Newtown Township

Board of Supervisors

Minutes of December 30, 2009

 

The Newtown Township Board of Supervisors met on December 30, 2009 in the Township meeting room at 5:00 PM. In attendance and voting were Supervisors: Chairman Robert Ciervo, Vice Chairman Mike Gallagher, Secretary/Treasurer Matthew Benchener, Philip Calabro and Jerry Schenkman, members. Also present were: Joseph Czajkowski, Township Manager and Jeffrey Garton, Township Solicitor.

Call to Order: Chairman Ciervo called the regular meeting to order at 5:00 PM with a moment of silence. This was followed by the Pledge of Allegiance.

Reports of Officials

Manager, Resolution 2003-R-13: Mr. Czajkowski provided the Board with copies of Resolution 2003-R-13, which established a policy for the reserve fund balance. This policy requires that the Township maintain a minimum of 15% of the general fund appropriations in a reserve fund. It also states appropriations from the 15% reserve fund balance may be authorized for operating expenditures by a unanimous vote of the Board of Supervisors. At the last Board meeting the members had been presented with a budget which, according to this policy, would have required a unanimous vote of approval.

Dr. Ciervo reminded the Board that at the December 16, 2009 meeting the Board had considered possibly rescinding this Resolution. He suggested that the Board continue that discussion before proceeding to the consideration of the 2010 budget.

Mr. Gallagher said that he was uncomfortable with the requirement of a unanimous vote to pass a budget with less than a 15% reserve fund balance, yet the Resolution to establish this policy could be rescinded with a simple majority vote. He also objected to a former Board dictating the actions of future boards without consideration of changing times and circumstances. For these reasons he said that he favors rescinding Resolution 2003-R-13.

Mr. Benchener noted that at the time of the enacting of 2003-R-13 the Township had a reserve fund balance of 35%. The economy has changed and he agreed with Mr. Gallagher that the current Board should not be locked into a position adopted by a different Board in a different economic climate. He understood that the goal had been to always keep some reserve funds; he would favor rescission with a possible adoption of a more flexible policy.

Mr. Schenkman said that he sees the existing policy as a mixed blessing in that it has forced the Board to carefully review the current budget. He said that he is not willing to totally disregard the policy. He would support amending the policy if, after the budget is presented, it fails to get a unanimous vote.

Mr. Calabro said that the resolution had prevented prior boards from dipping into the reserve. The Resolution does have a provision to re-evaluate the policy every two years. He said that he might support lowering the reserve fund balance for one year rather than rescinding the resolution. He would not support a reduction in the reserve fund to 5%, as recommended by the State.

Mr. Schenkman said that he does not support a rescission without a replacement resolution. The resolution has forced the Board into a discussion of the value of a large reserve fund and has caused the Board to instruct the Manager to ask for personnel reductions either through staff reduction or a change in the labor contracts. Looking forward, the Township will possibly see dwindling of revenue from development. A discussion on an increase in property tax might be necessary to protect the reserve fund.

Dr. Ciervo said that he supports rescinding the Resolution and replacing it with a less restrictive policy which would retain a lower percentage in the reserve and would not require a unanimous vote of the Board. He did not support the provision in the current resolution which requires excess of 20% of the reserve to go to a capital improvement fund. He noted that the 2009 budget passed without raising taxes, using some of the reserve funds; he does not support a raise in taxes when there is money in the reserve to balance the budget.

Mr. Benchener said he has three considerations: to not raise taxes, to not reduce key services and to keep the reserve as high as is possible to assure fiscal security for the long term. The budget being proposed will leave a 14% reserve, which accomplishes this.

In response to questions from the Board, Mr. Garton said that to rescind the policy resolution would require a motion which must pass by a simple majority.

Mr. Gallagher moved to rescind Resolution 2003-R-23. Mr. Benchener seconded.

Discussion of motion: Mr. Gallagher said that he made his motion because the discussion is drifting toward the budget. He agreed that there must be discipline around the use of the reserve and he would support the adoption of a replacement policy after hearing input from previous supervisors and the Financial Planning Committee. He would like time to work out details of the replacement so that there would be Board consensus.

