Board of Supervisors
Minutes of Novmeber 8, 2006
The Newtown Township Board of Supervisors met on Wednesday, November 8, 2006 in the Township meeting room at 6:00 PM. In attendance were Supervisors: Chairman Anne Goren, Vice-Chairman Phillip Calabro, Secretary/Treasurer, Jerry Schenkman and members Thomas Jirele and Richard Weaver. Also in attendance were Township Manager Robert Pellegrino and Finance Director Elaine Gibbs.
Department Heads/Personnel Present: William Wert, Parks and Recreation; Don Harris, Emergency Services; Chief Martin Duffy, Police Department; Ronald Weaver, Technology; Michael Solomon, Codes and Zoning, and Gary Crossland, Public Works.
Call to Order: Chairman Anne Goren called the regular meeting to order at 6:00 PM explaining the evening’s agenda; Mr. Pellegrino would present the 2007 budget followed by questions from the Board and public comment.
Mr. Pellegrino explained that the proposed 2007 budget has been prepared in accordance with the Pennsylvania Chart of Accounts for local governments published by the State Department of Community and Economic Development.
The funds are divided as follows:
The total budget appropriation of $15,000,000 is divided as follows:
The budget maintains municipal services at current levels; toward that end, the Township organization anticipates the need for one additional public works employee. The workload has increased with new development dedications, expanded park facilities and Sycamore Street improvements. Additional public works employees might be needed in future years. Other department staffing levels are adequate to maintain current service levels.
The budget provides for maintenance and improvements to our infrastructure, which is valued at $29,000,000, as noted in the 2005 Comprehensive Annual Financial Report prepared in compliance with the GASB 34 requirement to value public assets.
The current tax rate of 2.625 mills, about $195 to homes assessed at $75,000, or a value of $700,000, is maintained. This proposed budget is a balanced budget. No tax increase is proposed; however the budget includes planning and design for Woll site development and municipal complex expansion. A tax increase will be necessary in the Debt Service Fund in 2008 or 2009 if the Board authorizes construction of the Woll site and/or the municipal expansion. This is the twelfth year without a property tax increase other than the voter approved increase for the Fire Company in 2003.
The Park and Recreation Operating Fund was projected to have a deficit going into 2008 and was balanced with a transfer of $30,000 from the General Fund. The Park and Recreation Fund will need additional tax revenue in 2008. The Board could continue to fund future deficits from the General Fund reserve. This is a policy decision.
The General Fund
The General Fund is the largest of the operating funds, which includes expenditures for:
The General Fund revenue comes primarily from the Earned Income Tax (EIT). The EIT provides 57% of total general fund revenue, or $5,000,000. The EIT is projected to steadily increase as new development occurs; non-resident EIT is also increasing because of new development in the Newtown Business Commons and other non-residential construction. There was a 6.8% increase from 2005 to 2006. The non-resident EIT also increased and will exceed 2002 levels next year. The budget conservatively projects revenues of $5,150,000, an increase of 2%.
Permit and development fees continue to generate revenue to offset expenses of the Zoning and Code Enforcement Department, although the revenue is down from the prior year. Only six permits were issued for new homes in 2006, but there was completion of several housing developments, including The Reserve, Wiltshire Walk, The Overlook, Linton Hill Chase. We expect dedication of these developments in 2007, when our Public Works Department will assume maintenance responsibility for public rights-of-way and associated infrastructure improvements.
An increase in building permit activity is projected in 2007, for Delancey Court (120), Villas at Newtown (172), Foxhall Estates (18), Roberts Nursery (102), Goodnoe (26) and Melsky (59), totaling over 500 new units to be constructed in the next few years.
We are also projecting an increase in non-residential development in the next several years at Silver Lake Executive Campus, Tudor Square III. Penns Terrace Office Park, Newtown Office Park, Hilton Gardens Hotel, expansion at Village at Newtown South, Shoppes at Sycamore, the Deluca Corporate Center and the old ACME site.
$562,000 is budgeted from permit fees.
Steady sources of income include:
Intergovernmental agreements generate income with some offsetting expenses:
The 2006 projected revenue of $8,952,000 is $173,000 over the budget of $8,779,000:
We estimate the 2007 revenues at $9,341,800 or $562,000 (6.4% increase over 2006 budget and $389,000 over 2006 revenue collections:
The budget is very conservative on revenue estimates and liberal on expenditures.
