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Citizens' Summary - 2016 Proposed Budget

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Township of Lower Merion
Montgomery County, Pennsylvania

2016 Proposed Budget
Citizens’ Summary

November 6, 2015

Elizabeth S. Rogan
President, Board of Commissioners

Commissioner C. Brian McGuire
Chair, Finance Committee

Ernie B. McNeely
Township Manager

Eric M. Traub
Chief Financial Officer

2016 PROPOSED BUDGET HIGHLIGHTS

Key Dates

Distribution of Budget to the Board, Libraries, Staff and the Media:

  • November 6, 2015

Public Hearings:

  • November 18
    December 2

Budget Adoption:

  • December 16

Personnel

Net Full-Time Equivalent (FTE) Positions will decrease 1.8 FTE's from the 2015 Budget level of 476.5 to 474.8 in 2016.  Refer to the Personnel Section of Budget Message for more details.

Taxes and Fees

  • The Real Estate Tax millage rate will remain unchanged for 2016 (fifth consecutive year).

  • The adopted 2015 Solid Waste Fees will remain unchanged in 2016 as follows: one mini can ($205), one container per week subscription ($292), plus $58 for each additional can and the Rear Yard Collection Fee for refuse and recycling placed more than 5 feet from the curb line ($210).

  • The 2016 Budget indicates the possibility of a rate increase to the Sanitary Sewer Rental Fee and drawdown of fund balance may be needed to balance the budget and maintain a 10% fund balance reserve.  The Sanitary Sewer rental rate will be further reviewed before the official 2016 Sanitary Sewer rental rate is adopted by ordinance and billed in May 2016.

     

General Fund Budget Summary

2015 Estimated Actual:

  • The 2015 Revenue is estimated at $59,900,030, an increase of $1,666,430 or 2.9% compared to the 2015 Budget.

  • The 2015 Expenditures are estimated at $60,993,787, an increase of $572,858 or 0.9% compared to the 2015 Budget.

  • The 2015 Estimated Actual expenditures exceed revenues (deficit) by $1,093,757.

2016 Proposed Budget:

  • The 2015 ending fund balance (undesignated) is estimated at $18,536,141 or 30.4% of the 2015 Estimated Actual Expenditures.

  • The 2016 Revenue is budgeted at $59,071,644 an increase of $838,044 or 1.4% compared to the 2015 Budget.

  • The 2016 Expenditures are budgeted at $61,821,504, an increase of $1,400,572 or 2.3% compared to the 2015 Budget.

  • The 2016 Budget expenditures exceed revenue by $2,749,860 requiring a planned budgeted drawdown of fund balance to balance operating revenue with expenditures.

  • The 2016 Budget includes $1,200,000 of estimated negative appropriations (budgetary savings) in Non-Departmental (Department 70).

  • The 2016 Budget ending fund balance (undesignated) is estimated at $15,786,281 or 25.5% of the 2016 Budget Expenditures.

2016 PROPOSED BUDGET
ALL FUNDS SUMMARY
This table shows all Township funds subject to the annual appropriation process.
FUND
BEGINNING
FUND
BALANCE
 +
REVENUE
 -
EXPENDITURES
 =
ENDING
FUND
BALANCE
 
GENERAL
$18,736,141
 
$59,071,644
 
$61,821,504
 
$15,986,281
EQUIPMENT
13,465,648
3,532,344 
4,314,977
12,683,015
SANITARY SEWER
14,536,942
7,832,000 
8,387,102
13,981,840
SINKING
- 
11,958,582 
11,958,582
- 
CAPITAL PROJECTS
5,959,235
33,852,765 
39,812,000
- 
HIGHWAY AID
-
1,514,160
1,514,160
- 
SPECIAL REVENUE
- 
4,090,243 
4,090,243
- 
SOLID WASTE
960,524 
7,153,284
7,267,952
845,856
APPLEFORD
101,000
- 
- 
101,000
SUBTOTAL
$53,759,490
129,005,022 
$139,166,520
$43,597,992
 
TRANSFER BETWEEN
FUNDS
- 
  
(17,621,768)
  
(17,621,768)
  
- 
 
TOTAL
$53,759,490
  
$111,383,254
 
$121,544,752
 
$43,597,992
REVENUE SUMMARY BY MAJOR CATEGORY
Revenues
2014 Actual
2015
Estimated
Actual
2016 Budget
 
Program Revenues:
Charges for Services
$17,945,366
$18,063,023
$18,006,328
Grants
5,917,389
6,796,965
30,741,218
Departmental Earnings
2,519,199
2,520,000
2,565,000
Licenses and Permits
5,513,292
5,454,000
5,609,370
Fines and Forfeits
1,025,967
1,070,000
1,088,500
 
General Revenues:
Real Estate Taxes
$31,049,248
$31,041,907 
$31,224,008
Business Taxes
10,875,458
12,800,000
11,176,000
Real Estate Transfer Tax
3,341,636
3,428,280
3,565,411
Investment Income
87,187
92,760
85,165
 
