Borough pushes back presentation of 2009 budget

Saturday, October 25, 2008 6:22 AM EDT
By Evan Brandt

POTTSTOWN — Tax-conscious residents who had planned to attend the first presentation of the borough's 2009 budget, originally planned for Tuesday, will have to cool their heels for two more weeks.Apparently the budget, which a consultant said last week is among the most unnecessarily complicated she has ever seen, remains too complicated to be ready for its scheduled first airing.Borough Manager Ray Lopez announced Oct. 22 that the first public presentation of the budget will not occur until Nov. 10, which is borough council's regularly scheduled public meeting.
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The release announcing the change noted that borough staff and Timothea Kirchner, the consultant with the firm Financial Solutions "have been working round the clock to assure the numbers they present for the 2009 budget are a true reflection of the actual costs of services to the citizens of the borough."Noting that "the actual process of putting the budget together did not begin until mid-September, due to the fact that the finance director left the borough in late August," Lopez wrote that "other data, critical to the completion of the budget, such as health care costs and insurance costs, are only coming in this week."Borough council was warned by Kirchner last week that this year's budget would not be pretty.With a 2008 budget already laboring under the weight of a projected $200,000 shortfall and the discovery of an unexpected workers compensation insurance bill for another $125,000, Kirchner told council that "I am very concerned that expenses will outpace revenues."Kirchner also told council that its budget is unnecessarily complicated and that this year she and the staff would attempt to simplify it."We have committed to getting this budget right and to improving the budget process," Council Vice President Greg Berry, who chairs council's finance committee, said in the release."It isn't about hurrying to get the budget out. It's about getting it right," Berry said. "We should take the time to do that while fulfilling our obligation with regard to the required time for public discussion of this budget. Delaying until Nov. 10 accomplishes both goals."Following Kirchner's budget presentation last week, Berry said that with the exception of a tax increase, "everything is on the table, including heads."

http://www.pottsmerc.com/articles/2008/10/25/news/srv0000003881794.txt

No lack of interest in finance director job

Sunday, October 19, 2008 1:32 PM EDT
By Evan Brandt

POTTSTOWN — Although the borough is without a finance director — again — there's no shortage of people who want to replace him.So far, 40 applications for the job have been received, said Timothea Kirchner, a consultant with Reading-based Financial Solutions, the company hired by the borough to help hire a new finance director as well as put the 2009 budget together and prepare for a state-backed overhaul of Pottstown's financial and management structure.These last two tasks have taken the majority of Kirchner's time, she told borough council Oct. 14, but she said she will continue to review the applications.Whichever applicant is successful will find themselves in the midst of a consultant review under the aegis of a state program called the Early Intervention Program.

An initiative of the Pennsylvania Department of Community and Economic Development, the EIP, as it is known, is designed to help struggling municipalities get their financial house in order before disaster hits.Kirchner's firm has been involved with EIP projects in Lancaster and she said the fact that Pottstown will soon undergo this review, which will result in recommendations for making the borough operate more efficiently, is "the good news" in this year's budget process, which is looking to be a gloomy one."It's very good the borough has decided to go through the Early Intervention Program," Kirchner told council. "It will have short and long-term financial and management objectives and its aim is to improve the overall management of the borough."The requests for proposals from financial consulting firms will be "out on the street on Oct. 20," Kirchner said. Responses will be due by Nov. 24."We have an aggressive timeline and we're shooting for the job to be done by July 1, so you can incorporate it into the 2010 budget," she said.One of the places that consultant is likely to focus, Kirchner said, is the borough's finance department.She said the borough's "revolving door" history of finance directors had made it difficult to establish any consistency in approach to policies and practices."In my opinion, the borough manager and the assistant borough manager are in charge and the finance department is there to serve all the departments of the borough," Kirchner said."I think there was a disconnect and we have to take a hard look at who's responsible for what," she said.Council Vice President Greg Berry, who also chairs council's finance committee and championed the acceptance of the DCED grant that will help to pay for the EIP consultant, praised Kirchner's insights."We know there has been mismanagement and financial shell games going in the borough for years and we know that fiscal responsibility has clearly not been occurring over the years," Berry said.What the EIP study will do, Berry said, is three essential things."It's one thing to find these problems, then we have to find a solution and then put practices in place to make sure they don't happen again," he said.

http://www.pottsmerc.com/articles/2008/10/19/news/srv0000003826171.txt

Pottstown sees bleak budget picture in '09

Sunday, October 19, 2008 1:32 PM EDT
By Evan Brandt

POTTSTOWN — A tax hike, service cuts, higher trash bills and layoffs.Some or all of these politically unpalatable choices are part of Pottstown's financial future, as borough council prepares to start on a budget a financial consultant has warned will involve some tough decisions.The consultant, Timothea Kirchner, works for Financial Solutions of Reading and this week she appeared before borough council to give an overview of the upcoming budget process and to sound the warning about what it might entail.Council already knows some of the problems.

