NEWTOWN TOWNSHIP >> After less than 20 minutes of discussion, the board of supervisors approved the $13,081,611 preliminary general fund operating budget for the 2020 fiscal year beginning Jan. 1.
The proposed fiscal package, which was approved in a 5-0 vote at the Nov. 13 meeting, includes no property or other tax hikes even though anticipated real estate transfer tax collections are expected to drop in the coming fiscal year, as well as some other revenues.
Voting to formerly advertise the 2020 preliminary budget were: Chairman Phil Calabro, along with Supervisors John Mack, Linda Bobrin, Dennis Fisher and Kyle Davis.
The board’s action now allows the preliminary budget to be advertised for the 20-day minimum, as required by state law, so that a final operating package can be approved as early as the supervisors’ Dec. 11 meeting.
At a budget briefing Oct. 14, township manager Micah Lewis told the supervisors that real estate transfer taxes have “decreased drastically this year” and are expected to be lower than projected in 2020.
As a result, Lewis dropped the anticipated real estate transfer tax revenues next year from $800,000 to $750,000, the second year in a row that these collections have declined.
“This figure and its impact on the budget is consistent with the volatile nature of revenue in the budget,” he explained at the budget briefing, “Factors beyond our control can affect a decline in real estate transfer taxes such as diminishing supply, rising costs, increased interest rates and many other things.”
Another key tax revenue also is in trouble.
Because surrounding municipalities have enacted Earned Income Taxes (EIT), such as Middletown and Bensalem Townships, Newtown Township’s tax coffers recently have been hit because those non-resident tax revenues are instead going to the employees’ home municipalities.
The EIT is by far the largest revenue generator in the budget and is collected on the wages of residents, whether they work in or outside the township, as well as those non-residents who are employed in Newtown Township.
The tax accounts for more than half of all Newtown’s revenue collections in the general fund operating budget.
Under revised estimates, the non-resident EIT is now expected to generate about $2,050,000 in 2020, down from the original forecast of $2,125,000.
For 2019, non-resident earned income tax receipts which were anticipated at $2,078,500 by year’s end will instead be around $2,000,000, according to Lewis.
Meanwhile, under the preliminary budget, Newtown will still end the 2019 fiscal year on Dec. 31 with a healthy estimated surplus of about $2,372,029.
However, the general fund balance forward for the end of the 2020 budget year is projected to be much less, about $1,321,804, a figure still at the recommended level to maintain a good municipal bond rating.
According to Lewis, that somewhat healthy surplus is expected to drop even more over the next few years, resulting in the township to “significantly cutting back expenditures in the proposed 2020 budget to offset the projected shortfalls.”
In addition, the township is running into a budget shortfall on its debt service to pay off its outstanding bonds.
A recent bond refinancing with TD Bank allowed the township to make payments without a tax increase. But Lewis told the board last month that the township’s current millage rate doesn’t adequately cover future bond payments.
While these payments are enough for the 2020 fiscal year, the debt service fund will fall short by about $100,000, so a small property tax hike might be needed in the coming years, according to the township manager.
Lewis also acknowledged that the fire tax millage, which is also paid by property owners, might have to be increased in 2021 to offset expenditures to continue to fund fire and emergency service operations at the current levels.
While the township generates most of its tax revenue from the one-percent Earned Income Tax (EIT), it also currently imposes 4.5 mills on land owners.
One mill equals about $345,000 in revenue.
In 2019, property owners with homes assessed at the township average of $400,000 paid roughly $196, and will pay about the same amount next fiscal year.
With the revenue shortfall, Lewis said that capital spending is “dramatically less than in the previous years,” and that he has dropped plans to add any township employees. Currently, the township has 65 full-time workers and four part-time employees.
The preliminary budget calls for about $171,000 in capital spending for the police department, which will allow the township to hire one more officer, as well as purchase two new motorcycles, five new ballistic vests and three new Tasers.
Public works is slated to receive about $48,000 in capital spending, which will purchase a new Ford F-550 utility vehicle for road and inlet repairs, as well as new dump trailer and a milling head.
