LAME DUCK ADMINISTRATION APPROVES 2006 BUDGET OVER OBJECTIONS

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LAME DUCK ADMINISTRATION APPROVES 2006 BUDGET OVER OBJECTIONS
By Supervisor Glenn McKay
Dec 14, 2005, 10:13am

Outgoing Supervisors John Paul and Lee Fein along with Becky Kiefer approved the budget for 2006 by a 3-2 vote without listening to the concern expressed in writing to them on Nov. 21 and updated on Dec. 12 by Supervisor Glenn McKay nor to Carol Butterworth comments. Mrs. Kiefer expressed her concern over receiving these written recommendations at the last minute; however, she first received a recommendation letter Nov. 21. Furthermore, Chairman Paul, at the Nov. 22 Supervisors meeting, refused the request of McKay and Butterworth to hold a public budget workshop.
Mr. McKay asked that two primary items in the General Operating Fund Revenue be adjusted downward by a total of $1,424,000 and that Expenditures be reduced by $250,000.
The first of these revenue items was an unestablished value for the sale of dirt from new developments, hauled to two township sites under an arrangement negotiated privately by Mr. Paul. The budget included $750,000 revenue from a potential sale. Mr. McKay, having roughly measured the amorphous piles of dirt, and getting a second independent engineer's measurement made, estimated the volume to be 20-25% of that expressed by Mr. Paul; however, Mr. Paul refused to acknowledge how his numbers were determined. With such a variance in estimates and no documented value of its worth, Mr. McKay felt that it would be irresponsible to include any of it in the Operating budget, but was willing to lower it to $150,000, the revenues, if received, to be used to offset specific capital expenditures in the Park & Recreation Capital Fund.
The second item was $1,324,000 in Township Real Estate Sales as Revenue. In 2005, the Board of Supervisors had authorized an appraisal of several parcels belonging to the township. The original purpose of valuing the properties was to establish a baseline of one-time revenues that might be accessed to offset a potential purchase and then capital improvement of a suitable property to expand the administration and/or the police facilities, which are needed. However, the 2006 budget, though including a $1,500,000 revenue loan and a $1,500,000 capital purchase expenditure, did not provide anything on the expenditure side for capital improvement of the expansion, as hypothetically considered in 2005 by the Board. Instead, the $1,324,00 was only designated to offset capital highway improvements of $500,000. Mr. McKay’s recommendation was to reduce the real estate sales to $500,000 in surplus vacant land sales toward capital highway expenditures and presently retain our improved properties, since they generate income already included in 2006 budget and may have better future township application as we need to expand.
The bulk of our expenditures in the General Fund are year to year ongoing costs related to salaries, benefits, insurance, debt payments, township maintenance, police and emergency management. For good accounting management, I strongly feel that the bulk of our revenues should also be ongoing year to year, not reliant on one-time capital sales to balance this budget.
Implementing these recommended reductions in revenue and expenditures, the 2006 year end balance would only be $120,072 (compare maintaining a balance in your checking account). The Township Auditor recommended to the Supervisors in its Dec.31, 2004 report that it should take note of the decreasing balance from year to year (in 2001, balance was $4,003,084) and that the balance should be between 5-10% of expenditures as a cash flow cushion to cover unanticipated events. With the recommended downward adjusted 2006 budgeted expenditures being $9,135,312, the minimum 5% balance required would be $456,766. Thus, an additional $366,694 revenue is necessary to attain this level without further cutting expenditures.
There is no magic out there to pull money from the air (or non-existent dirt). Expenditures have exceeded revenues for at least the last six years as your reserve balance was spent off. In 2006 operating expenditures still exceed operating revenues. Selling the refrigerator (capital assets) to buy your food (operating costs) doesn’t work, because you no longer have anywhere to store that food. Either we find additional annual revenues or cut our food bills.