In July, former finance director Robert Armelin predicted the borough would end the year with a shortfall of about $200,0000.And Tuesday night, Kirchner informed council that she had discovered a letter indicating the borough owes an additional $125,000 to a worker compensation insurance trust fund due to underestimating Pottstown's payroll by about $2 million.Another obstacle to a balanced budget in 2009 is the dwindling value of property in Pottstown.With the real estate market in free-fall, more and more property owners are challenging their property assessments — and winning.Assistant Borough Manager Jason Bobst said the total assessed value of Pottstown property has dropped by $7 million to $8 million.That means without any tax increase at all, all other borough taxpayers must make up between $56,340 and $64,000 in lost income — either that or the borough has to cut that much out of the 2009 budget to keep the tax rate the same."I am very concerned that expenses will outpace revenues," saidKirchner.The struggling economy will also probably depress the borough's tax collection efforts, she added."In past years, you've had a 93 percent collection rate for your property taxes, which is really pretty good," she said. "But this year we're being very conservative and only estimating your revenue lines based on a 90 percent collection rate."Another obstacle is the budget itself, according to Kirchner."One of my immediate concerns is, to put it quite bluntly, you have a very complicated and complex budget in its format and in a number of items," she said."I've done county budgets for Lancaster that has a quarter of a billion dollars, and they are not as complicated in format as I have seen in this borough," said Kirchner who admitted to council that "I am enjoying being here, although I will say I almost ran out of the building on the first day,"Her observation was received sympathetically by Councilman Stephen Toroney, who once served as the chairman of council's finance committee."I've been on council going on nine years and there are parts of our budget that are still a mystery to me because of the complexity of it," he said.Given the "short time frame" Kirchner faced when her firm was hired and the demands of the budget timeline, she had not intended to make wholesale changes to the budget, hoping instead to make the changes for the 2010 budget."But as I looked at it, I realized I cannot in good conscience give it to you as it has been done before," she said.The borough's notoriously obtuse budget "is probably the result of a number of different finance directors moving through the borough and everyone had their own style, their own approach," Kirchner said."Everyone is frustrated with the budget and its format," said Kirchner, adding that her solution is "to get more of management involved in the entire budget process."She said the borough's managers have been open to her entreaties "and everyone is going through the budget line, by line, by line and there has been a lot of time and frustration by the directors."The goal is two-fold. One goal is to "ensure the budgets line up with what the managers say are actual revenues and expenditures" and also "to push hard to come in with the lowest budgets possible."Kirchner said "it is the staff's responsibility to bring you as lean a budget as possible."At the same time, she said she and Assistant Borough Manager Jason Bobst are "working to simplify the budget and budget documents by constantly asking the question: 'Why is it done this way?'"One area of the budget for which there was no good answer to that questions is in the grants and capital budget portions, said Kirchner."There really is no rhyme or reason for why some things are placed here and some things are placed there," said Kirchner.There are two big unknowns that will affect the final picture for the 2009 budget.One is the fact that the audit of 2007 was still not complete as of Oct. 14."We can't put a budget on the table without the confidence in the numbers that we can't have until the audit is in hand," said Kirchner.Toroney questioned why the audit was left open until March. "How can we legally keep a budget open?" he asked. "I want the confidence to know that when I vote on a budget, it won't be kept open."Another factor will be the increase in the cost of providing health insurance to the borough's employees.This particular mystery always carries a lot of suspense as well, not only because of the big part it plays in determining the borough's expenditures for the year, but also because the final numbers typically do not arrive until late December, when the budget is almost finished."The next eight weeks will be critical for health insurance costs," Bobst told council. "There will be an increase and I'm hoping that we'll be able to get some preliminary numbers based on the last 12 months and put something in front of you that is reasonably accurate."The final 800-pound gorilla in the budget room is trash.For the past three years, borough taxpayers have benefited from a trash contract that, despite the initial increase, has kept the price steady.That ends this year when a new contract will have to be signed."The wild card here is the trash contract," said Bobst.Bids on that contract will be opened Nov. 7.Given all these factors, borough council will have some tough decisions to make."I, for one, will not balance this budget on the backs of the citizens of this town," said Toroney. "We either have to raise taxes or cut services, that's the reality.""Everything is on the table," said Council Vice President Greg Berry, "including heads.""Well I won't touch police," Toroney said. "That's sacred ground for me.""We intend on taking a very fiscally conservative approach to this budget," Kirchner said.Council set 5 p.m. Monday, Oct. 27 in borough council's chambers as the time and place where Kirchner's official budget presentation will occur. Subsequent budget meetings will commence following that presentation.