Dr. Ciervo said that he would like to discuss a replacement policy this evening.

Mr. Schenkman said he is unwilling to support a rescission without a clear replacement policy.

The motion passed 3-2, with Messrs. Calabro and Schenkman voting nay.

Referring to Resolution 2003-R-13, Dr. Ciervo suggested adopting a new policy which would read the same as 2003-R-13 in the first two paragraphs, eliminating the third paragraph which references the Financial Planning Committee. The policy would state:

  • The Township shall maintain a minimum of 10% of the General Fund appropriations as a reserve fund from year to year, which amount is twice the amount recommended by Pennsylvania DCED.
  • The policy should be re-evaluated every year by the Board of Supervisors.

Points 2, 3, and 4 of 2003-R-13 would be eliminated from the new policy. The previous policy’s requirements to place the excess of 20% in a capital improvement fund no longer seems necessary, as at the time the policy was drafted the Township was saving toward the municipal expansion and the Woll and other park development. The new policy also eliminates the need for a unanimous vote of the Board.

Dr. Ciervo moved to adopt Resolution 2009-R-33, establishing a reserve fund policy as outlined in his previous statement, which would require a minimum of 10% to be maintained in the reserve fund, twice the amount recommended by the DCED. Mr. Gallagher seconded.

Discussion of motion: Mr. Gallagher said that he could not find reference to the 5% reserve in the DCED handbook. He suggested the motion be amended to eliminate that reference.

Dr. Ciervo amended his motion to adopt Resolution 2009-R-33, establishing a reserve fund policy requiring a minimum of 10% to be maintained as a reserve fund, and to be re-evaluated every year. Mr. Gallagher seconded.

Mr. Schenkman said that he agreed with the first two paragraphs and with the maintenance of a 10% reserve but would want the new policy to retain some of the restrictive provisions included in points 2, 3 and 4. The policy should have some checks and balances built into it.

Mr. Calabro said that he supports point #4, which requires a unanimous vote to pass a budget which would dip below the required minimum. This gives the minority Board members and the minority residents they represent some say in the budget process. He agreed to the provision of an annual re-evaluation.

Dr. Ciervo said that he appreciated Mr. Garton’s advice to address the policy, making changes if necessary, rather than ignoring the 2003 Resolution.

Mr. Benchener said that he supports the maintenance of 10% in the reserve fund and the other suggested changes. He also favors the annual review of the policy.

The motion passed 3-2, with Messrs. Calabro and Schenkman voting nay.

Budget Discussion, Adoption of 2010 Budget and Fixing of Tax Rate: Mr. Czajkowski presented the Board with revisions to the 2010 budget, which include a change in field usage fee revenue to $8,000 and a reduction in personnel costs of $96,000. The personnel reductions would come either from concessions from the three unions, police, fire fighters and non-uniform personnel in the form of a salary freeze, or if no concessions are agreed to, a personnel reduction. This budget would leave a reserve fund balance of $1,514,703, or 14.2%. The changes reflect the increase in debt service and the transfer of the park and recreation to the general fund.

Dr. Ciervo said that it is his understanding that services would remain at current levels with the pay freeze or with staff reductions.

Mr. Calabro said that the proposed budget is only a temporary “band-aid” postponing the inevitable. The Township could face difficult times again next year. If the Board were to consider a tax increase of one mill, this would equal about $50 for the average homeowner. He pointed out that the Township real estate tax is about 2% of the homeowners’ total tax bill, as the County is about 18% and the School District is 80%. For many years, as budgets were presented, Township managers have indicated that a tax increase would be necessary to cover costs of debt service. Mr. Calabro urged the Board to consider small, incremental tax increases. Without that change, he would not support the budget presented.

