Budget Category

Category: Budget

"Scary" #NewtownPA 2025 Proposed Budget "Hung"

Posted on 27 Oct 2024, 01:07 - Category: Budget

Supervisors Vote to "Hang" the Preliminary 2021 Budget

At the sparsely attended November 25, 2020,
BOS meeting, resident Ash Kamath presented
a petition signed by nearly 400 residents who
oppose the proposed tax increase.

At the November 25, 2020, Newtown Board of Supervisors (BOS) meeting, the supervisors voted 4-1 (Kyle Davis voting "nay") to advertise (aka, "hang") the preliminary 2021 Newtown Township budget.

This was NOT an approval of the proposed budget. The earliest that supervisors can vote to approve the budget is December 22, 2020.

I voted to advertise the budget so that residents can finally see the numbers and to give them more time to suggest changes.

See the budget embedded below or download it here.

This is the first opportunity for the public to view the numbers and other details of the proposed budget. The public will have 20 days for this review after the advertisement appears in a local newspaper on Monday, November 30, 2020, before the BOS can vote to finally approve the budget OR a modified version of the budget.

What Changes Can Be Made?

Once the budget is "hung" only limited INCREASES in revenue can be made without re-advertising for 10 days, according to the Second Class Township Code, Section 3202:

“Upon any revision of the proposed budget, if the estimated revenues or expenses in the final budget are increased more than ten percent in the aggregate or more than twenty-five percent in any major category over the proposed budget, it may not be legally adopted with those increases unless it is again advertised once at least ten days before adoption and an opportunity given to taxpayers to examine the amended proposed budget. A major category is a group of related revenue or expense items, the combined total of which is listed as a line item.”

At the meeting, Newtown Solicitor David Sander confirmed that DECREASES in expenditures and/or revenues can be made WITHOUT re-advertising. This essentially gives the BOS more time to consider and vote upon reducing revenue and/or expenses to lower the proposed 133% increase in municipal property tax.

The BOS will be able to vote on the final budget (including any agreed upon decreases in revenue & expenses) at the scheduled Dec 22 regular BOS session. Meanwhile, there is another regular BOS session scheduled for Dec 9 and a "work session" on Dec 14 where changes can be discussed. Changes can be made even at the Dec 22 BOS meeting and a special session can be called before Dec 31 to approve the final budget.

Register for the December 7, 2020, "Meet Mack Monday" Zoom "town hall" meeting where this budget will be discussed with interested residents.

Let's Put the Tax Increase in Perspective

The average Newtown Township homeowner such as myself pays about $4,800 in TOTAL property taxes each year. However, only about 3% of that – about $144 – is levied by Newtown Township. Bucks County gets $802 and the Council Rock School District (CRSD) gets a whopping $3,862!

Therefore, the 133% tax increase mentioned above applies to $144, which would increase to $336 for the average hownowner.

The Preliminary 2021 Budget

Posted on 27 Nov 2020, 01:52 - Category: Budget

Newtown Supervisors Vote to Revise Preliminary Budget

UPDATE (11 NOV 2020): At last night's Newtown Board of Supervisors (BOS) meeting, the members voted against "hanging" (advertising for public viewing & comment) the Manager's "preliminary budget" for 2021. That budget proposed a millage increase of 7.5 to be added to the General Fund (GF).

The vote against "hanging" this budget allowed the supervisors to discuss desired revisions to the budget.

I expressed my opinion on which cuts to keep when considering revising the budget. My suggestion was to reduce the millage increase to 5.0 without defunding the police or the road repaving program. See my meeting notes for details.

In the end, the BOS instructed our township Manager Micah Lewis to come back to the November 25, 2020, BOS meeting with a revised preliminary budget that reduced the millage increase by 2.0 mills. This would be done without making ANY cuts, but would mean that the end of year balance ("reserve fund") would be 10-11% of expenditures instead of the 15% as in the original budget.

What's Next?

If at the November 25 meeting the BOS decides to "hang" the revised preliminary budget, the public has 20 days to examine the budget and submit comments. After that, if there are no changes, the BOS has until the end of the year to approve the budget.

If, however, the BOS decides to make changes, those changes are limited. As per Artice XXXII of the PA Second Class Township Code, "Upon any revision of the proposed budget, if the estimated revenues or expenses in the final budget are increased more than ten percent in the aggregate or more than twenty-five percent in any major category over the proposed budget, it may not be legally adopted with those increases unless it is again advertised once at least ten days before adoption and an opportunity given to taxpayers to examine the amended proposed budget. A major category is a group of related revenue or expense items, the combined total of which is listed as a line item."

After November 25 there are two more BOS meetings scheduled: December 9 and December 22, 2020. An additional meeting can be planned if necessary. Consequently, it still would be possible to make some adjustments to the preliminaty budget on December 9, advertise it for 10 days and approve the final version at the December 22 BOS meeting. Stay tuned!

Posted on 11 Nov 2020, 01:16 - Category: Budget

Newtown Township Begins 2020 Budget Review Process

In the first step to approving a budget for 2020, Newtown Township Board of Supervisors (BOS) listened to and commented on the township manager’s presentation of his recommended budget. In attendance were Supervisors John Mack, Dennis Fisher, Phil Calabro, and Linda Bobrin. Supervisor Kyle Davis was absent.

