Newtown Township
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.
Other
Funds
¨ 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.
Concluding Remarks
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