John Mack - Newtown Supervisor
Budget Category

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

Supervisors Weigh in on Tax Increase

"It's never popular to raise taxes."

That’s how Newtown Township Supervisor Jen Dix prefaced her comments regarding the passage of the 2018 Budget at the January 24, 2018, Board of Supervisors (EIT Definition) meeting.

The budget includes two new taxes: 0.55 mills for fire hydrant maintenance and 0.45 mills for the Newtown Ambulance Rescue Squad (read “Newtown Ambulance Squad Seeks Additional Funding”). That brings the total Millage Definition to 4.5 for 2018.

The chart above compares the 2018 property tax millage of Newtown Township to several other local municipalities each of which - like Newtown - has a 1% Earned Income Tax (EIT Definition).

“I think our goal going forward is to keep our property taxes as low as possible,” said Ms. Dix, “but also use common sense about how we are spending our money and investing in the community.”

Kyle Davis, who cast the single nay vote, commented that “we need to keep vigilant and fight extra hard to keep it were it is and not catch up with our neighbors.”

Speaking of catching up, Supervisor John Mack stated that he was “very appreciative of the fact that we are giving more money to the Newtown Ambulance Squad [NAS], which is something we really do need to do in order to catch up with our neighbors.” Evan Resnikoff, NAS Chief of Operations, said the Squad’s paramedics on average earn $3.75 per hour below market rate for Bucks County and EMTs average $4.00 per hour below market rate. Mack pointed out that NAS “must be competitive to survive. For me that’s a no-brainer.”

Putting a Bandaid on a Bullet Hole

Chairman Phil Calabro gave the audience a bit of a history lesson. “A budget does not go bad over night,” said Calabro. He pointed out that for the past eleven years the budget has been dwindling and at one point the reserve fund was almost empty. He spoke of assets that had to be sold to balance the budget even though the assets generated income every year. He spoke of occasions when the Township could not make payroll!

“For the past 10 or 12 years they [the previous Board majority members] have been putting a bandaid on a bullet hole!,” Calabro said. 

Calabro noted that by having dedicated taxes for the ambulance squad and fire hydrant fund, the Township will be getting back about $300,000 into the General Fund to be used for much needed projects and maintenance, such as the purchase of a new dump truck for snow plowing, repair of the Police station roof, upgrading Veterans Park, and other improvements.

“If we don’t stop the bleeding,” said Calabro, some day will be forced to “catch up” with other local municipalities with much higher Millage rates.

You can listen to all the comments made by Supervisors by viewing the video below:

Posted on 01 Feb 2018, 01:57 - Category: Budget

Newtown Ambulance Squad Seeks Additional Funding

Asks for Return to EMS Millage

Evan Resnikoff, Chief of Operations, Newtown Ambulance Squad, presented the Squad’s Annual Report at the October 11, 2017 Newtown Township Board of Supervisors meeting.

Resnikoff compared funding of the Newtown Squad to funding of neighboring municipality ambulance squads. Lower Makefield Township, for example, provides $248,000 in annual funding for its ambulance squad, which averages 1500 calls per year compared to an estimated 2600 for Newtown’s Squad. Currently, the Newtown squad receives 25% of Local Services Taxes, which for 2017 is estimated to be $490,000 – the squad would receive about $123,000 of that.

About 90% of the squad’s revenue comes from fee for services (see Figure 1, below). Resnikoff reported that the Squad has $74,000 in collectibles for the period of January through August, 2017, due to the fact that patients are not turning over checks they receive from insurance companies. In general, the squad collects only about 60 cents of every dollar billed.

Figure 1. 2016 Revenue Sources for Newtown Ambulance Squad

When Resnikoff revealed that the response to opioid calls was up 58% in the first 8 months of 2017 compared to the same period in 2016, the audience let out an audible gasp! This adds a significant cost to the healthcare system including EMS because greater than 80% of these patients have no insurance and cannot pay the fees.

Resnikoff said the Squad’s Paramedics on average earn $3.75 per hour below market rate for Bucks County and EMTs average $4.00 per hour below market rate. These first responders have not been given base hourly rate raises since December 2015. These hourly wage levels have made it challenging to recruit for open positions, resulting in more overtime hours to fill open shifts.

Resnikoff suggested “going back to the EMS millage” instead of a percentage of the Local Services tax, which varies from year to year. The maximum allowable would be 0.5 mill. That would generate about $172,000 of funding for the squad in 2018.

[Updated on 14 December 2017] Mr. Evan Resnikoff re-iterated his plea for an EMS tax millage at the December 13, 2017 Newtown Township Board of Supervisors meeting. The proposed 2018 budget was the main issue before the board at this meeting (read "BOS Approves Publication of Preliminary 2018 Budget"). See video below.


Posted on 14 Dec 2017, 14:08 - Category: Budget

BOS Approves Publication of Preliminary 2018 Budget

On November 21, 2017, the Newtown Township Board of Supervisors (BOS) approved the publication of the Preliminary 2018 Budget. You can find a PDF version of this budget here.

The budget does NOT include a 2 mill property tax increase for the general fund proposed in the version presented to the BOS on 16 October 2017 by Township Manager, Kurt Ferguson (read "Newtown Township Manager Proposes Tax Increase").

It does include, however, a 0.45 mill new tax specifically earmarked for the ambulance squad and a 0.55 mill new tax specifically for fire hydrant maintenance.

The estimated new income from these taxes is $147,239 and $185,000, respectively. In the previous version, these expenses were paid through the general fund. By implementing new taxes to cover these expenses the Township will save approximately $305,000 (previously, $120,000 from the general fund was allocated to the Ambulance Squad and $185,000 for fire hydrants).

Note that with the new tax, the ambulance squad will receive approximately $27,000 in additional funding to cover increasing expenses due to increased call volume. It will also help the squad maintain staff with competitive salaries. The Squad had sought a 0.5 mill tax increase to cover these expenses. For more about that, read “Newtown Ambulance Squad Seeks Additional Funding”.

October 17, 2017, Budget Meeting Video


Also read this article:

 

Posted on 01 Dec 2017, 12:40 - Category: Budget

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