Budget Update: April 29, 2013
April Work session: The Town Council reviewed the Town Administrator’s Budget submission during the April 25th Work Session. The council submitted over 30 questions prior to the meeting regarding specific line items and the Town Administrator replied to each of them.
Below are some highlights: from the meeting.
Tax Rate: The Council remained committed to keeping the Tax Rate at .58/$100 of assessed value. This means that your Tax Bill will remain constant as both your assessed value and the tax rate remains the same.
The Council also remains committed to a balanced approach to the Budget in FY14 and FY15, looking for ways to improve revenue, keep a lid on expenses, and draw from the fund balance.
Corrections: There were three corrections made during the work session that impacted the initial budget submission. The result of these corrections had the following impacts:
- The Fund Balance Line for FY13 improves by $235,387, which means we finished the year at $1,699,570. This is a very positive result!!! Please remember that approximately $750,000 of the fund is reserved and should not be spent, based on “generally accepted government policy.”
- Overall the corrections to the Town Administrator’s submission resulted in an increased budget deficit of $475,952 (instead of the estimated $287,952).
- Therefore, the resulting Fund Balance for at the end of FY14 is projected at $1,223,618.
This is still a very healthy fund balance, but please continue reading to get insight into the initial Council Decisions made during the 4/25/13 Work Session.
Opportunities and Concerns: The Council then addressed potential changes to the Town Administrator’s Budget. Clearly the Council wanted to focus on improving the FY14 deficit, but they also wanted to ensure that certain programs, projects and priorities were funded. Preliminary Decisions were made to on the following items; these will be confirmed during the May Work Session and the June Town Meeting.
The financial results of the changes outlined below are: 1) A projected FY14 deficit of $337,952 which is an improvement of over $135,000 on the Town Administrator’s initial submission; 2) The FY14 Year End Fund Balance will be $1,361,618.
- Include $90,000 in State Grant money that is designated specifically to replace State Highway User Revenues. This revenue program that is provided by the state has decreased over the last four years costing Cheverly over $600,000. This grant augments this year’s allocation of the Highway User Funds of $40,000 bringing the grand total to $130,000. Great News, however, this total is only 50% of what the town formerly received from the State.
- The Council decided to change the estimated revenues to be received from Income Tax Revenue from $620,000 to $660,000 for both FY13 and FY14. The new projected Income Tax numbers remain conservative based on collections in FY11 and FY12. This improves revenues for both fiscal years and improves the fund balance as well.
- The Council decided to purchase the Trash Truck (discussed in the previous FYI) on a 3 lease to purchase. The FY14 part of the purchase will be $85,000, instead of the $255,000 in the Town Administrator’s submission. This reduces expenditures in FY14 by $170,000 in FY14. However, the Town will be committed to pay $85,000 in both FY15 and FY16.
The Town also anticipates selling one of the older Trash Trucks in our fleet for $15,000 which will be included in the line: Sale of Fixed Assets.
- The Council agreed to spend up to $250,000 on road projects based on the projected needs once WSSC completes its work in Town. The Town Administrator’s budget called for $100,000 so this is an increase of $150,000 in FY14 . This increase was agreed to because the anticipated needs and the addition of $90,000 in State Aid.
- The Council decided to restore the Community Grant Program which is funded at $8,000.
- The Council decided to include $5,000 for Technology and Communication Improvements. The Town Administrator’s budget already included funds for providing Town Meetings via the internet. This additional funding will be for Web Site improvements and the purchase of tax data, so the Town will be able to notify every resident who has not yet requested their “Homestead Exception” to do so.
- The Council also included an additional $8,000 in Park Supplies so that we could purchase some bike racks, trash bins and benches for parks throughout town. While this will only go a short way, we need to do a little each year.
Continuing Discussion Items: There are a few topics that are still being considered by the Council and will get further discussion.
- .10 Tax Rate Increase on Multi-Family Homes: The Town has been in discussions with the owners of the Multi Family Units and is still considering increasing the Tax Rate on Multi-Family Units. This would yield $20,000 in new revenue; however this conversation has always been about the equity between single family and multifamily units. Multi-Family Units comprise 23% of the Cheverly Housing stock, but pay only 3.8% of the property taxes.
- Workmen’s Compensation: This line item has nearly doubled over the last three years, and we are projected to spend $330,000 in FY13 and FY14. While both Police and Public Works employees have jobs that are more susceptible to claims, this number is much higher than the Council or the Town Administration is comfortable with. The Council has charterer the Town Administrator with identifying alternatives to reduce this expense.
May FYI, written on April 18th:
Draft FY14 Budget Presented: The Town Administrator formally provided the Town Council with the first draft of the FY14 Budget during the April 11th Town Council Meeting. The Council will consider and modify the budget over the next two months, with the goal of passing the budget during the June 13th Town Council Meeting.
