Board of Supervisors
2004 Budget Minutes
November 19 , 2003
MINUTES WERE APPROVED at the regular meeting December 10, 2003. BUDGET MEETING OF 11/12/03: Mr. Weaver moved to approve the minutes of the 11/12/03 budget meeting; the motion was seconded by Mr. Jirele and passed unanimously.
Present: Scott Harp, Chairman; Anne Goren, Vice Chairman; Dick Weaver, Treasurer & Secretary; Raymond “Skip” Goodnoe, Member; Thomas Jirele, Member; Bob Pellegrino, Township Manager; Elaine Gibbs, Finance Director.
Department Heads/Personnel Present: William Wert, Parks and Recreation; Don Harris, Emergency Services; Chief Martin Duffy and Jean Tanner, Police Department; Ronald Weaver, Technology; Thomas Harwood, Codes and Public Works.
Others Present included: Nancy Crescenzo, Walter Iwaskiw, Del Purscell
Attached to these minutes is the agenda of the meeting.
Mr. Harp called the meeting to order at 7:00 pm. He explained the meeting’s format: Mr. Pellegrino would give a presentation, followed by comments and questions from the Board, public comment, and any closing comments by the Board.
Mr. Pellegrino presented the budget, and said he would give an overview of the proposed 2004 budget, with a general overview of significant budget items and a review of each fund. He said that the budget format is the same as in 2003, following the DCED Chart of Accounts. Highlights of his remarks included:
¨ Funds: The seven operating funds include General, Street Light, Fire Protection, Rescue Squad, Park & Recreation, Debt Service, and Highway Aid. The five capital funds include Capital Projects, Recreation Capital, TSA 1, TSA 2, and Traffic System. The three trust funds include Police Pension, Municipal Employees Pension and Benefit Obligation.
¨ A significant source of General Fund revenues, which pays for most municipal services, is Earned Income Tax. This is estimated to generate approximately $4.7M. This year there has been a decrease in the resident earned income tax and an increase in the non-resident portion. He suggested that the township monitor the resident portion.
¨ Residential development has slowed, but non-residential development has increased. 740,000 square feet of non-residential development is in progress now, which will increase the tax base without draining municipal services.
¨ Business Licenses, permits, occupational privilege tax, pension system state aid, police fines and employee contributions to benefits are consistent sources of income.
¨ The same amount in Federal and state grant funds is expected in 2004 as was received in 2003. The last payment was received for completion of the ISTEA trail project. A $20,000 Community Development Block Grant will be used to update the Subdivision and Land Development Ordinance. The recycling grant funds increased this year from $29,000 to $86,000, as a result of hiring a professional consultant to assist with filing with the state; this number is expected to increase in upcoming years. A $15,000 grant was received to study local bus service.
¨ Intergovernmental agreements with the Borough for fire and safety inspections, and with Wrightstown Township for police services generate income with some offsetting expenses. Revenues from Wrightstown Township police services will generate revenues of $352,000 in 2004.
¨ Interest earnings are down 50% from the prior year.
¨ 2003 projected revenues are estimated at $7,673,00, an increase of $540,000 over the 2003 budget, and include increased earned income tax, unbudgeted grants, permit fees, and pension system state aid.
¨ 2004 projected revenues are $7,547,000, slightly less than expected in 2003, but $414,000 over the 2003 budget amount. This includes an increase in transfer tax, permit fees, CATV fees, and pension system state aid.
General Fund Expenditures
¨ Total Projected Expenditures of $7,682,00 show an increase of $18,000 over the 2003 budget of $7,664,000, and includes an increase of legal fees related to the RCN contract, an asset inventory and appraisal to comply with GASBY 34, unexpected building maintenance costs for the municipal building, an overrun in police overtime, an excess expense in snow removal, and an unfavorable arbitration award in the fire contract which resulted in an increase in salaries.
¨ $8,400,000 in appropriations is proposed for 2004, which is a $50,000 increase over 2003. This increase includes increases in salaries and wages, medical insurance premiums, liability insurance premiums, employee pension contributions, and capital projects.
¨ Appropriations include $610,000 for capital projects, $150,000 for debt service, and a transfer of $30,000 from the general reserve fund for recreation operations. The operating budget is up 6.9% over the prior year, including mostly employee salaries and benefits. Mr. Pellegrino referred to a handout detailing Operating Appropriations (attached).