The technology department sill see $5,000 for new computers, $12,500 for police evidence server and $2,000 for audio-visual booth to broadcast township meetings.
Newtown Township’s emergency service will get a new quick response Ford Expedition.
In addition, $50,000 will be spent on renovations of police headquarters, and $20,000 for a new police department air-conditioning unit.
According to Lewis, total new capital spending for building and facilities is about $85,000.
The parks and recreation department will also be allocated $5,000 to plant new trees at the Clark Nature Center in response to the emerald ash borer disease that has claimed numerous trees at the center, and another $20,000 for new fences at the Helen Randle Park ball field.
As with most municipalities, running the police department takes up the lion’s share of Newtown Township’s general fund operating budget.
In 2020, about $5.39 million will be allocated for township police services, with more than $3.54 million of that going towards the salaries of the 26 full-time officers, the police chief, two lieutenants and four civilian staff members.
The next biggest expenditure in 2020 will be the public works department which is slated to get $1,610,191.
That money would be used for snow and ice removal, repairing traffic signals and signs, as well as cleaning and fixing storm sewers and drains.
Emergency services is budgeted at $1,035,957. There are eight paid full-time firefighters and a chief who are on duty from 6 a.m. to 6 p.m. Mondays through Fridays. During the other times, the all-volunteer Newtown Fire Association covers the township.
Parks and recreation would receive $771,533 in 2019, with a good portion of that amount going towards township recreation programs.
Code enforcement and zoning would be allocated $394,784.
A healthy street resurfacing schedule will continue on the 71.3 miles of township-owned roads in the coming fiscal year.
Twenty-four township roads covering roughly 5.52 miles are slated for repaving at a cost of $1,686,194, most of that amount will be taken out in a loan.
From 2017 thorough 2020 the road program will have paved 16.53 miles, averaging a little more than four miles in each of those years.
“The road program is a major improvement to this town ... I think it’s a fantastic program,” said Supervisor Chairman Phil Calabro at the budget presentation last month.
Extension of the township’s trails is also on the list for the coming fiscal year, now that Newtown will be receiving $375,000 in state grants for the Lower Dolington trail.
The township has also allocated about $145,000 in local funding next year for the project, which will be used to build the one-mile, 10-foot-wide multi-use trail which will run from Frost Lane to Upper Silver Lake Road. It would have pedestrian crossings and several stop signs along the way to make it more of a safer route.
Overall, Lewis said that he is “cautiously optimistic” that revenues in the general fund operating budget will be better than forecast.
“In 2020, we will continue to provide the high level of services this community has come to desire and to expect,” he maintained.
To help the township plan its financial future goals, the 2020 budget contains $40,000 to have a detailed fiscal study prepared.
It will help the township develop comprehensive multi-year plans, as well as establish short-and-long term budgetary objectives and strategies over the next five-to-10 years.
In April, the board had announced that the Pennsylvania Department of Community and Economic Development (DCED) had awarded the township a $40,000 matching grant to pay for the study.
“If we don’t find enough revenue to come into this township, we can’t cut many expenses anymore ... this is a herculean task this board has to come up with this year and going forward,” claimed Calabro, “Hopefully this study which is being done will put us on the right track.”
During his budget presentation to the supervisors last month, Lewis said that anticipated future shortfalls in revenues “will become more evident with capital expenditures that are needed.”
The preliminary operating budget can be tweaked over the next several weeks until a final budget is approved, but Pennsylvania law limits the amount of fine tuning.
“You can make changes as long as they’re not too significant,” Lewis had said.
While line items can be reduced and extracted from the preliminary budget, they cannot be increased beyond a certain amount without having to re-advertise the budget which would in turn delay approval.
State law mandates that a final fiscal package be in place no later than Jan. 1 and that it must be balanced.
The 2020 preliminary budget can be viewed at http://www.newtownpa.gov/newtown-township-finance-department/ or by visiting the township building at 100 Municipal Drive during regular business hours.