Special Meeting of the Board of Supervisors and
Minutes of October 29, 2008
The Newtown Township Board of Supervisors held a special meeting with the Financial Planning Committee on October 29, 2008 at 5:30 PM in the Newtown Township Building. In attendance and voting were Supervisors: Thomas Jirele, Chairman, Michael Gallagher, Secretary/Treasurer, and members Philip Calabro and Jerry Schenkman. Representing the Financial Planning Committee were: Glenn Beasley, Chairman, and members, Ronald Kaizar, Jim McCrane and John Stranford. Also in attendance were Township Manager Joseph Czajkowski, Assistant Manager John Boyle and Finance Director Elaine Gibbs.
Call to Order:Mr. Jirele called the meeting to order at 5:30 PM.
Manager’s Report: Mr. Czajkowski asked the Board to authorize the changing of signature cards for a checking account at First National Bank and Trust of Newtown for the Youth Aid Panel to Police Sergeant Steven Myers and Lieutenant Glen Forsyth, removing retired police officers’ names from the account.
Mr. Gallagher moved to authorize changing of signature cards for the Youth Aid Panel account to Sergeant Meyers and Lieutenant Forsyth. Mr. Calabro seconded and the motion passed 4-0.
Mr. Czajkowski said that he would be submitting a grant proposal to PECO’s Green Region Program for purchase of the Rockbridge property. The application requires a resolution of the Supervisors showing approval of the project.
Mr. Gallagher moved to adopt Resolution 2008-R-16, approving the Rockbridge purchase project. Mr. Schenkman seconded and the motion passed 4-0.
Budget Presentation by Financial Planning Committee: Jim McCrane reviewed a PowerPoint presentation outlining the 2009, and future, budgets, based on the current economic downturn. The presentation noted that in our current economy, the Township’s revenues will be affected by:
Although the original 2008 budget was balanced, with income equaling operating expenses, the Committee is now predicting a deficit of $500,000. The reserves are likely to fall to $2,500,000 by the end of the year. 2008’s income should probably be close to projected, as Earned Income Tax (EIT) payments in April of 2008 reflect bonuses earned in 2006 and paid in 2007; homes started in 2006 and 2007 were settled in 2008.
Looking toward 2009, the Committee is projecting:
The Committee estimates that 2009 will see a total reduction in revenues of between $700,000 and $900,000. Because about 85% Newtown Township’s operating budget is salary and benefits, and the Township can expect certain higher costs for benefits, the Committee is estimating a 4.5% or $500,000 increase in the operating budget. The Township might also see a funding gap in the defined benefits of Township employees. Overall, the Committee is projecting a budget gap of between $1,100,000 and $1,500,000, caused by revenue declines and expense increases.
Some possible solutions that the Board should discuss would be:
Mr. Beasley said that the Committee did not discuss which solutions the Board should pursue. He noted that there is very little room for discretionary spending. One consideration might be to transfer the RCN settlement money from the Woll Tract fund.
Mr. Czajkowski said that the draft 2009 budget shows a deficit of $600,000. The Township expects a 6% increase in health costs, with expenditures over all at 5% above 2008. This draft budget anticipates a $1,000,000 drawdown from the reserves.
Mrs. Gibbs said that she did not anticipate a tax increase for debt service on the bond in 2009, but an increase will be necessary in 2010.
The Board briefly discussed the Woll tract bid. Mr. Czajkowski said that the Township is not obligated to accept any bid if the Board elected to postpone the Woll tract.
Mrs. Gibbs said that money dedicated to recreation cannot be transferred to other funds.
Mr. Schenkman urged the Board to consider the long term effect of postponement of the Woll project, as costs could increase.
Mr. Jirele agreed that if bids are lower as contractors are eager for work, it might be better to proceed, especially if the low bidder were a local contractor.
Mr. Jirele said that the Board should aim to keep the reserve fund balance at $2,000,000. The capital expenses should be carefully re-examined for savings. He also asked that the Board consider a freeze on any hiring of new employees.
Mr. Kaizar said that the Finance committee agreed that it is important to become proactive in road maintenance. Public Works Director Gary Crossland has discussed a process called micro-surfacing, which, along with crack sealing, could extend the life of the roads before complete resurfacing is necessary. This could produce significant cost savings over time. Liquid Fuels funds would pay for much of the road maintenance.
In response to Mr. Calabro’s question, Mr. McCrane said that the proposed road budget does include curb and storm drain work.
In response to Board questions, Mrs. Gibbs said that she is not sure whether there are any other taxes, such as a tax on goods and services, that a second class township can enact. She would investigate business privilege tax and hotel occupancy tax.
The Board discussed the funding for the Woll tract. Anticipated recreational impact fees have not been collected, as certain projects have not moved forward, leaving a deficit in the Woll tract budget. The fund has $2,127,000, which is a significant shortfall. The Board will have to consider lowering expenditures to the amount already in the fund.
Mr. Jirele suggested postponing projects such as replacing traffic signals. He asked Mrs. Gibbs to provide the Board with information on permitted uses of TSA funds.
Looking ahead, Mrs. Gibbs said that with the completion of the new municipal buildings there would be increased operating expenses. The Board should begin to consider an increase in taxes for 2010. To keep the reserve at its current level and to begin paying debt service would require an increase of about 3 mills, a 120% increase in taxes.
Mr. Jirele said that looking ahead the Township should investigate possible shared services with neighboring municipalities, which could result in some savings.
Mr. Gallagher suggested reviewing existing contacted services to see if renegotiation could produce savings. He also suggested taking a closer look at the Township’s annual contributions, such as to JDNC, First Fourth and to libraries.
Mrs. Gibbs said that the JDNC had been a pass- through, funded by a state grant. The Township made a donation to First Fourth, but paid directly for First Night fireworks.
Mr. Schenkman said that the Board should plan long term, as the current economic climate could continue into 2010. He suggested contacting the Township’s labor attorney to re-examine union contract obligations. He also suggested forming some task forces to work on inter-governmental cooperation and economic development. It was agreed that he would begin investigating an economic development task force and Mr. Jirele would work on inter-governmental cooperation.
Mr. McCrane said that if the Board is considering offering any incentives to businesses considering a move to Newtown Township, that there are certain negative results when bringing large retail businesses to a municipality, for example, there would be an impact on existing smaller retail businesses.
Mr. Czajkowski said that he would continue to revise the proposed budget, attempting to keep the reserve balance at $2,000,000. The capital budget would be reviewed by department heads and a freeze would be placed on new hiring.
Mrs. Gibbs said that she would review the Township’s reserve fund policy.
Mr. Schenkman said that the pension committee would need to meet some time in the next week.
Mr. Schenkman said that at the last Planning Commission meeting, Harold Beck and Sons presented a plan for an addition to its manufacturing facility on Terry Drive in Newtown Business Commons. The Planning Commission will be seeking input from the Board on sidewalks for this and future projects in the Common. The Commission is asking whether applicants should be required to install sidewalks that are not connected to neighbors’ sidewalks or to escrow money for a future sidewalk project throughout the Commons.
The Board agreed that there has been increased pedestrian traffic in the Business Commons. Members would like to know if Teletronics Telecommunications, Beck’s next door neighbor, will be required to install sidewalks, which had been part of its approval.
The meeting adjourned at 7:15 PM.