Board of Supervisors
Minutes of November 4, 2009
The Newtown Township Board of Supervisors met on Wednesday, November 4, 2009 in the Township meeting room at 6:00 PM. In attendance were Supervisors: Chairman Robert Ciervo, Vice-Chairman Michael Gallagher, Secretary/Treasurer, Matthew Benchener and members Philip Calabro and Jerry Schenkman. Also in attendance were Township Manager Joseph Czajkowski, Assistant Manager, John Boyle, Finance Director Elaine Gibbs and Department Heads: Kathy Pawlenko, Parks and Recreation; Don Harris, Emergency Services; Chief Henry Pasqualini, Police Department and Ronald Weaver, Director of Inspections and Infrastructure Management.
Call to Order
Chairman Robert Ciervo called the meeting to order at 6:05 PM explaining the evening’s agenda; Mr. Czajkowski would present the 2010 budget followed by questions from the Board and public comment.
Mr. Czajkowski thanked the Supervisors and thanked the department heads for their input in preparing the budget. He explained that the proposed 2010 budget has been prepared in line item format in accordance with the Pennsylvania Chart of Accounts for local governments published by the State Department of Community and Economic Development. It is a bottom-up budget with detailed reviews of departmental budgets by the Township Manager and Finance Director, and includes the involvement of the volunteers on the Financial Planning Committee. The format continues the practice of separating Operating funds from Capital Funds. The Fund Balance (or reserve) is shown. The result of operations, comparing revenues with proposed expenditures is shown.
The 18 funds are divided as follows:
General Fund – Largest Operating Fund
General Fund Revenues
2009 projected revenue $9,290,816 or $520,584 under budget of $9,811,400
2010 revenues estimated at $9,284,187 or $527,213 (5.4%) decrease from the 2009 budget and $6,629 under projected 2009 revenue collections
Mr. Benchener asked about the method used for calculating the transfer tax projection.
Mr.Czajkowski explained that the numbers are based on collection of transfer taxes through September 30, 2009 and from County data. The total is now expected to be about $688,000. Should the housing market improve the transfer tax income would also improve. It is directly related to real estate sales.
We will continue practice of purchasing of police vehicles, computer systems from operating budget.
While we expect non-residential development to continue, we expect it to be slower over the next couple of years due to the economic downturn.
Residential development is also expected to slow down over the next couple of years.
The Township is fortunate to be involved with DVIT, DVWCT and DVHIT as they have a track record of smoothing out the fluctuations seen in the commercial insurance and health insurance markets. (we anticipate a 6.7% increase in Health Insurance costs this year as opposed to the 15 – 20% increases predicted in the open market, and an 11.64% decrease in Liability insurance costs in 2010). There is no increase in workers compensation premium in 2010.
Continue multi-year budget forecasting and long term financial planning project with the Financial Planning Committee to improve long term financial projections; examine demographic changes, development potential, employment, etc.
We must find ways to reduce reliance on the General Fund for capital projects
Street Light Fund
Mr. Gallagher asked about the difference in the amount collected and paid directly to Newtown Fire Association.
Mr. Czajkowski explained that the additional money is interest earned on the collected funds until transfer occurs. At Dr. Ciervo’s suggestion he agreed to ask the solicitor whether it is necessary to give that interest to the Fire Association.
Fire Protection Fund – dedicated tax
Rescue Squad Fund – dedicated tax eliminated in 2008 – This item now fully funded out of the General Fund. Resolution passed by the Board in 2009 states that 25% of the LST (Local Services Tax) should be dedicated to the Rescue Squad. It is estimated that in 2010 $100,000 shall be transferred to the rescue squad.
Parks & Recreation Fund (other significant operating fund) – dedicated tax
Debt Service Fund – dedicated tax
Mr. Czajkowski explained that the first payment will be in February, before the receipt of tax revenue. The general fund can be reimbursed for that payment.
