In November 2010, Cumru Township had projected a 2011 budget general fund deficit of revenue versus expenses. At that time, in order to defer a 2011 general real estate tax increase, the Board of Commissioners chose to sharply reduce general fund expenses and fund the remaining general fund deficit of approximately $250,000 with reserve monies. Cumru Township anticipates a similar deficit of revenue versus expenses for the 2012 budget.
The ongoing budget deficits reflect the downturn in the economy, specifically the housing market. As a “bedroom community,” Cumru Township has been greatly affected by the depressed housing market. Real estate tax revenue has decreased as more homes have gone into foreclosure and successful assessment appeals have increased. Transfer taxes fell 24% in 2010 and 13% in 2011. Building and related permits declined by 30% in 2010 and 50% in 2011, resulting in decreased fee revenue and fewer assessment increases.
During the 2012 budget process in October and November 2011, Cumru Township projected a potential general fund budget shortfall of approximately $994,000. To address the general fund shortfall, the Board of Commissioners implemented several strategies.
First, the Board directed Township departments to identify cost cutting measures. Such measures include:
- eliminating the purchase of two vehicles in 2012,
- selling two vehicles during 2012,
- eliminating several staff positions,
- continuing the installation of energy saving devices, and
- instituting numerous procedural changes.
Second, the Board directed Township departments to identify 2012 real estate tax restructuring so that the budgets of the debt service and ambulance funds will balance. Heretofore, the general fund has been subsidizing the expenses of the debt service and ambulance funds.
Third, the Board directed staff to propose a new fee schedule. Many of the Township’s permit fees have not been increased in several years and no longer cover costs. A new fee schedule is anticipated for adoption in December 2011.
Despite the fact that the vast majority of the Township’s expenses are contractually or otherwise obligated, the projected general fund budget deficit was reduced by approximately $500,000 after implementing and accounting for these measures. The Board of Commissioners determined that some amount of deficit could be supported by reserves, but a modest general tax increase would be necessary in order to have reserves for emergencies and essential capital expenditures. The recent Declarations of Disaster Emergency for Hurricane Irene, Tropical Storm Lee, and the October 29th Snowstorm are vivid reminders of the need for reserve funds.
The total 2012 millage for all funds will be increased by 0.5 mil, or 10.5% overall. The tax structure will change as follows:
2011 2012
General fund 3.33 mils General fund 3.895 mils
Fire fund 1.00 mil Fire fund .85 mil
Debt service .27 Debt service .335
Ambulance .18 Ambulance .2
Total 4.78 Total 5.28
This tax structure and the cost savings described above result in a greatly reduced 2012 general fund deficit of $160,000, while leaving carry over funds for emergencies.
|