http://www.pottsmerc.com/articles/2008/10/19/news/srv0000003816596.txt

Owing $125K Is not Fiscally Responsible...

That is correct, owing $125,000 is not fiscally responsible.

What is fiscally responsible is finding the mistake, determining what caused it and developing a means to prevent it from occurring again.

This is what the Fiscal Responsibility Pottstown initiative was designed to do.

-Greg Berry

Borough finds it owes $125K for compensation fund

Saturday, October 18, 2008
Pottstown Mercury
POTTSTOWN — Taxpayers are on the hook for an additional $125,000 as a result of the borough's failure to correctly forecast the borough payroll, a consultant told Borough Council this week.Timothea Kirchner is a consultant with Financial Solutions, the Reading firm hired to help the borough prepare its budget in the wake of the resignation of former finance director Robert Armelin.Tuesday night, she appeared before council to give a preview of some of the budget difficulties the borough will face in the coming year. Not the least of these, is the recent discovery of a letter from one of the borough's insurance companies informing the borough that it owes $125,000 toward its workers compensation fund.This was the result of underestimating the borough's salaries by $2 million, she said. Kirchner told the council, "That's a real concern."
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"How do we underestimate salaries by $2 million?" Councilman Steve Toroney asked incredulously.Toroney said he had to wait a few moments before speaking, "So my head doesn't explode."Assistant Borough Manager Jason Bobst explained that because the borough provides workers compensation insurance by being part of a trust, at the beginning of the year a worksheet is filled out in which the borough's total payroll is estimated. This number is plugged into a formula which is used to estimate how much the borough will pay into the trust to cover that year's anticipated expenses.Although the estimate of base salaries was "right on," Bobst said, "overtime and longevity numbers, primarily police overtime, resulted in the estimate being too low."The driving factor here is police overtime," said Bobst. "It was grossly underestimated."The reason for that, said Police Chief Mark Flanders, involves a long-standing complaint he has had about how Pottstown puts together his budget. Much of the overtime, Flanders explained, is due to grant-funded activities, such as DUI checkpoints.Although the grant revenues pay for the overtime — "if there's no grant, there's no overtime" — the over-time is nevertheless booked in the budget as an ordinary expense, making it look like the police department is spending more money than it has revenue, Flanders said.The news of the due bill comes in the wake of a prediction Armelin made in July that the borough would end the year with a $200,000 shortfall. At the time, he identified shortfalls in the real estate transfer tax and the local services tax as the primary causes of the predicted shortfall.It is unclear whether that prediction included the $125,000 the borough owes the trust and if the shortfall the borough now faces is actually $325,000.What is becoming increasingly clear is the financial pickle in which Borough Council will find itself when it begins looking at the 2009 budget later this month, Kirchner warned.She said the audit on the 2007 budget is not yet complete and she is concerned about other surprises that may be lurking in the 2008 budget.The discovery of the letter regarding the worker compensation insurance "made us look that much more deeply at this budget," she said.

State of finances, budget challenges

Monday, October 13, 2008 1:49 PM EDT
By Evan Brandt

POTTSTOWN — Whether deciding something as big as how to spend a $250,000 check from Waste Management, or something as small as making a donation to the borough's new World War II Memorial, Borough Council Vice President Greg Berry thinks nothing should be done until Tuesday.That is the day that the borough's financial consultant, Finance Services of Reading, will give a presentation on the state of the borough's finances and the challenges it will face in the coming budget season."We're going to get a detailed report on where we are and an update on our efforts to simplify the budget so we can better align revenues and expenses," Berry said.

