Transcript Finance Update - Dec 03 2008

TOWNSHIP OF LOWER MERION
Proposed 2009 Budget
Proposed 2009 Budget Schedule
 2009 Budget Distributed to BOC and Public:
 October 31st (Six-year Capital Improvement Program)
 November 7th (Proposed 2009 Budget)
 Proposed 2009 Budget Public Hearings:
November 19th
December 3rd
 Adoption of Proposed 2009 Budget and 2009 –
2014 CIP scheduled for Dec 17th
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Summary of Proposed 2009 Budget
Beginning Fund Balance (undesignated)
Revenues
Expenses
Surplus/(deficit)
Ending Fund Balance (undesignated)
Ending FB as a % of Annual Operating Expenditures
2008
2008
Budget
Estimate
$
10.3 $
11.2
50.9
50.7
53.0
50.8
(2.1)
(0.1)
$
8.2 $
11.1
15.5%
21.9%
2008 Estimate = $2.2 million of Total Budgetary Savings
2008 Major Budgetary Savings Estimated for:
Personnel Costs ($0.9 M)
Solid Waste Fund Subsidy ($0.5 M)
Property and Liability Insurance ($0.2 M)
Workers Compensation ($0.1 M)
Materials and Supplies and Electricity ($0.2 M)
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Proposed 2009 Budget
Beginning Fund Balance (undesignated)
Revenues
Expenses
Surplus/(deficit)
Ending Fund Balance (undesignated)
Ending FB as a % of Annual Operating Expenditures
2009
Budget
$
11.1
50.6
53.9
(3.3)
$
7.8
14.5%
 Proposed 2009 Budget gap is $3.8 M (without
new revenue enhancement)
 2009 Proposed Budget calls for net new annual
revenue of $500,000
 2009 Budget – $3.3 M Budget Gap
 Hopeful
for $1.2 million of budgetary savings
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Proposed 2009 Budget
Other Key Points:
No Solid Waste Fee increase
Includes various increases for fees/rates
Likely increase for Sanitary Sewer fee in
2009
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Proposed 2009 Budget
Revenue Enhancement
Increase Township Real Estate Tax (RET) +2%
Increases 2009 RET from 3.61 mills to 3.68
mills: (+0.07)
+$25 RET for “Average Single Family
Detached Home”
Provides $500,000 of net new RET revenue in
2009
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Proposed 2009 Revenue Budget Highlights

The Proposed 2009 GF Revenue Budget is $50.6 million

-$300,000 or 0.6% decease from 2008 Budget

Key Revenue Increases over 2008 Budget:
Real Estate Taxes (Current)*
Business and Mercantile Tax
$ 600,000
250,000
*Includes +2% real estate tax increase

