THE MAYOR'S REPORT: Budget 101
Another autumn Sunday has arrived. Still doing some side porch sittin’ after a wonderful walk this cloudy afternoon. Linda and John Helman joined Tina and me for a few blocks during our walk. I should have peeled off the sweatshirt as I got a little warm. So ... take a few minutes and join me with some coffee or tea. I had hoped to write about the 1960s, however, that will have to wait a few weeks as one of my local books on the subject is being borrowed by a friend.
So it is budget season in all 2,560 municipalities and 67 counties in Pennsylvania. How about a Pa. municipal budget 101 lesson today? Greencastle Administration and Finance Committee meetings started three weeks ago and it seems to be going well. Mayors may participate in the budget discussions, however, I do not vote unless there would be a tie. Being a commonwealth, municipalities must adopt a budget by December 31 in accordance with the Pa. Borough or Township Codes. All 1,877 municipal authorities (water, sewer, airport, etc.) must adopt their budgets as well on a calendar year. School districts and the commonwealth government are on a fiscal year being July 1 through June 30 of the following year. Since Pa. is a commonwealth there are 19,479 elected municipal officials. Wow!
There are usually multiple municipal budgets for each community including the General Fund, Highway Aid Fund, Capital Reserve Fund, Storm Water Fund, Sewer Fund and Water Authority Fund. Greencastle Borough has an “operating authority,” which is a board appointed by town council. They set the budget and oversee the rate structure, revenues, expenditures, and capital improvements.
The General Fund is the primary, day-to-day operation that is funded by taxes and some fees. Primary taxes received during the year are real estate, earned income, and real estate transfer taxes (when properties are sold). Municipalities do not tax retirement or unearned income in Pennsylvania. This is why folks move to Pa. after they retire. Other funds may come from various grants, fines and revenues from Pennsylvania insurance companies to fund borough employee pension plans and firefighter’s relief association expenses.
The Highway Aid fund receives money from the commonwealth’s fuel taxes. Expenditures are restricted to road/street improvement projects. This fund will help pay for a portion of the North Carlisle Street reconstruction. Liquid fuel tax funds increased when the Pa. fuel tax was raised about six years ago, however, the annual allocations have been decreasing as vehicles are more fuel efficient, use of electric vehicles, and residents working from home and driving less. It will be interesting as Pa. government looks at funding alternatives for roads and bridges as, I believe, we have the most roads and bridges per capita (per person) than any other state in the nation. A fair amount of the fuel tax funds had been used to fund the state police.
A Capital Reserve Fund is where you take excess funds at the end of the year and place in a separate account to fund future capital purchases such as vehicles and heavy equipment. You may do this at home with a money market or investment account.
The Sewer Fund is managed by town council to fund operations and capital expenses for the sewer treatment plant and waste-water treatment system. In 2021 a pump station (lift station) was rebuilt at the end of South Carlisle Street.
The Storm Water (SWM) Fund is the newest and is restricted for storm water management operations.
The quarterly invoice you receive includes three funds — water, sewer, and storm water.
A separate fund was recently created with the Federal American Rescue Plan Act funds received this past summer. These funds are restricted with a second round of funds coming in 2022. Council will have to deliberate as to how this will be spent with a time frame over the next several years until 2026.
In writing budgets, the goal is to balance the revenues and expenditures. You must have funds in reserve to get you started in the new calendar year. How much reserve should be in your fund balance is debatable. Some municipalities, typically townships, may have rather large reserve funds because of their significant tax base. Larger reserve funds may be used to balance a budget in lieu of raising taxes. That depends on the number of capital expenditures that may, from time to time, be incorporated in the general fund budget. Boroughs are land-locked with a limited tax base and, typically, more services provided. That’s just the Pennsylvania commonwealth form of government. Greencastle’s millage rate on real-estate is 15 while other Franklin County boroughs’ millage rates are 27.36; 30; and 30.93.
I encourage you to follow the budget process as information is presented at committee and full meetings of council. The full council will hold a budget workshop on Oct. 25 with a possible preliminary budget adoption Nov. 1. Meetings begin at 7 p.m.
I hope this Budget 101 information gave you some insight regarding the municipal budget process. I thank our hard working staff led by Borough Manager Emilee Little who burns the midnight oil for timely presentations along with the help of each department leader. I’ve been involved with municipal budgets for 37 years now. It’s always great when you hear the word “balanced.”
I end by writing about the past week in Greencastle. We bid farewell to 98-year-old Oscar Reed Burke, who served his country, church, family and the Greencastle community for many, many years. I so enjoyed our talks over the decades. Until we meet again, my friend.
It’s getting a little damp here on the porch so time to head inside. Support your family, friends and neighbors. We are certainly blessed.