The last time borough council received an update on the 2008 budget, in July, former finance director Robert Armelin predicted the borough would end the year $200,000 in the hole.That was before the current financial crisis hit Wall Street, ripples from which could have anynumber of unintended consequences for municipal budgets. In the meantime, Armelin resigned to take a position with a Bucks County municipalitiy.The borough has received a number of resumes for the finance director position, applications which the consulting firm is reviewing and on which it will make recommendations.However, the borough not only has to put together a 2009 budget, but also prepare itself to participate in the state's Early Intervention Program, designed to provide a five-year financial forecast to borough council.In the past, Financial Services has helped municipalities participating in this program and so is well positioned to aid Pottstown, said Berry, who has championed the program.At a cost of $65,000, of which the borough will pay half, the effort will produce a report with recommendations on how Pottstown borough government could be made more efficient and fiscally sound.Berry said it is his intention for the finance committee, which he chairs, to invite high-level business leaders in the community to participate and make recommendations not so much about the finances "but for input on management issues."The borough must decide how to use the $250,000 the borough received from Waste Management as part of the agreement it signed with the owners of the Pottstown Landfill to treat at the Pottstown Wastewater Treatment Plant the leachate the landfill generates.Berry urged council to wait until after Tuesday's presentation before making any decisions; however some ideas have already begun to surface."I'm sure there are lots of ideas on how to spend that money," Berry said.The money is the first half of a $500,000 payment the borough will ultimately receive from the company.Because the borough was the "driving force" behind getting a new agreement, said Borough Solicitor Charles D. Garner Jr., the Pottstown Borough Authority, which owns the wastewater treatment plant, has declined any claim to a portion of the money.Councilman Stephen Toroney, who served on the landmark Landfill Closure Committee that oversaw the closure of the landfill and who pushed to have a new agreement pursued, made some specific suggestions."It has always been my stance that the money should stay in the trash fund, since there is where it originated," Toroney said.It could be used to pay for larger recycling bins or paying the borough's costs for the regional composting facility being proposed by Lower Pottsgrove Township, he said."What I don't want it to be spent on is things like paying the electric bill," Toroney said. "Hopefully it won't be utilized to offset the trash bills."Another financial request, this one from Charles Pierce, an organizer behind the World War II Memorial, should also be put off until after Tuesday said Berry.He added that the organization "is immensely deserving but I think we should consider donations on a personal level instead of from the borough."

http://www.pottsmerc.com/articles/2008/10/13/news/srv0000003714567.txt

Pottstown finance decisions on hold

Sunday, October 12, 2008 3:00 AM EDT
By Evan Brandt

POTTSTOWN — Whether deciding something as big as how to spend a $250,000 check from Waste Management, or something as small as making a donation to the borough's new World War II Memorial, Borough Council Vice President Greg Berry thinks nothing should be done until Tuesday.That is the day that the borough's financial consultant, Finance Services of Reading, will give a presentation on the state of the borough's finances and the challenges it will face in the coming budget season."We're going to get a detailed report on where we are and an update on our efforts to simplify the budget so we can better align revenues and expenses," Berry said.The last time borough council received an update on the 2008 budget, in July, former finance director Robert Armelin predicted the borough would end the year $200,000 in the hole.

That was before the current financial crisis hit Wall Street, ripples from which could have anynumber of unintended consequences for municipal budgets. In the meantime, Armelin resigned to take a position with a Bucks County municipalitiy.The borough has received a number of resumes for the finance director position, applications which the consulting firm is reviewing and on which it will make recommendations.However, the borough not only has to put together a 2009 budget, but also prepare itself to participate in the state's Early Intervention Program, designed to provide a five-year financial forecast to borough council.In the past, Financial Services has helped municipalities participating in this program and so is well positioned to aid Pottstown, said Berry, who has championed the program.

At a cost of $65,000, of which the borough will pay half, the effort will produce a report with recommendations on how Pottstown borough government could be made more efficient and fiscally sound.Berry said it is his intention for the finance committee, which he chairs, to invite high-level business leaders in the community to participate and make recommendations not so much about the finances "but for input on management issues."

