important to re-visit the discussion. 

Although some Community Matters readers may disagree, I continue to believe that an open, honest discussion with the public of all revenue sources needs to be an integral part of our local government. We can not afford to wait until November to begin the 2011 budget discussions.

At times misunderstood when campaigning, I often suggested that the township needed to explore Earned Income Tax (EIT) as a possible revenue source.  There was (and continues to be) a lot of inaccurate information circulating about Earned Income Tax.  An example of misinformation occurred at the last Board of Supervisor Meeting, when Supervisor Chair Warren Kampf indicated that those individuals who lost their jobs would pay Earned Income Tax (if Tredyffrin were to have an EIT).  I hope that Mr. Kampf did not intentionally try to confuse the public with his words;  the fact is that individuals receiving unemployment benefits would not pay Earned Income Tax; unemployment benefits are not subject to EIT.

I thought it might be useful to list examples of income which are not subject to Earned Income Tax:

  • Retirement Pensions
  • Disability Payments
  • Active Military Pay
  • Unemployment Compensation
  • Insurance Proceeds (non-business)
  • Workmen’s Compensation  
  • Bequests
  • Stock Dividends (non-business)
  • Gifts/Lottery Winnings
  • Social Security
  • Interest (non-business)
  • Military Bonuses

Earned Income Tax is based on gross wages, salaries, commissions and other earned compensation. As stated numerous times, approximately $3 million is being paid to other municipalities by Tredyffrin residents.  If an EIT were in place, this revenue would return to the township.  Dave Brill, Township Finance Director, has offered that the potential township revenue could be as high as $8 million (should Earned Income Tax be instituted). 

Assuming that we get through the township budget discussion on December 21 with the proposed draft budget more or less intact, I still contend that the 2010 budget is nothing more than a Band-Aid solution to a far greater financial problem.  I believe that the township will limp along through 2010 with the budget in place.  However, without financial foresight, this time next year the township will be faced with a far greater problem than the reinstatement of $20K to the Fire Department.  The 3 new supervisors all campaigned (and were elected) on the ‘no new taxes’ mantra and they will probably take office on January 4 with that promise intact.  However,  it doesn’t take my London School of Economics education to believe that their promise will be short-lived.  Financially the township is in a very precarious financial situation and we are going to witness firsthand the result of shortsighted financial planning.

I know that this posting of Earned Income Tax discussion will bring opposing comments, and I actually encourage the dialogue.  Tredyffrin’s 2006 Tax Study Commission and voter referendum overwhelmingly were against imposing an EIT.  Warding off that particular argument, clearly 2010 can not possibly be compared economically to 2006; it is a vastly different financial climate facing this township.  I may have been one of the voters in 2006 who opposed an EIT; believing that the township at that point did not have severe financial needs to warrant that taxation approach.  However, if in 2009 this township’s annual budget of $37 million can not fund $20K to our firefighters, something is dramatically different in this current picture.  Each and every taxpayer needs to take a careful look at the proposed 2010 township budget — I believe the future is going to require more than simply tightening our belts as has been suggested by some of our township leaders, as a response to our economic problems!

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Radnor’s Interim Finance Director Discovers a New Way to Lose $600K . . . Whoops, the shading was too dark to read!

Here’s a new excuse for an accounting mistake.  It was announced this week at Radnor’s Board of Commissioner’s Meeting that the township lost $600K . . . rather they never actually had it.  Apparently, some of the columns on the Excel accounting sheets are shaded too darkly to accurately read so the wrong numbers may have been picked up.  When the township’s commissioners asked Alison Rudolf, Radnor’s interim finance director to explain why the actual and working budget numbers are different, her explanation begins with maybe there was an  ‘absence of some zeros’!   I couldn’t make this up — and to explain sloppy accounting with the excuse that the Excel spreadsheet’s shading was too dark! 

Apparently, Commissioner John Fisher, who sits on the township’s finance and audit committee, complained in the past that the shading on the Excel spreadsheet was too dark . . . he told the residents at the commissioner’s meeting that he would lighten his own copy before printing so that it was readable.  Even after Commissioner Fisher alerted the finance department of the situation, the shading problem was ignored.  Lightening up the use of shading in a document does not take an advanced degree in computer science . . . and now this is the finance director’s excuse for the $600K accounting error!   

The inability of the finance department to reconcile the books would have been a stunning revelation by itself; but for Radnor’s Township Manager and Finance Director to offer this kind of excuse is truly remarkable!  Ms. Rudolf explained that the township uses two different kinds of accounting systems, one for budgeting and the other for everything else.  The budget system uses Excel.  The Excel spreadsheets were so darkly shaded that they were not readable, so Ms. Rudolf states it was difficult to read some of the entries!  Are the residents to believe that the finance department then just guessed what the numbers were?  Does this explain Ms. Rudolf’s assertion that perhaps some zeros just went missing?

Another problem with Radnor’s 2010 budget — the budget was based on a significant transfer of revenues from the Sewer Fund.  (do you remember Tredyffrin’s Sewer Fund discussion from December?)  It now looks as if the Radnor’s Board of Commissioners spent money from the Sewer Fund that was not there.  A reduction in usage due to conservation efforts and the economic downturn meant another large shortfall in anticipated revenues. 

One bright spot for Radnor’s residents is that this recent budget problem is forcing the commissioners and the township’s finance department to focus on the revenues and expenditures of their 2010 budget.  I would also guess this situation will encourage 2011 budget discussions in Radnor Township earlier rather than later. And just remember, Radnor Township has an Interim Finance Director and this $600K error occurred . . . what does that say for Tredyffrin Township?  We have not had a Finance Director since March.  Maybe a status report on where the township stands with getting this position filled would be a good idea!

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