Other:
Proceeds from the Sale of Bonds
$17,226,873
$12,532,123
$9,000,000
Transfers In
13,955,207
14,224,990
15,170,142
Other Revenue
2,031,305
734,660
773,880
 
Transfers Between Funds
(16,099,140)
(16,562,832)
(17,621,768)
 
Total Net Revenues
$95,388,987
$92,195,876
$111,383,254
EXPENDITURE SUMMARY BY FUNCTION
Function
2014 Actual
2015
Estimated
Actual
2016 Budget
 
General Government
$9,411,586
$10,167,288
$10,121,120
Public Safety
23,234,139
24,146,159
24,787,682
Building and Planning
3,422,778
3,477,946
3,810,972
Community Development
1,107,517
1,376,197
1,271,987
Public Works
13,827,644
14,549,015
14,093,633
Libraries and Recreation
7,413,143
7,514,683
7,447,758
Debt Service
20,673,614
20,755,115
22,166,314
Capital Outlays
15,706,083
14,192,000
39,812,000
Sanitary Sewer
7,748,844
8,113,239
8,387,102
Solid Waste
6,809,866
7,215,747
7,267,952
 
Transfers Between Funds
(16,099,140)
(16,562,832)
(17,621,768)
 
Total Net Expenditures
$93,256,074
$94,944,557
$121,544,752

Function and Description: The General Fund accounts for the financial resources of the Township which are not included in any other Fund. Principal sources of revenue are taxes, licenses and permits, and departmental earnings.

GENERAL FUND
 
2014 ACTUAL
2015 BUDGET
2015
ESTIMATED ACTUAL
2016
BUDGET
 
FUND BALANCE - JANUARY 1
$20,172,706
$16,270,429
$19,829,898
$15,986,281
DESIGNATED TO BALANCE BUDGET *
- 
2,187,329
- 
2,749,860 
REVENUE
57,835,463
58,233,600
59,900,030
59,071,644
TOTAL RESOURCES AVAILABLE
78,008,169
76,691,358
79,729,928
77,807,785
EXPENDITURES
58,178,271
60,420,929
60,993,787
61,821,504
TOTAL RESOURCES REQUIRED
58,178,271
60,420,929 
60,993,787
61,821,504
 
FUND BALANCE - DECEMBER 31
$19,829,898
$16,270,429
$18,736,141
$15,986,281
 
Sources of Revenue: Real Estate Taxes (52.8%), Other Taxes (25%), Licenses and Permits (9.5%), Departmental Earnings (4.3%), Fines and Forfeits (1.8%) and Other Revenue (6.6%).
 
Sources of Expenditures: General Government (11.6%), Public Safety (40%), Building and Planning (6.2%), Public Works (13.6%), Libraries and Recreation (12.1%) and Debt Service (16.5%).
 
Budget Changes: The Proposed 2016 Revenue Budget increased $838,044 (+1.4% ) in comparison with the 2015 Budget. This is primarily attributed to better business and mercantile tax, real estate transfer tax, highway aid and building and electrical permit fees performance projected in 2016. The 2016 Real Estate Tax (RET) millage rate remains unchanged and is proposed at 4.19 mills. This is the fifth consecutive year of no RET millage rate increase. Proposed 2016 revenues are projected to increase in real estate transfer tax (+6.1%), building and electrical permits (+8.6%), highway aid (+11.3%), business and mercantile tax (+1.6%) and cable television franchise fees (+6.4%) versus the 2015 Budget. For more detail, see the General Fund revenue categories and discussion of significant trends and assumptions.
The Proposed 2016 Expenditure Budget increased approximately $1.4 million (+2.3%) in comparison with the 2015 Budget. This is primarily attributed to salary and wages (+1.6%), debt service (+6.7%) and professional services (+15.6%). The 2016 Expenditure Budget increased $827,717 (+1.4%) in comparison with the 2015 estimate.
The Proposed 2016 Expenditure Budget includes $1.2 million of projected expenditure savings throughout the budget, which is expected to occur through ongoing cost containment and budgetary savings practices. Such savings would result in the General Fund ending 2016 with an actual operating deficit of approximately $2.7 million, thus reducing GF undesignated fund balance to approximately $15.8 million or 25.5% of the GF 2016 forecasted expenditures, and above the Township's fund balance policy goal range of 15% to 18%. The 2015 Estimated Actual ending GF undesignated fund balance is projected at approximately $18.5 million or 30.4% of the 2015 GF estimated actual expenditures.
 