¨ The 2003 beginning fund balance was $2,974,000. $9000 will be drawn for over-expenditure, leaving $2,965,000. At the end of 2004, projected balance to be remaining in the general fund reserve is $2,100,000, after transfer of $790,000 for debt service, capital projects and recreation operations.
¨ Mr. Pellegrino recommended expansion of the non-residential sector of the community and adherence to the township’s land use policy, to boost tax revenues and minimize need for additional township services and staff. He said that it was important to investigate alternatives to the present medical and liabilities insurance programs. He also recommended multi-year budget forecasting, to include preparation of budgets five years out.
Mr. Pellegrino recommended that the township should look for ways to reduce dependence on the general fund for debt service and perhaps capital projects. The largest upcoming capital project is the municipal building expansion.
Mr. Pellegrino commended the board for looking at a capital program out to 2009, including the prioritization of projects.
¨ Interest from Streetlights Fund is being used for capital maintenance of the street light system.
¨ Fire Protection Fund supports the Newtown Fire Association. $20,000 has been appropriated in 2004 to the Association to support their capital program; Mr. Pellegrino will appropriate $20,000 in 2005 if the Board wishes. The Rescue Squad Fund goes to the Rescue Squad; the Board also appropriates $42,000 for fuel, insurance, and worker’s compensation.
¨ 2 mills supports a portion of Park & Recreation administrative and park maintenance costs. The budget includes the hiring of a part-time naturalist at $9,000. Mr. Pellegrino noted that recreation programs continue to maintain 85% to 90% self-sufficiency. Mr. Pellegrino commended Mr. Wert and his staff for the many programs the department offers the community. The tax millage does not cover appropriations, and Mr. Pellegrino has recommended a transfer of $30,000 from the general fund to the recreation fund to balance the fund. Appropriations include the increase of one employee’s hours from 30 to 40. Mr. Pellegrino reminded the Board that increased parks generate increased costs.
· Debt Service Fund - At the end of 2004, total debt will be $1,070,000. Mr. Pellegrino said they have investigated a bond issue for $9M for the municipal expansion, which would represent 2-3 mils; the municipal expansion will be a top priority for 2004.
¨ The Capital Projects Fund balance at the beginning of 2004 will be $736,000. Some of the projects to be funded include: the completion of Sycamore Street, erosion control measures along the creek, acquisition of a document imaging system, land acquisition from the archdiocese, and associated architectural fees.
¨ Recreation Capital Fund revenues are derived solely from recreation impact fees. Just over $600,000 is expected to be collected in 2004. Projects include trail extensions, Silver Lake Park and Robert Ridge Park improvements, and minor improvements to the Clark Nature Center.
¨ Transportation Service Area Funds will cover such projects battery back-up units for existing traffic signals and modifications and additions to pedestrian crossings.
¨ The Traffic System Capital Fund, consisting of undesignated traffic impact fee money, will be used for traffic calming study and a traffic-calming program. Mr. Pellegrino has proposed $20,000 in the budget for any additional traffic calming studies the Board might wish to authorize.
¨ The Highway Aid Fund will be used towards roadway maintenance, equipment acquisition, traffic light expenses and streetlight electricity. Roadway maintenance in 2004 will include resurfacing portions of Eagle Road, Twining Bridge Road, Wrights Road, Parkview Way, Valley View Way and Penns Trail.
¨ Trust Funds: State aid contributions will fund all but $67,000 of required obligation for pension funds. Mr. Pellegrino reminded the Board that they are actual fiduciaries of the funds.
Mr. Pellegrino noted that a budget is a statement of financial position for a definite period of time, and that it represents estimates of revenues and expenditures. He observed that the budget maintains municipal services at present levels; a reduction in needed services is not anticipated. He said that the enhancement of services through increased efficiency, when possible, through use of technology and/or employee training would be done. Mr. Pellegrino noted that no tax increase is proposed in the budget, and no increase in personnel with the exception of the elevation one employee from part time to full time status. He noted that the Township maintains one of the lowest municipal real estate tax rates in the county; and except for the Fire Tax increase, taxes have not been raised since 1995.
Mr. Pellegrino concluded his presentation by thanking Ms. Gibbs for her work on the budget, and commended her staff and his staff for their considerable efforts.
