John Mack - Newtown Supervisor
Finances Category

2020 Estimated Real Estate Tax Revenue & Expenditures

Newtown Township's Real Estate tax millage Definition is composed several components dedicated to specific funds or projects. These are (1) 2.625 mills for debt services purposes (to pay off loans for road improvements, and other projects), (2) 0.875 mills for fire protection (Support for the Newtown Fire Association, Fire Chief’s salary, health insurance, etc.), (3) 0.55 mills for fire hydrant maintenance, and (4) 0.45 mills for the Newtown Ambulance Squad. 0.0 mills are collected for "general" purposes. Thus, residents know exactly what they get for their real estate taxes.

For an average Newtown Township home assessed at $40,000, the yearly real estate tax is $180 (4.5 millage X $40,000/1,000).

According to the 2020 Preliminary Budget (here), the total Real Estate Tax Levy for Newtown is estimated to be $1,558,345 based on a total assessment of real estate assets of $346,298,840 (see table and chart below).

Numbers from 2020 Preliminary Budget, Schedule A

Debt Service Tax for Town Center & Roadwork

The township is paying off a general obligation bond for the construction of the town center and a $1 million loan for the paving of roads. The total expenditure for those two items is $1,012,160 (see page 19 of 2020 Preliminary Budget).

Approximately 5.5 miles of roads will be repaved in 2020 thanks to $686,194 to be received from the 2020 State Liquid Fuels Program Definition and the aforementioned $1 million loan, which will be paid back over the next 3 years.

According to the September 20, 2018, "Preliminary Report on Newtown Township’s Municipal Finances" prepared by the Newtown Township Finance Committee, the current tax millage dedicated for repayment of the township building construction annual debt service will "not meet mandatory increased yearly payment amounts possibly as soon as 2020. The dedicated millage rate will need to be increased or supplemental revenue found" (view the video of the presentation of that report here).

Fire and Rescue Squad Taxes

The revenue collected via the Fire Tax will cover the $175,000 that the township gives to the Newtown Fire Association plus pay for the Fire Chief's salary and benefits and other fire-related expenses. The $185,000 Fire Hydrant Tax pays for fire hydrant maintenance by the Newtown Artesian Water Company.

Last, but not least, is the Rescue Squad Tax, which pays for the $151,000 that the township pays to the Newtown Ambulance Squad (NAS). You may recall that in October, 2017, Evan Resnikoff, NAS Chief of Operations, asked the Supervisors implement an EMS millage of 0.5 mill, which would generate about $172,000 of funding for the squad (see the video here). The Supervisors went on to approve the current 0.45 mill tax.

Posted on 22 Nov 2019, 11:08 - Category: Finances

2018 Audit Presentation

Edward Furman, a partner at Maillie, LLC, presented a summary of the 2018 audit to the Newtown Board of Supervisors at the October 10, 2019, public meeting. You can download the complete audit here. Last year, I summed up Furman's opinion thusly: "As long as non-resident Earned Income Taxes are not severed, all is well in the Newtown Township financial garden."

Real Estate Taxes Remain Low

Newtown Township has one of the lowest real estate tax rate in the region (see chart below). Currently, the Township relies entirely on earned income tax, real estate transfer tax, and a local services tax to fund the general operations of the Township. No real estate taxes go into the General Fund to pay for things like the police department and the public works department. Here's how those taxes are used:

  • Debt Service (mostly to pay for the Administration building):  2.625 Mills
  • Fire Protection: 0.875 Mills
  • Rescue Squad: 0.450 Mills
  • Fire Hydrant Maintenance: 0.550 Mills 
Financial Challenges Ahead

In 2020, Newtown Township faces financial challenges including unfunded state environmental mandates (see Pollution Reduction Plan Approved), non-resident Earned Income Tax (EIT) uncertainties (the Township suffered a "tremendous" loss of EIT when Lockheed Martin shut down and the property remains underutilized), real estate transfer tax decline (fewer new houses being built), the need for additional staffing (especially in the Police Department and Public Works), and the need to improve infrastructure (e.g., road repairs).

Posted on 07 Oct 2019, 10:20 - Category: Finances

Attracting New Businesses to Newtown Township

I'm often asked, What will you do to attract new businesses and new jobs to our municipality?

This is an important question because to maintain a low 4.5 mill property tax while providing the excellent services our residents have come to expect, the Township depends on business-related sources of income such as the Earned Income Tax (EIT Definition), which accounts for nearly 80% of its tax revenue!

As a member of the Newtown Board of Supervisors, I voted to create the Newtown Finance Committee, which is in the process of helping Newtown Township attract employers/jobs and pursue economic development.

I also supported the Township’s application for a matching $40,000 PA Department of Community and Economic Development (DCED Definition) grant to implement an Early Intervention Program (EIP Definition) that will assess the township's financial condition and identify additional sources of income, including attracting new businesses with high-paying jobs to Newtown (read “Newtown Township Seeks Grant to Assess Finances”).

I will continue to work with local business associations, the PA Department of Community and Economic Development and Newtown Township's Finance Committee to promote our community as a great place to establish businesses with high-paying jobs.