Total Expenditures in 2006, including transfers from the reserve fund for capital projects, is estimated at $9,508,000, or $195,000 under the budgeted amount of $9,703,000. This amount includes $600,000 from the reserve fund to purchase property from the Archdiocese of Philadelphia for the municipal complex expansion, however this transaction will not occur until 2007. The Township and the Archdiocese have agreed on a sale price of $710,000 based on Township appraisal of the 10-plus acre parcel. Approximately $375,000 in additional funds was required to complete the Sycamore Street project. The Township has requested additional grant funds from PennDOT through the Governor’s office to account for the shortfall.
Expendituresfor operations, representing the cost of operations before interfund transfers are projected to exceed the budgeted amount of $8,761,000 by approximately $40,000 because of excess police overtime. This represents a 0.45% variance from the budget. The result from operations, the difference between current year revenue and current year expenditures, is estimated at $151,000, a positive result.
The total proposed appropriations foroperations in 2007 are $9,341,800, an increase of $827,000 (6.6%) over the 2006 budget. The additional appropriations include:
We will continue the practice of purchasing three police vehicles and computer systems from the operation budget.
Total Expenditures with interfund transfers is budgeted at $9,722,800, with interfund transfers as follows:
In 2006, the beginning balance of the Reserve Fund was $3,158,221, but it is projected to decrease to $2,222,000 after transfers and funds are used to complete the Sycamore Street project. If the additional grant funds of $375,000 are allocated for the Sycamore Street project, the fund balance could reach $2,600,000 by the end of next year. The use of reserve funds is consistent with reserve policy adopted by the Board in Resolution #93-R-13 in 2003.
Expansion in the non-residential sector in the short term will boost tax revenue, particularly in permit fees and non-resident EIT. Residential development is expected to also boost permit fees and enhance resident EIT, although there will also be an increased demand on Township services. The administration will continue to explore cost saving alternatives to present medical and liability insurance programs. We will continue multi-year budget forecasting and long term financial planning to improve long term financial projections, examining demographic changes, development potential, and employment. We recommend hiring a consultant to work with the Financial Planning Committee on this.
The Street Light Fund
The Street Light Fund has a balance of $207,000 from the eliminated assessment. The operating costs have been borne by the General Fund since 1998. These assets are used for capital improvements to the system, which currently includes 1,500 street lights, with new lights added as new developments are dedicated. The budget includes $8,000 for upgrades in various locations.
The Fire Protection Fund
The Fire Protection Fund is funded by a dedicated tax of 0.875 mills. A total of $272,000 is paid directly to Newtown Fire Association. The Association uses 1/3 of this amount to fund its capital equipment replacement program.
The Rescue Squad Fund
The Rescue Squad is supported by a dedicated tax of 0.125 mills, which generates $38,000 of support. The General Fund contributes $51,000 for insurance and fuels for a total of $89,000. The Board should consider increasing the tax rate to reduce reliance on the General Fund. An increase to 0.185 mills would represent an increase in taxes of $14 for a home assessed at $75,000, or $9 for a home assessed at $50,000.
Park and Recreation Fund
Park and Recreation is also funded by a dedicated tax of 0.75 mills, which generates $228,000 to support recreation administration and park maintenance including staff salaries, fringe benefits, supplies and insurance. The 2006 revenue is projected at $647,000, as follows:
2006 expenditures are approximately $622,000, or $3,000 under budget:
The fund is projected to have less than $1,000 reserve balance at the year’s end. Our recreational programs are operating at 85-90% self-sufficiency, with program receipts paying for 85% of program costs. Programs are expected to generate $415,000 in 2007. This number represents three summer camps, and 1100 programs. There have been over 4,100 participants so far this year.
2007Appropriations are $688,000:
The increase in appropriations represents an increase in park maintenance costs of $12,000, and program costs of $51,000, although costs will be covered by program fees. As the Township discusses development of new park facilities, be aware that operating and maintenance costs will increase. A $30,000 transfer from the General Fund is needed to balance the 2007 budget, as revenues did not equal expenditures. The Board should consider possibly increasing the dedicated tax by 0.25 mills, which would generate an additional $76,000. This would cost a homeowner whose property is assessed at $50,000, or a home valued at about $450,000, and increase in taxes of about $12.50.
The Debt Service Fund
The Debt Service Fund is funded by a dedicated tax of 0.875 mills, which generates $266,000 for payments on outstanding debt. The Township owes $460,000, borrowed at an interest rate of 4.95%, for purchase of the Wiggins tract, and $50,000 at 0% interest for purchase of Silver Lake Park property. The Wiggins debt will be paid off in 2008; Silver Lake will be paid off in 2007. If the Board moves forward with the municipal complex expansion and development of the Woll tract, a tax increase will be needed to support payments on a new bond issue. An accurate estimate of the increase will be determined after hard costs are developed for construction of the facilities after final design is complete.