Mr. Harp introduced the Department Heads present and informed that Board that they were present to answer any questions.
Board Comments and Questions
Mr. Weaver complimented Mr. Pellegrino, his staff, and the department heads on their work on the budget. He said they would continue to investigate ways to reduce expenses, including in-kind services from some developers.
Mr. Jirele thanked Mr. Pellegrino and Ms. Gibbs for their work and an easy to read budget. He expressed concern about what the administration and the Board could do now to avoid a future tax increase. Mr. Pellegrino said that big increases this year were in personnel costs and staff, which is accounted for by movement of staff on the salary scale as well as increases in benefit costs and cost of living raises. He said reviewing insurance and medical costs might help reduce costs, and that building out the commercial areas and business commons would help build the tax base and enhance revenues. Mr. Pellegrino said that the proposed budget represented what he felt was reasonable to cover needed township services and staff. He noted that there were few increases in the budget from 2003, and said he did not see where the proposed budget could be reduced unless township staff was cut. Mr. Jirele urged the Board to carefully consider whether the township could afford proposed projects in the upcoming year. Mr. Pellegrino said that if the additional millage was levied to cover the debt service, and recreation covered by recreation fees, the general fund would carry itself, as the level of earned income tax is strong. He noted that there were a number of projects approved by the Board that drained funds from the General Fund, and that tough decisions might need to be made in 2005.
Mr. Jirele felt the capital expenditures projection through 2009 provided by Mr. Pellegrino in the budget was a useful tool. He noted that park development figures totaled about $4M, but that only about $3M was expected from recreation fees. Mr. Pellegrino said they were included because they were discussed, and suggested that if the recreation fees do not materialize, then such projects should be delayed. Mr. Jirele felt that the Board should concentrate on a few of the larger projects before addressing some smaller projects.
Mr. Jirele said it was a dangerous precedent to take $100,000 out of the general fund reserves for operating expenses. He said he was not happy that the reserve fund would decrease next year, and that the reserve fund should be saved to offset the cost of the municipal expansion project. Mr. Pellegrino noted that the $900,000 reduction in the general fund represented contributions to the Sycamore Street project, land acquisition from the archdiocese, debt service, and the fire company.
Mr. Goodnoe said he agreed with Mr. Pellegrino that it would be a good idea to project budgets out five or six years. He noted that over the last four years revenues had risen 16% and expenditures had risen 25%, and that in 2004 there is an estimated 5% increase in revenues and an increase of 10% in expenditures. He said that the Board needed to stop the growth in spending. He said that department heads should be asked how they could function with a 5% decrease in their budgets; funding operations from fund balances is inappropriate. He said the Board had been capricious in dealings with the business community, and this could hurt the tax base. Mr. Goodnoe said that revenues were unpredictable due to the township’s inability to approve land uses consistent with the zoning ordinance, and felt the township needed to reduce expenditures.
Mr. Pellegrino said he took debt and capital expenditures, considering them separate from operations, out of the budget to calculate a 6.9% increase in operating costs. He suggested that the Board reconsider the acquisition of land from the archdiocese to decrease expenditures from the reserve fund; only $107,000 of the proposed $900,000 from the reserves is marked for operating costs and $30,000 of that is to balance the recreation fund budget instead of increasing taxes. He said he would hesitate to eliminate spending for a municipal expansion project, since employees are currently housed in two trailers, additional meeting space is difficult to find, and there is currently no space for records storage.
Ms. Goren asked about possible reductions in the operating budget. Mr. Pellegrino said that expenditures that would not reduce staff that could be reduced would be for police vehicles and radios for emergency services personnel. He said that not replacing police vehicles in a timely manner was a bad precedent. He said he could trim a little from here or there, but that it would not be a realistic budget. Ms. Goren asked if he thought a reduction in staff would result in a decrease in essential services. Mr. Pellegrino said that Emergency Services was minimally staffed, he would not advise elimination of these services. He said that Public Works staff could be reduced, but that more roads require service each year, noting that road maintenance costs are relatively low now, since the community is fairly new.
Ms. Goren asked about things other communities were doing to increase revenues without increasing expenses. She suggested looking into offering police coverage to adjacent municipalities, or other ways to bring funding in without increasing operating costs. She said questioned the assumption that non-residential businesses would bring in a level of funding, and that the township had been disappointed before in such projected revenues. It was noted that the township is prevented from adopting an earned income tax at present.
