During the budget vote it was stated that Commissioners should have used reserves to balance the budget.
Couple of issues with that premise:
First, the budget was already balanced when the millage/homestead rates were considered. We did that last in the process at the final budget workshop.
The combination millage and homestead reduction is virtually revenue neutral. Before we set the millage and homestead we had already balanced the budget. One Commissioners quote that the millage increase will raise 300k in new revenue is also inaccurate. The forecast is for only a 100k increase which is within a margin of error accounting for early payments or late payments.
Second, the township doesn’t have 9M in unreserved funds. Here is why and the breakdown.
- 2.8M of the fund balance is mandated “rainy day” monies per the townships adopted fund balance policy. – From the 2013 policy: “The Township will maintain a fund balance for fiscal cash liquidity purposes (i.e. fiscal reserve) that will provide for sufficient cash flow to minimize the potential of short term tax anticipation borrowing. This amount shall be 20% of the combined budgeted expenditures of the General Fund.“
- 1.08M is policy required for encumbrances per the fund balance policy. – From the 2013 policy: “These funds are appropriated and encumbered balances for outstanding purchase orders, contracts, and other commitments for which goods and services have been ordered by the Township, but the goods or services have not been received in full.“
- 1.2M is designated reserved for a new aerial fire truck. This was designated in 2013 per request from the fire dept.
It’s important to understand Lower Macungie has an adopted fund balance policy. It represents good financial management. You can view it here. Credit goes to the prior board for doing this. I critique them often for some moves they made but this represented sound fiscal planning.
Considering all of the above it’s misleading to imply an un-designated fund balance of “10 million”. But that’s politics. It is what it is. All of the above is designated monies according to township fiscal management policies.
So what about the remaining?
Where does the remaining balance come from? Well it’s pretty simple. It came from removing the 3M+ Quarry Park Astroturf project from the 2016 budget which Commissioners Brown, Gallardo and myself did in November. Artificial turf plan nixed in Lower Macungie
What next?
Moving forward the budget process isn’t quite complete. In January the budget will be re-opened. One item I will propose, is to designate remaining un-designated funds specifically to open space and farmland preservation. This does not mean the money has to be spent. It only means it will be put into purpose restricted “savings account” that will allow the township to react if preservation opportunities arise. This protects the balance from being “chipped away at” over time. Which is always a concern.
How this fits into a preservation strategy.
Over the last two years we’ve considered a number of strategies for funding farmland and open space preservation. Commissioners agreed we did not want an income tax increase. We next explored a bond since the township will retire all our debt in 2019. The issue here is that with a bond we needed preservation targets lined up. Right now the township is actively seeking opportunities. The only strategy that allows flexibility to respond to opportunities as they arise is cash on hand. This gives us the most flexibility to preserve land without an additional tax and without taking on additional debt.
And that’s what I intend to do. I believe the township has a 5-6 year window to preserve land. I sincerely believe that the window is rapidly closing. I think I was voted into office on a clear platform centered around smarter growth, fiscal responsibility and land preservation. I’ve written extensively why I believe it makes sound financial sense. I intend to honor that promise. I’ve been working 2 years towards that goal.