The Budget document represents the priorities of the Town and provides a blueprint for revenues and expenditures for the upcoming Fiscal Year (FY14). The Council may amend the budget throughout the year; however this is fairly uncommon and is typically only done for small items or to address an unexpected expenditure.
The FY14 Budget submission is also the first time the council gets a clear picture on estimated actuals for the current budget year (FY13 ). The FY14 Budget combines the FY13 results and the FY14 blueprint.
Copies of the Budget are available at Town Hall during standard business hours. Every resident is encouraged to ask questions of their council people during this time this time.
“How will this Budget Affect My Taxes?” Mike, I know you’re going to give a ton of detail on the budget, but please give a quick answer to “How is this budget going to affect my taxes?”.
Single family homes, commercial establishments, and industrial buildings should see no change in their Cheverly Tax Rates or their Cheverly Tax Bill!! This is because the Tax Rate will remain constant and there is no increase in your tax assessment until homes are re-assessed in 2015.
There is some small growth in assessments for the Multi-Family Units and there is still some discussion of the increased tax rates for the Multi Family Units.
Projected FY13 Results: In previous newsletters I have discussed the Council’s plan for a “Balanced Budget Approach” in FY13. Our goal was to limit expenses, increase revenues (and keep property taxes flat), and draw from the fund balance as needed. This plan was put in place to address the revenue issues associated with the decrease in property values.
In FY13 we met these goals and achieved a virtual balanced budget! While the budget document shows we have a surplus of $166K, this result is a little deceiving. The council set aside $170K for a trash truck that was not purchased (more on this later), therefore the real results are much closer to a $4K deficit.
A closer look shows:
- Revenues: We exceeded planned revenues by approximately $300K. This was driven by increases in Tangible Personal Property Taxes from our Commercial and Industrial residents ($125K), a Department of Justice Grant for our Police ($70K), and collections on overdue speed camera tickets ($140K).
- Overall Expenses: Total Expenditures came in $80K under budget and $250K under the FY12 budget. Reducing spending year over year by $250k represents a 5% decrease in spending. While a good portion of this was due to delayed capital spending our Department Heads deserve significant credit for holding the line on expenses.
- Capital Spending: Spending on Capital items was down by $280K compared to FY12. This was purposeful, as the Council and the Department Heads tried to limit spending on large capital items. Clearly the council needs to make sure roads are paved, vehicles are replaced and our buildings are maintained but we tightened our belts this year.
- Operating Spending: Operating Spending is always the most difficult area to address as the costs associated with employees (insurance, workmen’s comp, etc) and operating vehicles continue to rise. While the council froze salaries and cost of living raises in FY13, operating expenses still increased year over year by $130K. The good news is that our Department Heads spent $130K less than was originally planned in FY13.
It is important to note the primary driver of increased spending in FY13 was the increased costs associated with Worker’s Compensation ($150K). Employment opportunities associated with Town Government are Public Safety and Public Works, and these jobs have a higher risk of injury than normal office jobs.
- Fund Balance: This is the critical measure of the Town’s financial health and the good news is that Cheverly ended FY13 with more than a $1.4 million positive balance. Please note that “sound government practices mandate that a municipality have approximately 20% of operating expenses in reserve for emergencies”. For Cheverly, this translates to a required fund balance of somewhere between $700K to $800K. Therefore, we have approximately $700K in a rainy day fund to address extraordinary expenditures.
Looking Ahead to the FY14 Budget: The Plan for FY14 can pretty much be stated as “more of the same”. While the Town Administrator’s budget submission calls for a deficit of $288K, that number is primarily driven by the purchase of a trash truck ($270K) in FY14. If the Council elects to defer the purchase of the truck or implement a different purchase plan that deficit will be virtually eliminated (again more on the truck later).
As always the Town Administrator’s submission is a conservative plan. He is known for sometimes understating revenues and overstating expenses. As a Council we are pleased with his conservative budgeting as it has always limited planned spending and resulted in sound financial results.
Three major goals of the council in FY14 will be to: reinstate raises and cost of living for our Town Staff, definitively address the purchase of the trash truck, and to allocate funds to complement WSSC’s repaving of the roads that they are disturbing.
Highlights and potential discussion points for the upcoming Council discussions:
Revenue Highlights: The Town Administrator’s budget calls for a small increase in Revenue of approximately $100K driven mostly by a Program Open Space Grant of $85K for the purpose of rebuilding the Town Stage in Town Park. However, there appear to be other opportunities to increase revenues: 1) continue higher collections of Tangible Personal Property Taxes, 2) Infusion of State Grant of $90K for the purpose of road projects, 3) Small increase in Property Taxes based on increases on Multi-Family Units.
Spending Highlights: The Town Administrator’s Budget calls for raises and colas (2%) for our employees, purchase of a police vehicle, e-ticket printers for the police, purchase of a trash truck, upgraded security equipment and the payment of bond on police station (of course).
The Town Administrator left out of his budget the following items that have been included in the budget in previous years: the Town Organization Grant Program ($8k) and bonuses for Department heads ($10K). These are items that will be discussed.
