The 2013 Lower Merion Township Proposed Budget, which is posted on the Township’s website, recommends no increase in the Township’s Real Estate Tax (RET) millage rate – the second year in a row of maintaining our RET rate unchanged.
Significant one-time, unanticipated and additional business tax revenue was received in late 2011 – and again in mid-2012 – from a small number of disputed business tax obligations. This unique, unprecedented situation provided the Lower Merion Board of Commissioners with a significant opportunity to fully wipe out the otherwise nearly -$1.5 million gap in the 2012 General Fund (GF) budget.
In early 2012, the Board agreed to (a) contribute an unbudgeted GF transfer of $1 million to its Equipment Fund, to partially restore dwindling reserves, and (b) determine by December 2012 an amount of the GF fund balance to contribute to the Capital Projects Fund (providing a source of funding for budgeted capital projects and delay the need to issue the next new money bond issue). A recommendation is included in the 2013 Proposed Budget that $5 million be transferred from the GF in November/December 2012 to the Capital Projects Fund.
Township Manager Doug Cleland’s budget message details reasons why no RET Millage rate increase can be recommended for 2013:
Cost Containment: 2012 has been another fiscally strong performance year for the Township. Instead of the nearly -$1.4 million deficit, a projected operating GF surplus of +$3.3 million is anticipated. This is being accomplished through $1.3 million in additional budgetary savings (above the nearly -$1.5 million budgeted as a negative appropriation), and $3.4 million in additional revenue (nearly all attributable to unbudgeted, one-time business tax receipts). Likewise, the Township’s Proposed 2013 Budget is lean and contains many additional expenditure savings and reductions. Continued cost containment efforts throughout the budget have been realized and are continuing, and service delivery levels have remained moderately constrained and stable.
Staffing Levels: Many staffing vacancies have remained unfilled during recent years, and many other vacant positions have been deleted from the budget.
Stabilized General Fund Revenue: General Fund revenue has begun to grow moderately in some key areas such as the real estate transfer tax and current business tax. “This is especially good news as it continues the trend from last year,” said Dean Dortone, Chief Financial Officer.
Drawdown of Fund Balance: The Proposed 2013 Budget calls for the 2013 ending GF fund balance to fall to approximately 22% of 2013 expenditures, above the Township’s 15% to 18% policy level. Policy discussions by the Board are recommended to discuss the ramifications of an even quicker depletion of the GF fund balance.
“As with last year’s budget, major GF spending categories remain the cost of our employees and debt service for our capital improvement program,” noted Cleland. “In fact, over 40% of the proposed 2013 GF budget is for public safety—which is clearly one of the most important priorities for the Township.”
A rate increase of approximately +9% was adopted by the Board in October for the Township’s 2013 residential Solid Waste Fee (SWF) subscriptions (the first rate increase since 2010). The rear yard collection fee remained unchanged. The primary reason for the increase has been the recent volatile resale market for recycled materials – creating unfavorable revenue performance on the resale of mixed paper and increasing costs for the disposal of commingled recyclables. In addition, the Commonwealth of Pennsylvania decreased the Township’s allocation of recycling performance grant revenue by 40% (beginning in 2010). The combination of decreased revenues, higher recycling disposal costs, and flat to minimally declining customer subscriptions created the need for new net revenue to balance operating revenues and expenditures for solid waste in 2013.
“We have not only carefully evaluated and implemented additional cost reduction and containment opportunities in our operating budget, but have also made continual major changes and delays in our spending strategies in our six-year Capital Improvement Program (CIP),” added Dortone. “Many projects have been revised, reprioritized or delayed, while still ensuring the Township’s future infrastructure needs are provided for today and in the future.” No new money borrowings were budgeted or undertaken in 2011 or 2012; due to unprecedented, and continued, low borrowing interest rates, new money was borrowed in 2010 to fund multiple years worth of estimated capital needs.
“The Township’s ability to borrow and refinance at the lowest possible rates exemplifies the value of our Triple-A bond credit rating,” remarked Vice-President Paul McElhaney, Finance Committee Chair. “Maintaining a rating shared by only a few other Townships in the United States speaks to the strong fiscal management of the Township, and translates to tangible savings for our citizens.”
The budget message includes an updated Five Year Forecast, a history of the Township’s Real Estate Tax and alternative revenue measures and other background information and data.
“As in years past, I applaud Manager Cleland’s 2013 Proposed Budget, which again attains the goal of a zero percent tax increase for the residents of Lower Merion Township,” stated Elizabeth Rogan, Board President. “His expert and steady experience over more than two decades has been key to his strategic management of the Township Budget. Combined with the remarkable performance of the reduced Township staff, the highest quality of services and programs to our citizens has been maintained.”
The first Public Hearing on the 2013 Proposed Budget will take place on Monday, November 19th at approximately 8:00 PM, and the second Public Hearing will be held on Wednesday, December 5th at approximately 7 PM in the Board Room of the Township Administration Building. The 2013 Proposed Budget and six-year Capital Improvement Program for 2013—2018 are scheduled for adoption on December 19th.
“I hope many citizens will participate in the upcoming public hearings, as their input is vitally important to our Board deliberations,” added President Rogan.
The 2013 Proposed Budget can be accessed directly from the home page of www.lowermerion.org. Citizens unable to participate in the public hearing process are invited to e-mail firstname.lastname@example.org to provide feedback.
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