SANATOGA PA – An infusion of $621,450 from Lower Pottsgrove (PA) Township‘s savings into its 2011 budget makes a general fund tax increase unnecessary for another year, but former Commissioners’ President Tom Troutman last week told the current Board of Commissioners he thinks “that’s an awful lot of money” for budget balancing.
Could be, Jonathan Spadt – a Troutman successor in board presidency – replied, and then added, there’s more where that came from.
Even after what will be Lower Pottsgrove’s second-largest shift of cash from savings to budget revenues during the past five years, Spadt predicted the township will start next year with a fund balance of $1.784 million. The amount is easily higher than a $1.2- to $1.3 million cushion of reserves financial advisers say the township should have on hand to protect its bond ratings.
“We’re still in a very healthy position,” Spadt proclaimed.
Troutman, during the board’s meeting last Monday (Dec. 6, 2010) acknowledged he was pleased that the general property tax rate would remain unchanged. “No tax increase certainly sounds good,” he admitted, but he decried the expected transfer as “a startling number.” Another former board member and Troutman ally, Anthony Doyle, who also was in the meeting audience, lodged essentially the same complaint two weeks earlier.
Spadt dismissed both. “I don’t think sitting on a pile of cash is healthy for the township,” so long as its reserves are sufficient to meet bond rating standards, he said. Those ratings become highly important during 2011, as commissioners will be asked to guarantee a new, $13.7 million loan being sought for sewer system repairs by the Lower Pottsgrove Authority.
Besides, Commissioner James Kaiser noted, the township doesn’t have much choice in opting for a big transfer. “Investments are down everywhere,” he said, and Lower Pottsgrove’s revenues from interest and dividends have fallen like those of other local governments. “There’s no municipality in the state that was prepared for a 30-percent reduction as a loss from investments,” Solicitor R. Kurtz Holloway added.
Historically, Lower Pottsgrove has been able to avoid a tax increase over many years by relying on the fund balance, its piggy bank of sorts, to annually balance the books. Besides the $621,450 transfer it plans in 2011, it shifted $760,946 in 2010; $320,234 in 2009; $285,423 in 2008; and $479,243 in 2007, according to township budget documents.
The board is scheduled to meet this Thursday (Dec. 16) at 7 p.m. in the municipal building, 2199 Buchert Rd., Pottstown PA, for its annual close-out meeting. It’s likely the already tentatively-approved budget will be adopted as final then.
Related (to Lower Pottsgrove Township’s 2011 budget):
- Even With 2011 Transfer, Township Cash Cushion At $1.7M
- Municipal Budget Woes All Over The Local Map
- To Protect And Serve Cots Township $2.26M In 2011
- Five Years Of Lower Pottsgrove Budgets At A Glance
- Garbage Claims 7.5% Of Lower Pottsgrove’s Budget
- No Change In Town’s 2011 Base Tax Rate, But Bills To Rise Slightly
- State of Lower Pottsgrove’s Budget? Hurting, Not Wounded
- Pass The Excedrin. It’s Budget Time In Lower Pottsgrove
Related (to the Lower Pottsgrove Board of Commissioners’ meeting of Dec. 6):
- Even With 2011 Transfer, Township Cash Cushion At $1.7M
- Slowing Down In Sanatoga Proposed As A ‘Groovy’ Idea
- With Keim Bridge Out, Signal Coming In To Lower Pottsgrove
- Township OKs New Fire Police Law, Approves Members
- Township, Moyer Estate Settle Late Treasurer’s Accounts
- Commissioners Meet Tonight, With A Busy Agenda
So let me see, and we have a surplus in the budget which they put into savings?
Hmmmm Wouldn’t it be better to just have taxes enough to balance the budget and no more?
Ok what am I missing?
Bonds, Ed, bonds. The township has borrowed money for big ticket items like sewers, and will borrow more. It needs to show lenders it has the ability to repay those debts. Having a sufficient fund balance give creditors some assurance they’ll get their money back.