Mr. Harp noted that it was difficult to determine the effect of the economic downturn over the last two years has had on the earned income tax revenues, but changes in the economy may help in the future.
Mr. Pellegrino referred to a handout calculating the impact of the real estate tax levy (attached). He said he had spoken to other township managers and that some communities are expecting dramatic millage increases; it seems to be a trend. Mr. Jirele said that he believed that $100,000 could be cut from the budget without compromising essential township services.
Mr. Harp said he hoped that fees for the solicitor handling the RCN hearing would result in a favorable settlement for the township.
Mr. Goodnoe asked about a schedule of vehicles that various departments needed; Mr. Pellegrino will have it at ready for the next Board meeting.
Community Comments and Questions
Del Purscell said the township has double the number of senior citizens in 20 years, and fewer school age students. He wondered if there should be a study to determine future demographics. He said he hoped that the Board would take a stronger look at ways to change revenue sources, especially with regard to non-residential sources. He said the township needed to be friendlier to commercial development.
Walter Iwaskiw said the Board should not consider increasing taxes when the township is looking to increase the business community. He said there was no reason the operating expenses couldn’t be balanced with revenues. He noted that it had been suggested that there be a tax increase to fund parks and recreation, and suggested that perhaps the schedule for park development be slowed down.
Nancy Crescenzo said the general overview was extremely helpful. She reminded the Board that any work on the Clark Preserve was supposed to be funded with in-kind services and that it had not been done so maintenance funding was now required. She said that before any additional parks were put on line, issues of maintenance of existing parks needed to be addressed. Ms. Crescenzo said that baseball and soccer fields were in poor condition, and the bathroom issue needed to be resolved. She questioned the need for a township naturalist, and suggested the formation of an environmental council. She said she was pleased to hear acknowledgment by township officials of the importance of business in the township.
Ms. Crescenzo asked if it were possible to have an attorney for the RCN issue that was based closer to the township, rather than in Pittsburgh, to lower cost. She suggested looking at the various technology-related contracts to see if costs could be lessened. Mr. Pellegrino said that changes had been made to the township’s Internet and telephone services that resulted in an annual savings of $15,000, and had reduced the mobile communications bill by approximately $3000 through changes in the contract.
Ms. Crescenzo questioned the ability of the police department to patrol the Clark property from the parking lot. Mr. Pellegrino said that the woods in the park is not patrolled, and that many other parks are not patrolled back in the woods. Ms. Crescenzo asked about traffic enforcement on Stoopville and Swamp Road with regard to the lack of shoulder area; Mr. Pellegrino said there had been a great deal of enforcement. Chief Duffy clarified that if there were a truck violation along Swamp Road many times a police officer would follow the truck to a spot that was safe to pull the truck over.
Ms. Crescenzo said she was disappointed to see projects noted in the budget that the public that had not had a chance to comment on. Mr. Pellegrino said that this year operating revenues equaled operating expenses, and in 2004 there is a proposal to use some reserve money for operations. He said that the Board had discussed land acquisition, but had not discussed or approved any municipal expansion; numbers for these projects were noted as information for the Board.
Mr. Harp said it was important to note that since 1998 expenditures have been below revenues, and hopes that this will hold true when the 2003 books are closed.
Mr. Harp said that the hanging of the budget would be on the agenda of the Board meeting next week.
Mr. Pellegrino clarified that, according to Second Class Township Code, a preliminary budget must be adopted and available for public inspection for 20 days before it can be finally adopted; technically the budget need not be presented to the public until it is hung. He said that once the budget is adopted preliminarily, it could still be changed. The adoption/hanging of the budget is scheduled for November 19, 2003, and discussion will continue at the Board work session on November 24, 2003. An additional hearing can be scheduled at the Board’s discretion for December 3, 2003. Adoption of the budget is tentatively scheduled for December 10, 2003.
Mr. Goodnoe requested that Mr. Pellegrino ask department heads to review their budgets for possible reductions.
On motion by Ms. Goren, and without objection, the meeting was adjourned at 9:00 pm.
Respectfully Submitted by:
Leslie. Dunleavy, Recording Secretary 1/9/2004