The Capital Projects Fund
The Capital Projects Fund is used for capital expenditures that meet policy guidelines; over $25,000 with a lifespan of five years or more. The Township has a six year improvement program through 2012. Expenditures are funded with General Fund reserves and grants.
The 2006Capital Fund expenditures totaled $1,595,000, including:
Sycamore Street was funded 80% by a Federal grant. There was a $375,000 shortfall because of cost overruns including additional sidewalks, replacement of drainage pipe, flashing signal for Chandler Hall, winter shutdown and adjustments for fuel. We have requested additional funds from PennDOT to cover these costs.
The 2007Appropriations, totaling $367,000, include:
The appropriations will require a $300,000 transfer from the General Fund reserve.
The Recreation Capital Fund
The Recreation Capital Fund is dedicated to construction and improvement of recreation facilities and is funded by fees new development, at $5,165 per new home, and $1,291 per 1000 square feet in lieu of dedication of open space for non-residential construction. We expect to collect $647,000 in impact fees in 2006 and estimate $1,500,000 in 2007.
2006 projects totaling $166,000 include:
There were debt payments of $84,000, and a $500,000 transfer to the Woll Site Improvement Fund.
2007 appropriations totaling $1,528,000 include:
The total appropriations of $1,528,000 consists of $555,000 for park system improvements, $73,000 for debt services for Silver Lake and Wiggins interest and $900,000 transfer to Woll Site Improvement Fund.
The Transportation Service Area Funds (TSA 1 and 2)
The Transportation Service Area Funds (TSA 1 and 2) are funded by impact fees for transportation system improvements under State Act 209, which divides the Township into two areas. Funds are restricted to use in specific areas. The combined fund balance in 2006 was $1,213,000. $118,000 in fees was collected in 2006.
2006 expenditures included engineering for the Newtown Yardley Road improvement project (TIP), which is 80% federally funded. After PennDOT installed a right turn lane on Richboro Road at the Newtown By-pass, $5000 was spent on a right turn arrow.
We expect to receive $1,150,000 in new fees in 2007. The 2007 appropriations, totaling $500,000 include:
This leaves a 2007 year-end balance of $178,000.
In response to Board questions, Mr. Pellegrino explained that the Newtown Yardley Road improvements would include a widening of the road and the addition of turning lanes.
The Traffic System Capital Fund
The Traffic System Capital Fund had an approximately $96,000 fund balance at the start of 2006. In 2006 we spent $35,000 to install battery backup units on traffic signals and to convert many signal heads to LED lamps, reducing operating costs by 25%. The remaining fund balance is $64,000.
2007 appropriations include $10,000 for engineering for general traffic system improvements and $50,000 to update the Township’s Act 209 study, which was last updated in 2001.
The Woll Site Improvement Fund
The Woll Site Improvement Fund will account for revenues and expenditures associated with development of the property as a municipal park. The fund has a beginning balance of $750,000. We expect to transfer $500,000 to the fund in 2006 and $900,000 in 2007 from impact fees. We propose to use $160,000 for site engineering in 2007, with construction to begin in 2008.
Municipal Complex Improvement Fund
The Municipal Complex Improvement Fund will be set up in 2007 to account for costs associated with the municipal expansion. We propose to fund the acquisition of property from the Archdiocese of Philadelphia for $710,000, with site engineering and architectural design totaling $440,000. We recommend a short term loan to fund these appropriations. The loan can then be incorporated into a future bond issue or other debt instrument over the long term once a decision is made on financing complex construction and Woll site development.
Highway Aid Fund
The Highway Aid Fund , the Township’s share of State Liquid Fuel Tax funds, is restricted in use to roadway maintenance, equipment acquisition, traffic signal expenses, street light electricity, road materials, etc. In 2006 we received $343,000, and spent $276,000 as follows:
The year-end fund balance is projected at $845,000.
Proposed appropriationsin 2007 include $750,000 in roadway maintenance for Twining Bridge Road, Winding Lane cul-de-sac, South Drive and Hemlock Drive. There have been increases in costs due to oil prices. We will have to cut back on this program or find new funding sources.
Pension Trust Funds
The Pension Trust Funds account for monies held in trust to provide benefit pensions for retired police, firefighters and municipal employees. The funds have approximately $6,200,000 in assets, invested by professional managers with oversight by the pension committee. The required contribution for 2006 is $667,000, with pension system state aid totaling $335,000. $332,000 will be paid from the General Fund and $80,000 from employees. The Pension Plan Advisory Committee is working on diversifying the portfolio to improve investment performance.
