'09 budget wrestles with $1.9M shortfall

Wednesday, November 12, 2008 9:15 AM EST
By Evan Brandt, ebrandt@pottsmerc.com

POTTSTOWN — Property taxes would go up more than 11 percent next year; 13 borough employees would lose their jobs, and all four fire companies would have their funding cut by 25 percent if the preliminary budget presented to Borough Council Monday night were to be enacted as is.The budget presented, however, is preliminary and unlikely to be adopted without change. What remains unclear is what changes may be made, seeing as the members of Borough Council had few specific comments about the proposal during the public meeting.One thing was clear to one member of council."It's very clear to me that the party in borough hall is over," said council Vice President Greg Berry, who also chairs the finance committee.

It was a sober presentation made two hours into the meeting before a standing-room only audience that had turned out to voice support for firefighters and borough workers, among other subjects.Despite waiting two hours to get answers and, in some cases, their jobs on the line, the facts presented quieted any audible discord.The presentation was made primarily by Timothea Kirchner, a consultant serving as the interim borough finance director."I know I'm not telling any of you anything new when I say that this is a challenging time for all municipalities," Kirchner said. "In Pottstown, you have significant challenges with a good economy; as it is, we are all going to have to make extraordinary decisions just about everywhere."When the management team sat down to put the budget together, it was quickly clear that Pottstown would face a $1.9 million budget gap in 2009 if cuts were not made and revenues not raised, she said.Closing that gap with a tax hike would have raised property taxes by 30 percent, Kirchner said, and the managers were unwilling to bring that to the council.There are a number of contributing factors of the borough's budget woes. The total assessed value of the borough's property has dropped and is expected to continue to do so in 2009.Further, she said, the 2008 budget was built on the assumption that 97 percent of the borough's property taxes would be collected, despite the history of the borough's collection rate being closer to 93 percent. That alone has resulted in a $300,000 gap in budgeted property tax revenues. Add to that a $275,000 shortfall in budget real estate transfer taxes and even the loss of revenues from PCTV.On the expense side of the equation, the borough faces a contracted 3.5 percent salary hike for the borough's union employees and is estimating an increase for police, who are currently in contract negotiations with the borough. Also, health care costs are expected to rise by 15 percent.This proposed budget does not include any salary increases for management and no increase in worker compensation insurance.Faced with these realities, the borough's management team made a number of recommendations, including the elimination of 13 positions -- five management positions and eight union posts. Included in the proposed management cuts are the code enforcement director, currently vacant; the economic development director, a post currently held by Terri Lampe; the streets supervisor, currently held by Al Shaulis; a parks maintenance supervisor and a projects coordinator.Cuts to union positions include an engineering inspector, service worker, police secretary, part-time parking enforcement officer, a codes enforcement officer, a full-time and part-time janitor, and an accounts clerk in the finance office.The borough could save $35,000 by contracting out for janitorial services and another $40,000 by contracting our for payroll services, Kirchner said.Other savings could be realized by eliminating borrowing for a proposed airport hangar project, cutting the night cleaning service, and enacting a 25 percent cut to Pottstown's four fire companies.The proposal also calls for using $177,000 of the $250,000 Pottstown recently received as part of its settlement with Waste Management over landfill leachate to close part of the gap in the general fund budget, the largest portion of the budget and the portion with the largest gap.With those changes, the budget gap shrinks from $1.9 million to $692,357.Of that gap, $430,309 comes from the general fund, Kirchner said. The fire budget makes up another $162,030 of that shortfall and with a debt service gap of $140,423 making up the third largest portion.Of the general fund's expenses, 55 percent is the police department and the other 19 percent the fire budget.Of note is the parks and recreation department, whose budget remained within its revenues with no gap under the proposal for 2009.Should Borough Council choose to adopt this budget as presented, it would result in a millage increase of 0.922864 or a property tax hike of 11.47 percent, Kirchner said.According to information provided by Kirchner, this increase would mean a $69.21 increase in 2009 over this year's bill of $603.63 for a home assessed at $75,000, just below the borough's median property assessment."We tried to keep the tax increase as low as possible," said Assistant Borough Manager Jason Bobst.With the council asking no specific questions, Bobst asked that members send him any suggestions about changes they would like to see in the proposal."We need to know what areas are sacred and what you don't want to cut, or what you would like to see cut more," Bobst said.While council did not ask questions about the budget, they did manage to get in a little sniping.Councilman Stephen Toroney, vice president of the previous borough council, took exception to Berry's comment about "the party in borough hall.""I guess I must have been around during the party, but the managers who were here and the council and I took our job seriously. It was not about play time," Toroney said.He said the economy has taken a serious turn and that it was this turn of events that is responsible for much of the pain outlined in the budget presentation."I stand by my comment," Berry replied."We're all adults here and I am sick of this beating up on each other," said Councilman Jody Rhoads. "We all have to work together."Councilman Mark Gibson agreed. "We're supposed to work as a whole, Democrats and Republicans, and these kind of comments aren't helping people," Gibson said.Looking at Berry, he added, "We're so much more efficient now than we were in the prior two years, but right now you're starting to sound like Jack Wolf" in reference to the previous borough council president.Borough Council President David Garner intervened and said, "Hopefully, we're all staying focused on the task at hand."Berry praised the clarity of Kirchner's presentation. "This is something that has not been seen in this borough in a long time," he said.What also has yet to be seen is when the next budget meeting will be held.Apparently unprepared that another budget meeting must be scheduled, the council members were unable to settle on a date.