We Need This Kind of Promotion!

Posted on 12 Apr 2019, 01:15 - Category: Finances

Newtown Applies for DCED Grant to Assess the Township’s Financial Condition

Newtown's Financial Garden

At the January 23, 2019, Board of Supervisors meeting, a resolution was passed authorizing the Township Manager to apply for a matching $40,000 Department of Community and Economic Development (DCED Definition) grant for implementing an Early Intervention Program (EIP Definition) that will assess the township’s financial condition and identify additional sources of income. 

This is a matching grant. If the Township is awarded a grant, it must match the amount with its own funds. $40,000 is the maximum grant applied for. That anticipates a total budget of $80,000. However, the actual expense of hiring consultants for the project may be less the projected budget.

[Listen to this podcast and learn more about the EIP and the grant process: “Andrew Sheaf Talks About DCED's Early Intervention Program”]

The following are the questions and answers from the EIP grant application submitted to the DCED on March 15, 2019.

What do you plan to accomplish with this project?

Newtown Township is currently facing stresses on Township finances. The Township will need to address fire protection and emergency response needs that will require additional capital resources.

In the past, the Township has relied heavily on the EIT Definition [Earned Income Tax] to fund a large portion of its budget. That may no longer be possible as neighboring municipalities are implementing the EIT to support their own budgets. [For more on that, read “Earned Income Tax Trends”.]

Long-term budget needs must be anticipated and addressed now if the Township is to continue to be able to meet the needs of its residents. There are several critical factors, which must be addressed: what has been the practice of using reserve funds to offset other current budget needs.

By 2020, the tax millage dedicated for loan repayment for the construction of the Township Building will no longer meet mandatory increased yearly payment amounts. It is critical that changes in the budget process be changed and new sources of income must be sought.

How do you plan to accomplish it?

Step 1: Financial condition assessment: a multi-year trend analysis of historic financial data and an assessment of current budget performance will be performed by the consultant as a means to establish a realistic baseline of the township’s historic and current financial condition.

Staff will provide the consultant with current budgeting and financial challenges and assist with creating a five-year fiscal projection, estimating revenues, expenditures and fund balance levels. Staff will also share current practices with the consulting team to provide a solid understanding of what practices are currently in place.

Step 2: The consultant will make recommendations to the township regarding the following:

  1. Possible changes to the operation of the township
  2. Proposals regarding establishing a multi-year budgetary process.
  3. Identification of additional sources revenue, including possible sources of economic development within the township.
How do you plan to use the funds?

The funds will be used to engage a professional consultant with experience and expertise in preparing a multi-year financial management plans under the EIP plan guidelines and terms. The consultant will also have extensive experience advising municipalities generally on public financing matters.

The main purpose of the program is to establish short-term and long-term priorities and objectives that will strengthen the managerial and fiscal capacity of the township.

A secondary, but, as noted in the “identified problem,” an extremely important objective of the purpose of this program is to identify additional sources of revenue for the township.

Posted on 18 Mar 2019, 12:59 - Category: Finances

How's the Newtown Township Financial Garden Doing?

Budget season is upon us! The draft 2019 budget is currently being worked on by Newtown Township officials and will be presented to the Board of Supervisors (BOS) for discussion at a public meeting later this month. The public, as always, is invited to attend this meeting. Refer to the Events calendar to find out when this meeting is scheduled.

Meanwhile, two financial reports were presented to the BOS at the September 26, 2018, public meeting:

  • 2017 Audit Report
  • Newtown Township Finance Committee Report

The 2017 Audit Report

Edward Furman, a partner at Maillie, LLC, presented a summary of the 2017 audit to the Newtown Board of Supervisors at the September 26, 2018, public meeting. Furman's opinion can be summed up thusly: "As long as non-resident Earned Income Taxes are not severed, all is well in the Newtown Township financial garden."

Some Data

The following table is a summary of the 2017 Government Funds Revenue vs. Expenditures as reported in the 2017 Annual Audit. 

 

Finance Committee Report

Jack Brod, Chair of the Newtown Township Finance Committee (NTFC), presented the Committee's first-ever report to the Newtown Board of Supervisors. The major point made by the NTFC is that the Township is "rapidly approaching [a] fiscal precipice." Some recommendations made by the Committee include the need for benchmarking, implementation of a multi-year planning and budgeting cycle, and increased public education and awareness of the Township's financial issues.

The Committee's Report

The September 20, 2018, report is based on a preliminary and limited analysis of Township budgets and financial documents by committee members. It represents the Committee's first attempt to identify:

  1. potential fiscal issues and concerns;
  2. needed benchmarking of township services, staffing, income and expenditures against other municipal governments and accepted standards; (3) possible implications of the fiscal issues we have estimated; and
  3. initial recommendations for future consideration and actions.

Download the complete report here.

Posted on 01 Oct 2018, 10:51 - Category: Finances

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This site is paid for and approved by John Mack: john@johnmacknewtown.info
The opinions expressed here are solely those of John Mack and do not represent the opinions of any other person or entity.
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