Mr. Schenkman said that he has concerns about the Township’s continued support of the Newtown Corporation, which has recently terminated its executive director, opening itself to potential liability. The organization has no leadership at this time. Mr. Schenkman also questioned whether the Township has been getting value for its investment, as the bulk of Newtown Corporation’s and prior to that, JDNC’s efforts have gone toward the Borough. The Township has asked Newtown Corporation to shift its focus to a marketing of Newtown’s entire business community, which has not been done to this point. The organization needs to develop a strategic plan and find a new executive director. He would suggest withholding the Township’s $16,000 contribution and possibly investigating whether the Township could recoup some or all of its past contributions, which total $125,000. He urged the Board to consider withholding the contribution, at least until the organization has developed a strategic plan. He said that he favored restoring some of the funding of the Newtown Library Company and Wrightstown Village Library rather than continuing the Newtown Corporation contribution. He also suggested that perhaps a for-profit marketing firm might better address the mission of promoting Newtown’s economic development than the non-profit Newtown Corporation.

Dr. Ciervo said that JDNC had been funded by State grants, with some matching from the Township and Borough. He did not see a possibility of getting any past contributions back. He shared Mr. Schenkman’s concerns that the Township has not been the focus of the organization and for this reason has wanted to reduce this year’s contribution and change the method of funding to quarterly contributions rather than a lump sum. It is his understanding that Newtown Corporation is seeking a new executive director with economic development experience to promote Newtown’s entire business community. The Township does appoint the Newtown Corporation’s Board of Directors, so does have some direct input into the organization. He was unwilling to completely eliminate the funding.

After some further discussion, the Board agreed that the line item for Board Contributions would remain at $26,000. Disbursement to Newtown Corporation of any portion of the $16,000 would require Board permission. At a January meeting the Board would further discuss Mr. Schenkman’s suggestion to ask the solicitor to pursue re-imbursement of any portion of the money already contributed to Newtown Corporation or JDNC.

Mr. Gallagher said that he had reviewed the first budget presented to the Board in November, which had a one mill tax increase. That budget has been reduced so that the tax rate remains at 2.5 mills. In an attempt to meet the previously required 15% reserve fund, he had calculated that a ½ mill tax increase, equaling about $25 per household, would have met that amount. He said that after considerable thought, he feels that it would not be a good idea to increase the tax rate in order to maintain a 15% reserve. He supports the currently presented budget, with taxes remaining at 2.5 mills, with a reserve fund of 14.2%, because an increase in taxes would only bolster savings.

Dr. Ciervo agreed that he did not support a tax increase which would only help to keep a higher reserve fund balance. He thanked all of the department heads who worked to reduce their budgets.

Mr. Gallagher moved to adopt Resolution 2009-R-34, appropriating specific sums estimated to be required for specific purposes of the municipal government, hereinafter set forth, during the year 2010. Dr. Ciervo seconded and the motion passed 3-2, with Messrs. Calabro and Schenkman voting nay.

Mr. Gallagher moved to adopt Resolution 2009-R-35, fixing the tax rate for 2010 at 2.500 mills. Dr. Ciervo seconded and the motion passed 5-0.

Old Business

Mr. Calabro said that at the December 16, 2009 Board meeting, the Board was stunned by the resignation of Township volunteer Glen Beasley from the Financial Planning Committee, which he has chaired for two years. Mr. Beasley has been a longtime volunteer in the community, and his resignation should have been acknowledged. He thanked Mr. Beasley for his many years of service to Newtown Township.

Mr. Gallagher said that he was also dumbfounded at the last meeting and wanted to add his thanks to Mr. Beasley for his service and guidance to the Township.

Dr. Ciervo added his thanks, noting that Mr. Beasley has been a volunteer throughout our community and our school district.

Mr. Schenkman said that Mr. Beasley is a man of great integrity and a personal friend. His advice and counsel will be missed. He hoped that over time, the Township could again be in Mr. Beasley’s good graces and he would return to Township service.

Dr. Ciervo announced that the Board had met in executive session to discuss matters of personnel.

The meeting adjourned at 7:15 PM.

Respectfully Submitted:
Mary Donaldson, Recording Secretary

 

Attest:

Joseph S. Czajkowski, Township Manager


Robert Ciervo, Chairman

Michael Gallagher, Vice-Chairman

Matthew Benchener, Secretary/Treasurer

Philip Calabro, Member

Jerry Schenkman, Member