* A portion of the December 31 fund balance is appropriated to balance the following year's operating budget. The 2015 Estimated Actual projects a deficit of $1.1 million. In the Proposed 2016 Budget, approximately $2.7 million is being designated from the estimated actual 2015 ending fund balance to create a balanced 2016 Budget. **It should be noted that approximately $0.2 million of the fund balance is designated for open encumbrances and not included in the Township's undesignated General Fund fund balance policy calculation.
GENERAL FUND - REVENUE SUMMARY
 
2014
ACTUAL
2015
BUDGET
2015
ESTIMATED
ACTUAL
2016
BUDGET
 
TAXES:
REAL ESTATE - CURRENT YEAR
$30,366,570
$30,547,000
$30,384,304
$30,441,405
- PRIOR YEAR
567,328
720,000
500,000
625,000
- INTERIM
56,333
75,000
105,000
105,000
ACT 511 - REAL ESTATE TRANSFER
3,341,636
3,360,000
3,428,280
3,565,411
- EMST/LOCAL SERVICES TAX
1,881,538
1,825,000
1,850,000
1,868,500
- BUSINESS & MERCANTILE
8,993,921
9,162,000
10,950,000
9,307,500
TOTAL TAXES
45,207,326
45,689,000
47,217,584
45,912,816
 
LICENSES & PERMITS:
BEVERAGE
19,550
21,000
20,000
20,000
BUILDING & ELECTRICAL
2,301,966
2,000,000
2,075,000
2,172,438
BUSINESS PRIVILEGE & MERCANTILE
148,933
140,000
142,000
143,420
ALARM REGISTRATION FEES
489,251
500,000
530,000
543,250
PLUMBING
368,958
315,000
285,000
294,263
STREETS
160,178
200,000
300,000
275,000
HEALTH
65,573
69,000
67,000
67,000
RECREATION
489,251
500,000
530,000
543,250
FRANCHISE FEES
1,430,333
1,442,000
1,475,000
1,534,000
OTHER LICENSES & PERMITS
29,985
30,000
30,000
30,000
TOTAL LICENSES & PERMITS
5,513,292
5,250,000
5,454,000
5,609,370
 
FINES & FORFEITS:
ORDINANCE VIOLATIONS
641,592
700,000
700,000
700,000
DISTRICT JUSTICE
384,375
410,000
370,000
388,500
TOTAL FINES & FORFEITS
1,025,967
1,110,000
1,070,000
1,088,500
 
DEPARTMENTAL EARNINGS:
PARKING
1,251,882
1,296,000
1,250,000
1,250,000
POLICE SERVICES
401,646
357,000
360,000
378,000
RECREATION
287,309
285,000
345,000
357,450
ZONING & SUBDIVISION
439,811
449,000
460,000
479,600
HIGHWAY SERVICES
87,569
61,000
101,000
95,950
FIRE SERVICES
5,250
4,000
4,000
4,000
TOTAL DEPARTMENTAL EARNINGS
2,473,467
2,452,000
2,520,000
2,565,000
 
OTHER REVENUE:
PAYMENT IN LIEU OF TAXES
59,016
60,000
52,603
52,603
INVESTMENT INCOME
62,636
56,000
61,000
61,915
INDIRECT COSTS - SOLID WASTE
846,000
880,000
880,000
915,200
INDIRECT COSTS - SANITARY SEWER
630,000
655,000
655,000
681,200
REIMBURSED EXPENSES
188,896
155,000
100,000
155,000
FEDERAL BAB'S SUBSIDY
183,194 
196,000 
187,843
203,380
HIGHWAY AID
1,269,972
1,360,600
1,402,000
1,514,160
GRANTS AND GIFTS - POLICE
68,045
50,000
50,000
50,000
OTHER
307,652
320,000
250,000
262,500
TOTAL OTHER REVENUE
3,615,411
3,732,600
3,638,446
3,895,958
 
TOTAL REVENUE
$57,835,463
$58,233,600
$59,900,030
$59,071,644
GENERAL FUND - SOURCES OF REVENUE
 
2014
ACTUAL
2015
BUDGET
2015
ESTIMATED
ACTUAL
2016
BUDGET
 
REAL ESTATE TAXES
$30,990,231
$31,342,000
$30,989,304
$31,171,405
OTHER TAXES
14,217,095
14,347,000
16,228,280
14,741,411
LICENSES & PERMITS
5,513,292
5,250,000
5,454,000
5,609,370
FINES & FORFEITS
1,025,967
1,110,000
1,070,000
1,088,500
DEPARTMENTAL EARNINGS
2,473,467
2,452,000
2,520,000
2,565,000
OTHER REVENUE
3,615,411
3,732,600
3,638,446
3,895,958
TOTAL:
$57,835,463
$58,223,600
$59,900,030
$59,071,644
GENERAL FUND - USE OF FUNDS
 
2014
ACTUAL
2015
BUDGET
2015
ESTIMATED
ACTUAL
2016
BUDGET
 
GENERAL GOVERNMENT
$6,539,981
$7,068,851
$7,230,473
$7,167,416
PUBLIC SAFETY
23,225,801
24,627,686
24,121,160
24,762,682
BUILDING & PLANNING
3,422,778
3,720,486
3,477,946
3,810,972
PUBLIC WORKS
8,315,047
7,841,539
9,090,200
8,424,944
LIBRARIES
4,143,983
4,269,071
4,228,048
4,126,328
RECREATION
3,269,160
3,325,876
3,286,635
3,321,430
DEBT SERVICE
9,261,521
9,567,420
9,559,325
10,207,732
TOTAL:
$58,178,271
$60,420,929
$60,993,787
$61,821,504