So Tell us about the Trash Truck: Before starting this discussion, I’d like to give credit to the folks in Public Works who maintain our vehicles. Due to their efforts, our maintenance costs associated with our Public Works and Public Safety vehicle fleets are quite low. Furthermore, their efforts allow us to have a fleet of cars and trucks that are older; reducing the Town’s on-going capital costs. For example; the Town has three trash trucks, two primary vehicles and one very limited backup. These vehicles were manufactured in 1992, 1994 and 2002. That makes the average age of our trash trucks 17 years.
Three years ago Public Works requested that we start planning for the purchase of a new truck. Based on that request, the council set aside $85K in the budget in FY12 and FY13 so the money would be reserved, with the idea the truck would be purchased in FY14. The good news is that the Trash Trucks are holding up well and there is no immediate urgency to purchase a truck. However, we do need to address this purchase soon.
Therefore the Council and Town Administrator have discussed another option. Given the low interest rates available at this time we may purchase the truck but spread the payments over the next three to five years. This would smooth out the payments, reducing this year’s payment to approximately $60K to $85K. This would generate a cash flow savings in FY14 of over $170K. These funds could assist us in re-paving efforts we may have to pursue.
The Council may choose to continue to defer the Trash Truck decision as our Public Works Director and Town Administrator would like to purchase a vehicle fueled by Compressed Natural Gas in an effort to reduce future operating costs. Unfortunately, there are no CNG fueling stations nearby. Town Staff have been discussing this issue with County Officials in an effort to get a CNG station located near the County Waste Facility.
What about re-paving when WSSC finishes its work? Financially the town has been fortunate to have so many roads disturbed by WSSC construction over the last few years. WSSC has been a good partner when it comes to repaving the roads they disturb. Their work has saved the Town hundreds of thousands of dollars in future road projects. However, it does create a smaller financial issue for Cheverly, as WSSC only repaves the percentage of the road it disturbs. Although they tend to be generous in determining that percentage, it leaves Cheverly with the responsibility to pay for the remainder of the road.
Therefore, over the years Cheverly has followed WSSC and re-paved the remaining portion of the road. To date these effort have been easily budgeted, however this year WSSC has initiated construction for sewer and water projects throughout Wards One and Two. As discussed in previous newsletters this construction will last for at least 270 days, however by late next Spring repaving will occur. The Town Council has a stated policy of trying to complement their repaving efforts, fix the corresponding sidewalks and place raised crosswalks at the appropriate intersections.
Due to the amount of construction we will be budgeting significant funds for this effort, unfortunately we most likely will still be a little short.
Town Grant Program: For the last two years the Town has sponsored a Grant Program for Town Organizations. The program was created for two reasons. First, the Council wanted to create a consistent process for awarding small awards to town organizations. In previous years, these awards were always handled in a “one-off” process that had no rules or guidelines. The second reason was to provide town organizations with some small financial assistance for the purpose of achieving their goals.
Over the last two years the council has helped support the volunteer composting program, the youth program run by Vine Corps, the Boys and Girls Club and many others. Initially the grant program was funded at $10k, but last year the program was reduced to $8K.
I will be supporting the inclusion of this program in the Town Budget.
National Park Service Homes: There are three vacant homes on 59th Avenue across Route 202 from the Howard Johnson’s that are owned by the National Park Service. These homes were purchased by NPS over five years ago. Since that time the Town has been in negotiations regarding their eventual demolition. In the March Town work session, NPS attended to report on their progress. They reported that at long last the Federal Process for Home Demolition had been completed and funding for the project had been acquired. The current schedule for completion is August 2013, we have our fingers crossed.
Pedestrian Safety: In the March work session the Town Council considered an ordinance initiated by our town staff that would have created a municipal infraction allowing our police and code enforcement officers to issue tickets to pedestrians walking in the streets. There are currently state statutes that our police could enforce, however the state statute is part of the criminal code and therefore any ticket issued would be a criminal violation. That of course seems overly severe and to date no ticket has ever been issued. The proposed ordinance would have been like a simple traffic violation.
The council agreed not to pursue this ordinance at this time, because there are many examples of individuals who safely use the roads for pedestrian uses. However, the council encourages everyone to exercise extreme caution when doing so, as accidents can occur
Shout Out to Girl Scout Troop #3443: On March 9th Girl Scout Troop #3443 held an Eco Fair at St Ambrose Church. The Girl Scouts earned their Silver Award when they organized an educational event for Cheverly residents that featured many local vendors and residents who specialize in Green businesses. The Silver Award is the highest achievement a Cadette can achieve in Girl Scouts, so congratulations to all and thank you for a hosting a great event.
Silver Award Winners; Bena Williams, Camille Leys, Cameron Minor, Makayla Tabron, Taylee Turner, Clarice Ferrando, Katheryn Yates, and Caitlin Caldwell.
Other Cadette Helpers: Mynai Abram and Cecillia Graham.