Capital Projects Fund
Recreation Capital Fund
* Funds were not expended, and thus will be used on composting toilets at Roberts Ridge
** Expect $160,000 from County Open Space funds, which will probably be received as revenue in 2010.
2010 Appropriations ($680,000) include:
Transportation Service Area Funds
Traffic System Capital Fund
Woll Site Improvement Fund
Municipal Complex Improvement Fund
Highway Aid Fund
Pension Trust Funds
Mrs. Gibbs explained that the actuary calculates the minimum municipal obligation
Mr. Czajkowski said that the budget is a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them, and a plan for the coordination of resources and expenditures. The proposed budget represents an accurate estimate in dollar terms of the Township’s commitment to deliver quality municipal services. He thanked Mrs. Gibbs, the department heads and the staff for their efforts in preparing the budget.
Mr. Schenkman asked Mr. Czajkowski to review the timeline for adoption of the budget.
Mr. Czajkowski said that the Board will have opportunity to ask specific questions. He suggested using e-mail to circulate questions among the Board, Mrs. Gibbs, the various department heads and himself. The budget will be hung on November 18, 2009. It can be altered from now until the December 16, 2009 meeting, at which time it is scheduled to be adopted. Until December 16, budget discussion will be on every agenda. State law requires that a budget is adopted by December 31, 2009. Once adopted, the budget can be reopened after the first of the year if the Board feels that further changes are necessary.
Mrs. Gibbs said that she has prepared copies of the budget for the Financial Planning Committee to review in preparation for their next meeting, scheduled for November 17, 2009.
The Board agreed that the Financial Planning Committee Chairman could give a report to the Board, and if necessary, a joint meeting could be held to further review the budget.
Mr. Benchener said that the Financial Planning Committee would need more in depth information than is provided in the budget and attached schedules. He said that going forward he would like to recommend a strict prioritization of expenditures.
Mr. Calabro said that he had no specific questions this evening. He would carefully review what has been presented and e-mail his detailed questions to Mr. Czajkowski and Mrs. Gibbs, copying the Board members on any exchanges. He thanked the administration and staff for the work they have done and for the easily understandable format of the presentation.
Mr. Schenkman and Mr. Gallagher also indicated they would send specific questions after having more carefully reviewed the material presented this evening.
Dr. Ciervo asked why the School Resource Officer income remained flat for next year.
Mrs. Gibbs said that this is an estimate. The School District pays the hourly rate for the officer. The hours vary, as the officer is needed for different times each day throughout the school year.
In response to Dr. Ciervo’s question about expected recreational impact fees for 2009, Mrs. Gibbs said that Lockheed Martin and Penns Trail Storage’s payments have only recently been received.
Dr. Ciervo asked about the water meter pit at Helen Randle Park and about some field repairs discussed at the Park and Recreation Board meeting.
Mrs. Pawlenko explained that the water meter pit would allow for irrigation of the fields. This water would bypass the sewer meter. The field repairs have been postponed until the spring.
Dr. Ciervo asked whether Highway Aid Funds could be used for plowing.
Mr. Czajkowski said that while this might be permitted, plowing is currently paid from the general fund. The Financial Planning Committee has urged that the Highway Aid funds be saved as they will be needed for future roadway maintenance program work. While the money could be used for plowing and paid back from the general fund when needed for roadway maintenance, there are a number of roads which are expected to need repaving in the near future. A list of the roads which will have been dedicated twenty years ago and have not been repaved could be provided to the Board. Mr. Czajkowski stressed that a large number of roads inside of developments are aging and have not been repaved.
Dr. Ciervo asked about the contributions to the Rescue Squad, since the dedicated tax has been eliminated.
Mrs. Gibbs explained that the resolution passed dedicates at least 25% of the local services tax to the Rescue Squad. This amount, based on last year’s LST revenue, includes payment of their workers compensation. The fund remains for bookkeeping purposes.
Mr. Benchener asked whether there are State requirements to have different funds and different dedicated millage. He said that perhaps with one general fund and general tax, it would be possible to move funds to where they are needed. He asked specifically about the Park and Recreation, Fire and Debt Service and the Street Light Funds.
Dr. Ciervo said that the Fire tax was voted in a referendum. He did not think it could be eliminated.
Mr. Czajkowski said that it might be possible to have one general tax, eliminating the Park and Recreation and Debt Service taxes, but the funds would be required for bookkeeping purposes. The Fire tax cannot be eliminated.
