Real estate transfers, tax increase credited with budget surplus

LANSDALE >> The numbers aren’t quite final yet, but are shaping up to show good news for Lansdale.

Finance Director John Ramey reported last week that the town’s 2018 budget looks to have finished out the year with a small surplus.

“This is a first look at the year-end, Dec. 31, 2018, and we are still making year-end adjustments,” Ramey said.

As of Dec. 31, Ramey told council’s administration and finance committee on Feb. 6, total borough revenues were roughly $15.5 million, up about 4 percent and by about $594,000 from 2017 levels.

Expenses are up by roughly $913,000 from the prior year, a roughly 6 percent increase, and Ra-

mey said about $80,000 in additional expenses were still scheduled to be posted and reconciled in early February. The revenue figure is about $100,000 higher than anticipated in the 2018 budget, and Ramey said that’s due to several factors.

“We knew some of the revenue increase would be that we raised real estate taxes — that’s probably the biggest one,” he said.

Over the past seven years, total real estate tra nsfer ta x revenues have averaged roughly $328,000, making a 2018 total of roughly $536,000 stand out too. Ramey said the large jump was almost entirely caused by the sales of two relatively large proper ties, the Silk Factory apartments and the Pavilion shopping center.

“This is like a historic high for real estate transfer taxes that we had this year. That’s one of the big ones,” he said.

The 2018 budget’s line item for state grant money is also showing $45,000 over budget, and that’s

due to the borough receiving two years of reimbursements from the state for recycling programs often funded several years afterward.

“It kind of got doubled up in 2018 due to timing, so that’s one of the reasons it was over budget,” he said.

The increases in expenses were up by $913,000 from 2017 levels but roughly $406,000 under the budgeted projections for the year, Ramey told the committee, and several factors played into that drop. Police personnel costs came in roughly $220,000 under budget, mostly because the 2018 budget included a full year of funding for three police hires to make up for retirements in 2017, but those hires weren’t finalized until six months in.

“We budgeted for a full year, but we didn’t hire the three of them until June, so their salaries, benefits, everything we budgeted a full year for, we saved half of it,” Ramey said.

The police department also found additional savings by finishing the year with their overtime costs roughly $18,500 under budget, and Ramey said that particular line item was the

lowest in the past five years.

“With the three new hires, overtime still came in that much under, which is really a tribute to the first six months when they were still shorthanded,” Ramey said.

The borough’s Code Enforcement depar tment also came in well under budget due to a hiring issue: roughly $171,000 was saved because prior department head John Ernst took over the position of borough manager at the end of 2017 and shifting responsibilities left the code director position unfilled.

“At the time we were doing the budget, we didn’t know how that would play out, so overall there was one less position being filled in the borough,” Ramey said.

The net result as of Feb. 6 looked likely to be a $500,000 increase in the borough’s general fund balance, which would be reduced by the $80,000 in remaining expenses still to be processed.

Staff also track outstanding liens on properties in town, Ramey said, and the amount of liens outstanding jumped from $38,000 in 2017 to $79,000 in 2018. That dip in that line item will, at least in theory, be made up in another year.

“We’re going to get that money. People can’t sell the property when there’s a lien on it, so we will get it, eventually,” said Ramey.

Resident Nancy Frei asked if the information on liens owned is publicly

available, and Ramey said it’s typically published by Montgomery County, leading to a joking suggestion from committee member Carrie Hawkins Charlton.

“Now we have to tell Nancy who it is, so we can get our money back. Nancy will be our bounty hunter for liened taxes,” she said.

Committee chairman Leon Angelichio said, while he was glad to see the tight budgeting and higher revenues produce a surplus, council and the public should not expect either to happen again in 2019.

“That $200,000 above, for the transfer taxes, this is an anomaly. This is not something we should continue to expect to happen, every single year,” he said.

“It’s a windfall this year, and it may not be present in 2019,” Angelichio said.

Councilman Denton Burnell asked when the additional expenses would be finalized, and the 2018 budget closed out for good. Ramey said staff typically don’t close the books until the end of year audit is complete, and staff apply for financial reporting certifications, typically around June.

After hearing the budget summary, the administration and finance committee discussed and vetted one budget-related item: the annual contract with consultant F. X. Browne to process the borough’s recycling reporting and submit for state grant money

“They contact all of the

trash haulers, find out how much recycling is collected, and it’s submitted to the state to be reimbursed for the grant,” Ramey said.

The two payments received in 2018 for that recycling reimbursement program each totaled roughly $45,000, Ramey said. Councilman Denton Burnell replied that that’s well worth the roughly $3,500 cost for the consultant contract.

“It’s a relatively small number compared to the savings we get back,” Burnell said.

Lansdale Borough Council next meets at 7 p.m. on Feb. 20 at the borough municipal building, 1 Vine St.

“We budgeted for a full year, but we didn’t hire the three of them until June, so their salaries, benefits, everything we budgeted a full year for, we saved half of it.”

— Lansdale Finance Director John Ramey