Key Revenue Decreases from 2008 Budget:
Real Estate Transfer Tax
Investment Income
Local Services Tax
($1,000,000)
(350,000)
(200,000)
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Proposed 2009 Revenue Budget Highlights
 Other Key Points:
 2009 Preliminary Real Estate Tax Assessment Base
Flat Compared to 2008
 Proposed 2009 Budget includes RE Tax Assessment
Growth (+0.6%)
 Increased RE Assessment Appeals (Successful)
 Slower New Construction and Building Renovations
 2008 RE Deed Transfer Tax (Estimated Actual)
 Q4 Impacted by Economic Downturn
 Expected to Finish $300,000 Lower than 2008 Estimate
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Township of Lower Merion
Proposed 2009 Budget - Revenues
Departmental Earnings
5%
Fines & Forfeits
3%
Licenses & Permits
9%
Other Revenue
7%
Almost TwoThirds of General
Fund Revenues
are Derived from
Real Estate
Related Taxes
Real Estate
Property Taxes
54%
Business Taxes
15%
Real Estate Transfer Taxes
7%
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Proposed 2009 Expenditure Budget Highlights
 The Proposed 2009 GF Expenditure Budget is $53.9
million
 Moderate +1.8% or $1.0 million increase over 2008
Budget
 Includes Expenditure Reductions ($800,000)
Reduction of seven full-time positions
 Includes Contractual Wage Increases
Workers Association
Fraternal Order of Police
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Proposed 2009 Expenditure Budget Highlights
(continued)
 Higher costs for health care insurance premiums for
employees
 Higher costs for Shade Tree maintenance
 Higher debt service (+5%) resulting from 2008
Series Bond Issue ($10 M – New Money)
(+10%) without debt restructure in 2008
 Lower GF subsidy to Solid Waste Fund
 Lower Professional Technical Services
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Township of Lower Merion
Proposed 2009 Budget – Expenditures By Service Area
Debt Service
14.1%
General Government
14.3%
Libraries & Recreation
13.1%
Public Safety
38.7%
Public Works
13.7%
Building & Planning
6.1%
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Township of Lower Merion
2009 Proposed Budget – Expenditures By Major Expense
All Other Expenses = 20%:
•Utilities
•Professional Services
•Materials and Supplies
•Equipment Fund Rental Rate
•Fire Company Contributions
Personnel Costs
63%
General Fund Subsidy
to Solid Waste Fund
3%
Debt Service
14%
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Key Areas of Expenditure Cost Containment
 Controlling Personnel Costs
 Increased service delivery expectations
 Eleven full-time positions less than in 2002
 Fair market based labor agreements
 Controlling Healthcare Costs
 Employee contributions for health care
 Self funded prescription and dental benefits
 Negotiated cost saving measures in our prescription
drug benefits
 New hires at lower cost health care plans
 Incentives for attendance and opt-out health care
 Employee safety and wellness programs
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Key Areas of Expenditure Cost Containment
(continued)
 Debt Service Costs
 Refinancing of Debt Portfolio
 Township’s Triple A Bond Rating
 Reduced Costs for Risk Management Programs
 Member of regional municipal risk-sharing trust
 Excellent claims experience; safety programs
 Performance dividends ($500,000 since 2003)
 Stable and declining insurance premiums
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Key Areas of Expenditure Cost Containment
(continued)
 Electricity Costs for Traffic and Street Lights
 Reorganization Within Township Departments
 Utilizing Cooperative Purchasing Programs
 Police Equipment Purchases With Drug Forfeiture
Funds
 Contracting Services From the Private Sector
 Reducing Consulting Costs Through Use of Staff (inhouse)
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Township 5-Year Forecast (Nov 2008)
Beginning Fund Balance (undesignated)
Revenues
Expenses
Surplus/(deficit)
Ending Fund Balance (undesignated)
Ending FB as a % of Annual Operating
Expenditures
Estimate
Forecast
Forecast
Forecast
Forecast
2008
2009
2010
2011
2012
$
11.2 $
11.1 $
9.0 $
5.3 $
(0.2)
50.7
50.6
52.1
53.3
54.5
50.8
52.7
55.8
58.8
62.1
(0.1)
(2.1)
(3.7)
(5.5)
(7.6)
$
11.1 $
9.0 $
5.3 $
(0.2) $
(7.8)
21.9%
17.1%
9.5%
-0.3%
-12.6%
Revenue and Expense ($ Millions)
$70
$60
Expense
$50
Revenue
$40
$30
Projected “GAP” Without New Revenue
$20
$10
$5.5
$0.1
$2.1
$7.6
$3.7
$0
'08
'10
'12
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Township 5-Year Forecast
 Key Points:
 Moderate revenue growth (+2% compounded annually)
 Higher expenditure growth (+5% compounded annually)
 +3.5% (07 Actual), +2.9% (08 Estimate) and
+3.7% (09 Forecast)
 Expenditure Cost Drivers:
Employee health care (+8%)
Debt service for CIP (+8%)
Solid Waste Fund subsidy (+16%)
 Expenditure growth net of cost drivers (+3.5%)
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Revenue Outlook Beyond 2008
Compounded Annual Revenue Growth (+2%)
Revenue ($Millions)
Downside Developments
RE
Deed Transfer Tax
Local Services Tax
Investment Income
Business Taxes
RE Assessment Growth
Pressure Points
View (2009)
Housing Market
Stock Market
Economic Conditions
State Mandates
$ 60
$ 50
$ 40
$ 30
Optimistic
$ 20
Annual Revenue Growth
$ 10
$0.9
$-0.1
$1.4
$1.2
$1.2
$0
'08
'10
12
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Expenditure Outlook Beyond 2008
Compounded Annual Expenditure Growth (+5%)
Expenditures ($ Millions)
Upside Developments
Workforce Efficiencies
Cost Containment
Expenditure Reductions
Good Workers’ Compensation
Experience
Stable Insurance Premiums
Reduced Electricity Use
Pressure Points
Employee Wage Costs
Healthcare Insurance Costs
Retiree Healthcare Insurance Costs
Capital Improvement Program
Solid Waste Fund Subsidy
$ 70
$ 60
$ 50
$ 40
$ 30
$ 20
$ 10
Annual Expenditure Growth
$1.0
$1.9
$3.1
$3.0
$3.3
$0
'08
'10
12
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2009 – 2014
Capital Improvement Plan (CIP)
 2009 Proposed Capital Budget provides for $27.1
million of funding
 Township funds CIP with 20-year GO Bonds
 $10 million bond issues projected (2009 – 2012)
2009
Capital
CIP Project (Sources of Funding)
Budget
Capital Projects Fund
$
15.6
Federal, State and County Grants
7.3
Sanitary Sewer Fund
2.8
Other Sources (Private Contributions)
1.4
Total Funding Sources $
27.1
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2009 Capital Improvement Plan (CIP)
 Top 10 CIP Projects Represent 70% or $17.1 million of
Total 2009 Capital Budget
 Major projects scheduled in 2009:
 Ludington Library Renovations
 Montgomery Avenue Closed Loop Traffic Signal System
 Five-Points Intersection Improvements
 Ardmore Transit Center
 Anderson Avenue Underpass Improvements
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2009 Proposed Budget
 Key Points of Public Discussion on Proposed 2009 Budget:
 Amended 2009 Tax Levy and Appropriations Ordinance Advertisement
 Includes RET increase in the range of 0% - 2%
 With or without an across-the-board increase of the Solid Waste Fee
 Funding to Outside Agencies
 Board discussed amending contribution to Eldernet (from $10,000 to $20,000)
 Action will be taken at Finance Committee next week
 Corrected budget typo in funding to outside agencies:
 Lower Merion Conservancy (from $10,000 to $20,000)
 EMS Corps of LM and Narberth (from $20,000 to $10,000)
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End of Presentation
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