Mrs. Gibbs explained that the Street Light Fund contains money collected by assessment. The assessment was eliminated in 2002, but $200,000 remained in the fund. The income generated by the $200,000 is used to repair and maintain streetlights.
Mr. Benchener asked about the Highway Aid Fund.
Mr. Czajkowski explained that the funds come from the State based on a calculation using the population (based on the 2000 census) and the miles of roads. As new roads are dedicated they are included in the calculation. The funds can only be used for specific expenditures such as roadway maintenance and equipment, traffic signals, etc. He would provide Mr. Benchener with a more detailed list of permitted uses for the funds.
Mr. Czajkowski further explained that money collected from developers for recreational and traffic impact fees may only be used for specific recreation and traffic projects. The State restricts the use of these funds.
Mr. Schenkman asked whether the Township audits any of the entities which are beneficiaries of Township contributions.
Mrs. Gibbs said that the Township audits the Fire Company and receives copies of the audits of the libraries, rescue squad and Newtown Corporation. She would provide the Board with copies it they wish.
Mr. Benchener asked whether it would be possible to forego a tax increase and instead use the funds on hand to meet a trimmed budget which would only include absolutely necessary spending. He would like the department heads to go through a rigorous prioritization of their budgets.
Mr. Gallagher explained that the recently purchased Municast software can make such projections.
Mr. Czajkowski explained that very little of the budget is discretionary spending. It is up to the Board of Supervisors to determine what, from the discretionary spending, is absolutely necessary. To really make a cut in the budget would require cuts in services, and that is a decision to be made by the Board as representatives of the community.
Dr. Ciervo noted that to meet the budget without a tax increase, the Township will have to either dip further into the reserve or make cuts, but he agreed there is not much room for cuts.
Mr. Benchener said that looking at the budget, he sees items that to him do not seem essential, noting, as an example, the amount budgeted for printing and advertising for Park and Recreation. He would ask that department heads explain further why these budgeted items are necessary or look for ways to reduce or eliminate them.
Dr. Ciervo said that the next step in the budget process is for the Board to review what has been presented and ask questions about items they would like additional information on. This is what has been done effectively in the past. He noted for example, that when Newtown’s First Night became a “for profit” undertaking the Township removed its contribution from the budget.
Mr. Calabro said that this has been an effective method of review in the past. Each Board member has had some questions or concerns that have been discussed, and then, if the Board is in agreement, adjustments have been made.
Mr. Gallagher agreed with Mr. Calabro, noting that the budgeting is a year long process. The Board must ask its questions and evaluate the answers, learning the meaning of the various line items before making any reductions.
Mr. Czajkowski said that if salaries and benefits are removed, this budget is lower than in previous years. Discretionary spending is lower than in the past and Newtown Township’s taxes are the lowest of the developed communities in the County.
Dr. Ciervo noted a 6.7% increase in salaries. He asked whether a freeze in salaries has been considered.
Mrs. Gibbs said she could provide more detailed information to the Board on salaries. Some increases are because of the addition of new police officers; salary increases are smaller than is customary.
Mr. Benchener said that he would like a report which would illustrate any variances in the budget for 2008, 2009 and comparison of 2009 to 2010.
Mr. Gallagher said he has that information and could easily generate such reports.
Mr. Benchener said that the process should be changed to a spending stream structure with each department being given a total amount to work with and prioritize spending accordingly.
Dr. Ciervo explained that the budget form is dictated by the State. He again urged Mr. Benchener to ask his specific questions on line items of Mrs. Gibbs or of the department heads directly. He agreed that the budget does not allow for flexibility to move money from one fund to another.
Mr. Schenkman said that while prioritization is a good exercise and should be part of the budget discussion, the municipal budget does not have the same flexibility as private enterprise would have. The State requires that our budget take the form it does.
Dr. Ciervo thanked the Board, the administration, the department heads and staff for the efforts made in producing the budget.
Resident Jay Sensibaugh said that he had attended a Park and Recreation meeting at which Chairman Andrew Levine discussed the potential loss of revenue if the advertising budget for recreation programs were cut. It is important to consider the impact of eliminating a revenue producing expense.
The meeting adjourned at 7:40 PM.