Managing Budgets

Here is a question for you. Does a municipality need to adjust to economic conditions after the yearly budget was approved?

Inflation Rate

Let’s review the facts. The inflation rate in the Lehigh was 5.2% in 2007(See Morning Call Article: The price of growth still high in Valley February 19, 2008). The Lehigh Valley inflation rate has exceed the US inflation rate for thee 5th straight year. Some good examples of factors that is the driving force of the Lehigh Valley inflation rate food prices, dairy products, and oil prices.

Housing Market

“The average price of an existing home rose 3 percent to $222,000 in January. In the Lehigh Valley, the price of a newly constructed home with four bedrooms and 21/2 baths rose 28 percent to $495,000 compared to January 2007, according to the Lehigh Valley Association of Realtors”. The time to sell a house was 68 days compared to 61 days last year. The number of homes sold last year hit the lowest level since 2001. (See Morning Call article: Ups and Downs in the Valley February 12, 2008). So far, we seem to be to avoid the national housing decline, but it sure seems we have housing issues as sheriff sale’s in the various townships seems to be increasing.

Jobs

“Unemployment in the Lehigh Valley ended the year at 4.6 percent, as the region added 7,500 jobs during the year, according to the Pennsylvania Department of Labor and Industry. The average of monthly jobless rates during 2007 was significantly lower, at about 4.2 percent, marking a low in March of 3.75 percent” (See Morning Call article: In Fighting Trim February 10, 2008).

Saving our pennies!

So, we seem to have mixed results. As inflation increase, our disposable income is declining. The job market is good, so we can retain some hope for avoiding a local recession. The housing is still hanging on. The key question is for how long. Nationally, we seem to be in a recession with escalating fuel price and further reductions in housing prices.

So what does all this mean? We need to watch our pennies and adapt to a very volatile economy. As our revenue streams decrease, we will need to reduce our expenses in-year!

If you have any ideas or comments about critical issues facing Forks Township, please share your ideas via our blog.

Get Involved – Every Voice Counts!

Sincerely,David Billings

Do we know our Total Tax Increase?

It is that time of season again; as the various townships and school boards are finalize their 2008 budgets.

Everything Forks started to wonder what is the total impact of the various tax increases on our residents. So here is our best estimate:

Forks Township Tax Increase:

1. An 11% increase in Real Estate taxes (4.6 mills to 5.1 mills). The owner of a property of $50,000 will pay about $255 in additional real estate tax.

EASD Tax Increase:

1. A 10.87% increase in school taxes (45.106 mills to 50.006 mills). A house assessed at $100,000 would generate a $5,000.60 tax bill under the preliminary budget, a $490.10 increase from last year.

Total Tax Increase:

Note: A mill is $1 of tax on every $1,000 of assessed property value

If we use the value of the property of $100,000, we would have the following total tax increases.
1. Forks Township: $510 per year.
2. EASD: $490.10 per year
3. Total tax increase: $1000.10 per year.

Yikes! This is a pretty hefty tax increase for 2008.

Other approved changes in our tax code:

1. Ordinance 306 - Local Services Tax / Adoption. Effectively it is a name change from the EMS Tax to the Local Services Tax. The amount remains the same at $52 per year for employees working in the Township.

2. Ordinance 307 - Realty Transfer Tax - This ordinance is to authorize the PA Department of Revenue to collect Forks' share of the Realty Transfer Tax (RTT) in instances when the State finds that the value of property has been misrepresented. The 2% RTT is shared as follows: 1/2 goes to the State, and the other half is split evenly between the school district and the local municipality.

If you have any ideas or comments about critical issues facing Forks Township, please share your ideas via our blog.

Get Involved – Every Voice Counts!

Sincerely,

David Billings

Forks 2008 Budget

Forks Township has published the 2008 budget. The budget outlines the 2008 revenue stream and cost structure for 2008 only. The budget can be found at http://www.forkstownship.org/2008abudget.htm

2008

Total Operating Revenue: $7,113,292
General Fund Carryover: $669,743
Total Revenue: $7,783,035

Total Operating Expenses: $7,242,842

Revenue less Expenses: ($129,550). This excludes the General Fund Carryover.

Some factoids on 2008 revenue:

1. Real Estate Taxes: 34% of Operating Revenue
2. Taxes: 46% of Operating Revenue
3. Other revenue: 20% includes lease earnings, interest earnings, charges for services/public safety, etc
4. An 11% increase in Real Estate taxes (4.6 mills to 5.1 mills). The owner of a property of $50,000 will pay about $255 in additional real estate tax.
5. Budgeted Real Estate Transfer taxes are budgeted at $500,000 down from $800,000 in 2007.
6. Property Tax revenue will increase from $2.07M to $2.41M, but revenue from real estate transactions should fall as the housing market continue to soften.


On the expense side, a couple of interesting thoughts:

1. A 4% raise for salaried employees
2. Police Dept: 40% of total cost ($2.46M)
3. Fire Dept: 5.46% of total cost ($.395M).
4. Forks EMS Funding: $20,000 (Note: This funding has not been released to the Forks EMS).
5. Community Center Costs: $.294M vs revenue of $.247M. (loss of ($47,803).
6. Recreation Board: $60,000
7. Athletic Association: $80,000
8. Park Maintenance: $338,589
9. Highways and Streets: $917,867.

What to watch for in 2008:

1. The continuing softening of the housing market. This will create downward pressure on the 08 real estate transactions revenues.
2. Another tax increase in 2009.
3. Possible 08 net income loss

If you have any ideas or comments about critical issues facing Forks Township, please share your ideas via our blog.

Get Involved – Every Voice Counts!

Sincerely,

David Billings

d.billings@att.net

Happy New Year

We would like to wish everyone a happy, healthy and safe New Year.



We will be talking about the 2008 Forks budget this week.