The borough must decide how to use the $250,000 the borough received from Waste Management as part of the agreement it signed with the owners of the Pottstown Landfill to treat at the Pottstown Wastewater Treatment Plant the leachate the landfill generates.Berry urged council to wait until after Tuesday's presentation before making any decisions; however some ideas have already begun to surface."I'm sure there are lots of ideas on how to spend that money," Berry said.The money is the first half of a $500,000 payment the borough will ultimately receive from the company.Because the borough was the "driving force" behind getting a new agreement, said Borough Solicitor Charles D. Garner Jr., the Pottstown Borough Authority, which owns the wastewater treatment plant, has declined any claim to a portion of the money.Councilman Stephen Toroney, who served on the landmark Landfill Closure Committee that oversaw the closure of the landfill and who pushed to have a new agreement pursued, made some specific suggestions."It has always been my stance that the money should stay in the trash fund, since there is where it originated," Toroney said.It could be used to pay for larger recycling bins or paying the borough's costs for the regional composting facility being proposed by Lower Pottsgrove Township, he said."What I don't want it to be spent on is things like paying the electric bill," Toroney said. "Hopefully it won't be utilized to offset the trash bills."Another financial request, this one from Charles Pierce, an organizer behind the World War II Memorial, should also be put off until after Tuesday said Berry.He added that the organization "is immensely deserving but I think we should consider donations on a personal level instead of from the borough."

http://www.pottsmerc.com/articles/2008/10/12/today

Pottstown finance decisions on hold

POTTSTOWN — Whether deciding something as big as how to spend a $250,000 check from Waste Management, or something as small as making a donation to the borough's new World War II Memorial, Borough Council Vice President Greg Berry thinks nothing should be done until Tuesday.
That is the day that the borough's financial consultant, Finance Services of Reading, will give a presentation on the state of the borough's finances and the challenges it will face in the coming budget season."We're going to get a detailed report on where we are and an update on our efforts to simplify the budget so we can better align revenues and expenses," Berry said.The last time borough council received an update on the 2008 budget, in July, former finance director Robert Armelin predicted the borough would end the year $200,000 in the hole.That was before the current financial crisis hit Wall Street, ripples from which could have any number of unintended consequences for municipal budgets. In the meantime, Armelin resigned to take a position with a Bucks County municipalitiy.The borough has received a number of resumes for the finance director position, applications which the consulting firm is reviewing and on which it will make recommendations.However, the borough not only has to put together a 2009 budget, but also prepare itself to participate in the state's Early Intervention Program, designed to provide a five-year financial forecast to borough council.In the past, Financial Services has helped municipalities participating in this program and so is well positioned to aid Pottstown, said Berry, who has championed the program.At a cost of $65,000, of which the borough will pay half, the effort will produce a report with recommendations on how Pottstown borough government could be made more efficient and fiscally sound.Berry said it is his intention for the finance committee, which he chairs, to invite high-level business leaders in the community to participate and make recommendations not so much about the finances "but for input on management issues."The borough must decide how to use the $250,000 the borough received from Waste Management as part of the agreement it signed with the owners of the Pottstown Landfill to treat at the Pottstown Wastewater Treatment Plant the leachate the landfill generates.Berry urged council to wait until after Tuesday's presentation before making any decisions; however some ideas have already begun to surface."I'm sure there are lots of ideas on how to spend that money," Berry said.The money is the first half of a $500,000 payment the borough will ultimately receive from the company.Because the borough was the "driving force" behind getting a new agreement, said Borough Solicitor Charles D. Garner Jr., the Pottstown Borough Authority, which owns the wastewater treatment plant, has declined any claim to a portion of the money.Councilman Stephen Toroney, who served on the landmark Landfill Closure Committee that oversaw the closure of the landfill and who pushed to have a new agreement pursued, made some specific suggestions."It has always been my stance that the money should stay in the trash fund, since there is where it originated," Toroney said.It could be used to pay for larger recycling bins or paying the borough's costs for the regional composting facility being proposed by Lower Pottsgrove Township, he said."What I don't want it to be spent on is things like paying the electric bill," Toroney said. "Hopefully it won't be utilized to offset the trash bills."Another financial request, this one from Charles Pierce, an organizer behind the World War II Memorial, should also be put off until after Tuesday said Berry.He added that the organization "is immensely deserving but I think we should consider donations on a personal level instead of from the borough."

Pottstown Mercury - 10/12/08 - http://www.zwire.com/site/index.cfm?newsid=20161626&BRD=1674&PAG=461&dept_id=635482&rfi=8