Shedding some light on that $65M Delco surplus
To the Times:
In late December I wrote a letter to the Delaware County Daily Times reporting what I discovered after examining the 2020 county budget as a member of the volunteer Finance Working Group that was created by the incoming county council. That budget, which was passed by the outgoing Republican administration, is projected to blow through
$23 million of the county’s $25 million General Fund Reserve during the course of the year. This means that during
2020 the county will be spending almost $2 million more a month than it is collecting in revenue.
Since the county was only balancing its budget by spending down its reserve fund, the county is, in reality, running a $23 million deficit.
On Feb. 14, Tom McGarrigle, chairman of the Delaware County Republican Party, wrote a letter to the Times claiming that the outgoing Republican Administration
left the county with a $65 million surplus. What gives? Well first, as a macroeconomist for 42 years, I think I know the difference between a deficit and a surplus. If the county is spending $23 million more than it is taking in, then that is a $23 million deficit. Where did Mr. McGarrigle get his $65 million figure? Tracking this down unfortunately requires going into the financial weeds. The county has several fund balances in addition to the general fund reserve. Approximately half of these balances are dedicated to paying health care costs and debt service, but half are unrestricted and could support the operating budget.
But this in no way changes the fact that the county is running a $23 million deficit. At the rate that budgeted county expenditures exceed revenues, these unrestricted funds would only keep the county afloat for another year and a half before they too would be exhausted.
Mr. McGarrigle’s $65 million “surplus” is a good example of a saying my father had, “Figures don’t lie, but liars can figure.”
The subject of Mr. McGarrigle’s letter was a proposed $5 increase in auto registration fees by county residents. Generally, I am against nuisance fees, but this one is an exception for two reasons: 1) The Commonwealth will match what the county collects with this fee, so for every $1 that a county resident pays, the county collects $2. If the county does not institute this fee, then the money stays in Harrisburg. 2) The fees will go toward improving our transportation infrastructure. Has Mr. McGarrigle looked at the condition of our roads? TRIP, a nonprofit transportation research organization, estimates that nationally our poor roads cost each car owner $599 a year in extra car repairs due to broken axles, struts, shock absorbers and damaged tires (https://tripnet.org/reports/vehicle-operatingcosts-infographic). Since Mr. McGarrigle owns a car repair shop, perhaps his opposition to the $5 fee is based on a calculation that not repairing the roads is good for business.
“If the county is spending $23 million more than it is taking in, then that is a $23 million deficit. Where did Mr. McGarrigle get his $65 million figure?”
— Mark Kuperberg