No tax hike in draft budget

Early version moves ahead; sewer rates could be revisited during year

UPPER GWYNEDD » A draft 2018 budget for Upper Gwynedd Township came into clearer focus Thursday night, as township officials approved several cuts and set the stage for a transfer from reserves to balance the budget.

“At this point in time, there is no indication of any tax increase for the township,” said commissioners’ President Ken Kroberger.

“We’re also going to continue to revisit and look at any potential increase in our sewer rates. It’s not definite, but something we will continue to look at down the road. It will not be in the first half of the year — if it happens, it will happen down the road,” he said.

Over the past month, the board and staff have discussed their draft 2018 budget, which nets out to a total of roughly $11.8 million in total general fund revenues and $12.7 million in total expenses, before inter-fund transfers. After accounting for transfers from the township’s sewer funds, liquid fuels state grant money, and capital reserves, the net result is a deficit of $169,172, which could be covered by a transfer from the township’s general fund reserve, which stands at roughly $9 million.

“If the board chooses, you can allocate part of that fund balance, the $9 million, to make up that shortfall, so it would be an allocation of the general fund reserves,” said Finance Director Dave Brill.

Doing so would leave the general fund reserves at roughly $8.8 million, which Brill said would equal roughly eight months of normal township operating expenses and revenues — which Brill called “a very healthy amount of money the township has set aside, which is excellent.”

Total general fund taxes will remain at the level of 1.874 mills last changed in 2014, with the township’s fire tax millage set at 0.139 mills, a level the board voted to increase in 2016 for 2017. The township’s homestead exemption will remain at $30,000, and township officials have said roughly 80 percent of households in the township take advantage of the exemption.

For the average property owner in the township, with an average assessment of $188,452, and who claims a reduction of $30,000 from the homestead exemption, their total township tax bill adds up to $328.41, according to Perrone, and a discount on that total is available to those who meet an early payment deadline.

Each department outlined their requests and specific funds during a lengthy budget workshop last week, and Thursday night’s special workshop was meant to address specific changes requested by the board after those talks. Brill reported back on the results of those changes, including a closer look at the township’s sewer fund revenues, for both short-term operational and long term capital expenses.

“We’re projecting this year to be $63,000 to the good, which is great, that’s where you want to be,” he said.

“Historically, we have been able to fund the cash flow needs of the plant, which really in my mind is the minimum you want to be funding. You should strive to have your rates cover, in addition to that, some of your longer term needs of the plant, which would be to fund the depreciation needs,” he said.

The total capital assets of the township’s wastewater plant add up to roughly $50 million, and of that total roughly $20 million are controls, electronics, and other equipment that can be depreciated. Factoring in depreciation costs would produce a deficit of roughly $270,000 per year, Brill told the board, and he outlined the possible impact of several possible rate increases. Increasing current rates by five percent would produce roughly $290,000 in extra revenue; a ten percent increase would add roughly $530,000; increasing by 15 percent would produce over $800,000 in new revenue, and increasing by 20 percent would create just over $1 million.

“We’re not talking about funding operations. Operations, we’re fine, this is future depreciation,” said commissioner Tom Duffy.

No rate increase is proposed with the start of the year, but the board asked Brill to look into the impact of raising sewer rates for only commercial properties, which fund roughly 60 percent of total sewer revenues, or residential rates which fund the remaining 40 percent.

“Dave will refine the numbers on some kind of split rate structure, and we’ll get back to you on that,” said Township Manager Len Perrone.

The board also suggested staff look into completing a list of short and long term capital needs for the sewer plant, as plans proceed for a bond borrowing meant to fund the diversion of sewer flow from the treatment plant in Towamencin to the township’s own facilities.

“If we go out for the bond in 2018 or 2019, then whatever we need to stabilize this, we can add that in on the bond,” said Commissioner Jim Santi.

Brill said the total estimated cost for the diversion project is roughly $27 million, but Kroberger and Duffy said that number is only an estimate and would need to be clarified through specific engineered plans, and payments on the bond could be covered by diverting the money Upper Gwynedd now pays Towamencin for sewer processing that would be saved by the diversion.

“Worst case scenario, our revenue is going to cover the bond,” Kroberger said.

There is good news from the 2017 budget, Brill told the board: township real estate taxes are projected to produce roughly $630,000 more than anticipated, and Brill suggested putting at least part of that into the township’s capital reserve, to fund future equipment needs.

“Our contribution to the capital fund every year is $200,000. I would suggest an additional $200,000, so our surplus this year in the general fund would still be substantial,” he said.

Other changes to the draft budget from earlier versions included adding $25,000 in reimbursement funds expected from Lower Gwynedd Township to cover the costs of repairs to a bridge on Swedesford Road; $5,900 in new revenue from PennDOT for maintenance of Allentown Road, removal of $45,000 in stream bank restoration projects, and removal of $82,000 in capital equipment replacement projects at the sewer plant that can be done in 2017, using this year’s budgeted funds.

Upper Gwynedd’s commissioners voted Tuesday to authorize staff to prepare and advertise the 2018 budget, and the board next meets at 7:30 p.m. on Nov. 20 and could formally adopt the budget at their Dec. 18 meeting. Both meetings will be held at the township administration building, 1 Parkside Place; for more information or meeting agendas and materials visit www.UpperGwynedd.org.