Township Manager Michael Lewis read verbatim his 2020 budget letter. This review includes quotes from his presentation.

“As presented in the past, the Township continues to face significant financial shortfalls,” noted Mr. Lewis. The current budget projects our 2020 year end fund balance to be $1,342,706, which is about 10% of the general fund expenditures. The Government Finance Officers Association (GFOA Definition) Best Practice recommends, at a minimum, that general-purpose governments, regardless of size, maintain unrestricted fund balance in their general fund of no less than two months (16 percent) of regular general fund operating revenues or regular general fund operating expenditures.

Meanwhile, Jack Brod, chair of the Finance Committee, in a 2018 report to the BOS, suggested the “safe harbor” for a General Fund balance should be 30-40% of the operating budget (view video: “Newtown Township Finance Committee Report”).

Nevertheless, when questioned about this by Supervisor Fisher, Mr. Lewis confirmed that the township has maintained its AAA bond rating.

According to Mr. Lewis, this shortfall is “ primarily caused by the loss of past Earned Income Tax (EIT Definition) revenue, other towns enacting an Earned Income Taxes, and reduction in Real Estate Transfer Tax revenues.”

Reliance on Uncertain EIT

“Earned Income Tax continues to be the predominant source of revenue in the budget,” said Mr. Lewis. According to the 2018 Audit (here), “Newtown Township's reliance on the non-resident EIT cannot be understated. The Township suffered a tremendous loss [over $700,000] in non-resident EIT with the closing of Lockheed Martin and the enactment of an EIT in Middletown Township and Bensalem Township.”

“Drastic” Reduction in Transfer Tax Revenue

2018 represents the lowest collection of Real Estate Transfer Tax Definition in the last 5-years (see chart).

“Our real estate transfer taxes have decreased drastically this year [2019],” said Mr. Lewis. 2019 may be concerning as the year to date totals are running far below where the township expected them to be. “Factors, beyond our control can affect the decline in real estate transfer taxes; such as diminishing supply, rising costs, increasing interest rates, demand, and many other things,” said Mr. Lewis.

Newtown Enjoys Low Tax Millage Rate...

The millage rates and estimated annual revenues, for comparable near-by towns with an Earned Income Tax, for a residential dwelling with an assessed value of $400,000.

...But Suffers From "Unsustainable" Cutbacks

Mr. Lewis ended his presentation warning that continued cutbacks are not sustainable. “With the progressively diminishing general fund balance,” said Mr. Lewis, “we have significantly cut back expenditures in the proposed 2020 budget to offset projected shortfalls. The proposed Capital Plan is dramatically less than in previous years. We have also suspended the proposal to bring on additional staff to expand the operations of each department. Line item expenditures have been re-evaluated, and reductions have been applied where applicable. This practice is unsustainable, as costs for services and personnel continue to rise. It is recommended that future budgets contain sufficient revenue increases to support the diminishing general fund balance, as well as other funds, to offset the volatility of our current funding structure.”

With regard to future budgets, the Democrat Board members approved the hiring of outside consultants to develop a 5-year financial plan that will identify additional sources revenue, including possible sources of economic development within the township (read “Newtown Township To Develop a 5-Year Financial Plan”).

Q&A

After his presentation, Mr. Lewis and Police Chief John Hearn answered questions posed by the Supervisors (see video below).

The public will be able to view the recommended “preliminary" 2020 budget after it is authorized to be advertised and made available to the public by vote of the Board of Supervisors. The Preliminary 2020 Budget needs to be advertised for a minimum of 20 days before it can be adopted by the Board of Supervisors.

Mr. Lewis recommended that the following schedule be considered for adoption:

Adopt Preliminary 2020 Budget: November 13, 2019
Adopt Final 2020 Budget: December 11, 2019

Posted on 15 Oct 2019, 11:18 - Category: Budget

Budgetary Concerns Cited as the Largest Issue Facing Local Government Leaders, Says Survey

I was just one of the over 2,000 local government leaders who participated in a March, 2019, CivicPulse survey. Over 2,000 local policymakers completed our survey and provided their views and ideas about a range of topics. By far, the most pressing concern was the budget. Strikingly, about 76 percent of the survey-takers - including Township government leaders - expressed budgetary concerns.

You might say "It's the Budget, Stupid!"

CivicPulse is a nonprofit organization that runs national surveys of local officials to improve our understanding of local government across the United States.

CivicPulse asked respondents what solution they would use to address the budget issues that their local area faces. A snapshot of the results can be seen in the chart below.

Solutions for Budget Challenges. Respondents who agreed that the budget was a pressing issue were asked how they would solve this challenge. Responses were categorized into different solution types and displayed here in terms of their frequency.

The most frequently mentioned ideas were to grow business and change tax policy. For the full analysis on what was learned, check out the report “What do leaders in local government think about the budget?”

Newtown Township is currently facing its own budget challenge and is in the process of hiring outside consultants for advice on how to solve those problems (read "Newtown Township Seeks Grant to Assess Finances"). The Township recently received a grant of $40,000 from the DCED Definition to help cover the costs.

Posted on 07 Aug 2019, 11:02 - Category: Budget

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