Budget with tax hike one vote away

Town could study electric rates in 2022

LANSDALE » A tax hike for 2022 in Lansdale is just one vote and two weeks away.

Council’s administration and finance committee voted unanimously Wednesday to recommend the budget, and accompanying tax increase, for full council approval later this month.

“We need to bring that forward to full council — as we voted to do — the budget as presented, so that hopefully in two weeks it will be adopted,” said councilman Leon Angelichio.

Starting in October council has discussed the draft 2022 budget, with total expenses and revenues of roughly $17.6 million and which started with a deficit of roughly $550,000, a figure staff said was due largely to growing costs and the need to include several capital projects, including needed infrastructure repairs and other long-term capital projects. In mid-November, council discussed several possible tax increase scenarios, ultimately voting to advertise a 0.5-mill tax increase, which would generate $406,000 in new revenue, balance the budget when combined with spending of federal COVID relief money, and raise the average resident’s borough tax bill from $690 to $750 per year, based on an average assessed property value of $120,000.

During their final meeting before final budget adoption on Dec. 15, the administration and finance committee touched briefly on the 2022 budget, with finance director Glenn Dickerson asking if the committee had any remaining questions or comments.

“Basically, we just have to make sure that we are authorizing, at this point, the 2022 budget and

the tax resolution,” he said, and the committee voted unanimously to do so.

“We’ll make sure all that gets put together, and will be voted on,” borough manager John Ernst added.

Dickerson also gave an update on the town’s 2021 financials as of Oct. 31, with comparisons to the figures from the same time in the prior year. General fund revenues are up by roughly $566,000, largely due to higher than expected real estate, earned income and local service tax revenues, while electric fund revenues up by $1.4 million, a jump Dickerson attributed to increased working from home. On the expense side of the 2021 figures, general fund expenses are down by roughly $1.2 million, but electric fund expenditures up by roughly $1.5 million, and Dickerson said the latter has two clear causes.

“Primarily, there’s a $420,000 expense associated with tree trimming that we had to do during the year, as well as some increased costs of electricity due to increased costs of transmission,” he said.

The borough’s highway aid fund also shows a massive jump in expenses, from just over $16,000 in 2020 to roughly $133,000 in 2021, a hike Dickerson said is largely caused by winter weather: “associated with snow and ice removal and road treatment.”

“One point of note: for the 2022 budget, typically we’ve taken money for this, to do the snow and ice removal, we’ve actually switched how we are using these funds,” he said.

In prior years, those costs were partially covered by the highway aid fund, which also can be allocated for road repairs and repaving, and Dickerson told the committee that the snow expenses will be recategorized starting with the upcoming year.

“These are now fully going to be used for road improvement projects, which was, I think, the original intent for what these funds are for. We have moved the funding for snow removal into Public Works, so this money is now being allocated, going forward, for road projects only,” he said.

Total borough assets, including cash on hand, fixed assets, and accounts receivable, now total just over $46 million and are up by roughly $3.2 million over the year-end 2020 figure of $42.8 million, Dickerson told the committee. Total liabilities have dropped by just under $900,000 over the same span, from $3.2 million at the end of 2020 to $2.4 million through Oct. 31, a drop partly attributable to the timing of the reported figures.

One other budget item will be going up slightly in 2022: Dickerson and Ernst reported that borough engineering consultant Remington, Vernick and Beach have requested a minor increase in their fees starting with the new year.

“They’re asking to be reappointed as our engineer, for engineering services, for 2022. Within this, they’re asking for a $5 increase” on most billing categories for engineering services, Dickerson said. Based on the firm’s hours billed in prior years, that increase looks likely to total just over $11,000, but certain inspections being taken over by the borough’s code enforcement department may drop that figure.

“Quite frankly, personally, I think it’s a sound investment. Chris (Fazio, borough engineer) has served this borough very well,” Angelichio said.

Councilwoman Carrie Hawkins Charlton added that she had recently heard from a resident who compared the borough’s millage rates to those of surrounding townships, and suggested the borough look elsewhere for more revenue.

“She suggested really taking a look at the electric rate increase, instead of a tax increase. They suggested a one to two percent electric rate increase, instead of doing taxes year over year,” Hawkins Charlton said.

During earlier budget talks in October, Dickerson said the town has not changed electric rates since 2015, and sewer rates since 2016, and Hawkins Charlton said she thought both were due for fresh looks.

“I want to kind of put that out there, that I think next year, if we’re in the same kind of budget crunch, that we should probably take a look at our electric and sewer rates,” she said.

Ernst answered that staff are planning to authorize studies into both of those rates during 2022, and Angelichio said the committee should keep in mind that an increase in rate may not necessarily mean an increase in revenue.

“When you have a tax millage rate change, you know damn near exactly what your revenues will be — unless they reassess, things don’t really change,” he said.

“If you do raise electric rates, and everybody decides at that point to cut their electric usage, it’s kind of a wash. But we are due for a study,” Angelichio said.

Resident Nancy Frei added that she felt the borough’s electric department was far more responsive and quick to repair damages than other surrounding towns with larger utilities like PECO and PP&L.

“Our company, they come out, they know when something’s happened, and they fix it right away. I don’t know how you put a value on that,” Frei said.

Angelichio added another consideration: if the borough were to consider selling the electric department or switching to a private firm, the electric revenues used to balance the overall budget would be lost.

“What happens, four or five years down the road, when you realize ‘Wait a minute, we were transferring millions of dollars a year. Now we’ve gotta make that up.’ People already don’t like where taxes are? Wait ‘til you see that tax bill, to get an additional $4 million, $5 million, $6 million a year,” he said.

Lansdale’s borough council next meets at 7 p.m. on Dec. 15 at the borough municipal building, 1 Vine St. For more information visit www.Lansdale.org.