In conclusion , the 2007 budget maintains municipal services at or above present levels, providing necessary resources to the Township organization to meet expected service levels to which the residents have become accustomed. We expect increased development activity in the short term. No increase in property tax is proposed. Our Township maintains one of the lowest municipal property tax rates in Bucks County. The Township is in good financial condition in the short term. As the community matures, we should do some long term projections.
Mr. Pellegrino thanked Finance Director Elaine Gibbs, Administrative Assistant Lisa Russo and the department heads for the hard work that has gone into the preparation of the budget.
Board Member Comments
Mr. Schenkman, as a member of the Finance Committee, also thanked those who participated in the budget preparation. He asked Mr. Pellegrino about the numbers used during the presentation, as they differ slightly from numbers in the actual budget document.
Mr. Pellegrino said that in his presentation he has rounded the numbers. In the narrative he has used estimated numbers. Estimates are prepared by examining past budgets, going back several years. Estimates of anticipated fees are based on interviews with developers about projects that are currently being discussed and planned. All estimates are very conservative. He stressed that there are many costs over which he has no control. The only way to make significant cuts in the budget would be through reduction of staff, which he does not recommend.
Mr. Weaver noted that this is the fifth year in which revenues have exceeded expenses, allowing the Township to add to the reserve fund.
Mr. Calabro asked about the self-sufficiency of the Park and Recreation Department.
Mr. Pellegrino said that there are many ways to calculate this rate. It would be possible to show a much higher rate of self-sufficiency if revenue were compared only to program costs. The Park and Recreation Department has over 1100 programs to serve a variety of interests, with close to 5000 participants.
Mrs. Goren noted that if programming were eliminated, parks would still have to be maintained. There would not be a change in the tax rate if programming were eliminated, and there would be no revenue.
Mr. Pellegrino reviewed the calendar of upcoming meetings, suggesting that the budget be included on every agenda. He said that after Board members have had an opportunity to carefully review the budget, numbers can be changed rather quickly. A preliminary budget must be adopted on November 20, but changes to the preliminary budget could still be made. Twenty days are required for advertisement, and a final budget should be adopted at the December 13 meeting. A final budget must be adopted by the end of the year. The budget would be put on the Township Web site for residents to review and make comment.
Resident Nancy Crescenzo made suggestions to reduce expenses such as creating a “Friends of the Clark Nature Center” to recruit volunteers to work at the center; eliminating mailing of Park and Recreation brochures to all residents; creating a “Friends of Sycamore Street” to recruit volunteers to maintain the amenities; re-activating the trail committee to apply for grants; asking the Environmental Advisory Council to advise on stormwater management rather than employing an engineer; eliminating mowing of open space areas. She said that the municipal complex and Woll site improvements should be separated and residents should vote on each by referendum. She said that a community center is needed for youth and senior citizens.
Mr. Calabro asked Park and Recreation Director Bill Wert to discuss, the trail committee, programming for youth and seniors and the costs associated with mailing the brochure.
Mr. Wert said that the brochure is mailed to every household in the zip code at a cost of $0.14 each. If brochures were mailed individually, each would be sent by regular mail at a cost of about $0.80. When the number of brochures was reduced to two per year, participation dropped. His department has reduced costs by searching for a less expensive vendor, saving about $5000. He has begun using an e-mail newsletter for program updates, which is being sent to past participants and residents who have supplied e-mail addresses and expressed interest in receiving these updates. The brochure is also on the Township Web site. The most effective marketing is the brochure. The programs’ success depends on bringing information to the residents, not on residents actively looking for information.
Mr. Wert said that currently the trail committee is a sub-committee of the open space committee of the Park and Recreation Board. Most of the trail connections are being provided by developers, uniting existing trails with new developments. The most recent grant applications for trails have been declined, as trail money must be allocated throughout the state.
Park and Recreation programming has been divided into categories including “Sports for Youth” “Special Interest for youth” and “Special Interest for all ages”. The department has not been able to capture statistics on the percentage of adult participants who are senior citizens, as participants have been reluctant to provide their age. The youth programs include many non-sports activities, including a youth chess program.
Mrs. Crescenzo said that the non-sports activities provided are not an adequate answer to her request for a community center. At a community center, youth and seniors could congregate without an organized activity.
Mr. Schenkman asked Mr. Wert for an update on Roberts Ridge Park.
Mr. Wert said that the “Playground of Possibilities” was nearing completion. The work has been done by volunteer members of local trade unions in the evening and on weekends. The last task to be accomplished is the roof for the picnic pavilion. Once completed, the fence will be removed, hopefully within a week. A formal ribbon cutting ceremony will be planned later in the year. Updates on the construction are posted on the township Web site.
There would be a need for executive session to discuss land acquisition.
The meeting adjourned at 8:20 PM.