Lower Merion Finance Committee Debates How to Allocate $6.9 Million in Unexpected Tax Revenue

The  on Wednesday night voted unanimously to recommend that the full board amend the proposed 2012 budget to recognize an estimated $6.9 million in additional General Fund revenue from outstanding business taxes.

However, when it came to discussing what should be done with the $6.9 million, commissioners disagreed along party lines, with Republicans proposing to give some or all of the money back to taxpayers, and Democrats saying the money should instead be used for other purposes, such as paying down township debt.

In its vote, the Finance Committee recommended that the 2012 Proposed Budget be amended to increase the 2012 Beginning General Fund (GF) “undesignated fund balance” from $10.6 million to $17.5 million (with a resultant 2012 Ending GF balance changing from $9,16 million to $16.06 million.

Found money

Township Manager Douglas Cleland recommended the change because of unexpected—and unbudgeted—additional business tax revenue from 2011 totaling $6.9 million. The money came from outstanding disputed tax obligations resolved since the proposed 2012 Budget was submitted on October 21.

If the full board approves Cleland’s recommendation, the amendment will change:

• The Estimated Actual 2011 GF undesignated ending fund balance as a percentage of the Estimated Actual 2011 GF expenditures (from approximately 19.7 percent) to about 32.5 percent
• The proposed 2012 GF undesignated ending fund balance as a percentage of Proposed 2012 GF expenditures (from approximately 16.5 percent) to about 28.9 percent.

The change would trigger the township’s fund balance reserve policy, which calls for Cleland to work with the chair and vice chairs of the Finance Committee in order to come up with a plan to reduce the fund balance to 15 to 18 percent, Cleland said. The township’s maximum fund policy goal is 18 percent.

The Finance Committee voted 11-3 against recommending that the full board approve Republican Commissioner Jenny Brown’s proposal that the $6.9 million should be divided up and returned to taxpayers in the form of a dollar amount credit upon 2012 real estate taxes, billed in January and February 2012 (and representing the equivalent of 0.9 mills of taxable assessment).

Along with Brown, fellow Republican commissioners Lewis Gould Jr. and Philip Rosenzweig voted in favor of the measure.

“It’s not ours, folks,” Gould said.  “It belongs to our taxpayers.”

Not ‘a surplus’

Democratic Commissioner Brian Gordon said Brown’s proposal was a “curious motion but a perplexing one as well ... We’re not talking about a surplus here.”

Gordon said at a meeting about six months ago, Gould had said “enemy number one is debt,” so he thought the first thing Gould would want to do with the $6.9 million is pay down debt.

Democrat Daniel Bernheim said the commissioners should carefully explore their options, which include adding money to the equipment fund in addition to paying down debt. Last year, the equipment fund stood at only 50 percent of its budget, and is in danger of being depleted—possibly resulting in future borrowing, Bernheim said.

Bernheim added that debt reduction is “far more beneficial to the citizens of Lower Merion than a one-time reduction of their real estate taxes.”

Republican Commissioner Scott Zelov proposed an amendment to Brown’s proposal, but it failed. Zelov suggested having a tax credit of 0.4 mills of taxable assessment, and said he would like the funds remaining after the rebate to be divided between two places: the fund balance, in an effort to prevent a real estate tax increase in 2013, and the capital fund, to delay future borrowing (or to pay down debt).

Democratic Commissioner George Manos said he saw no reason to “rush to any particular decision here.”

Taxpayer concerns

Manos said residents have expressed concerns to him about losing library resources when the Bala Cynwyd Library closes for renovations, about potholes, street light repairs, public safety, comfort stations being closed at playgrounds, flooding, maintaining trees in the township’s right of way and reducing long-term debt.

“What I haven’t heard anyone say is lower my taxes,” Manos said. “I hear, ‘I’m paying taxes. Where are my services?’”

Disagreeing with Manos, Rosenzweig said, “What is your cell phone number? I’ll give them to you.”

Helen Weary, who identified herself as a Lower Merion taxpayer for 42 years, told the commissioners, “I don’t want a (tax) credit back. I want to believe that you’re going to figure out what to do with that money in a responsible and thoughtful way.”

Weary, a library volunteer, said she hopes some of the money goes to the libraries.

When the Board of Commissioners on Wednesday night held its second of two public hearings about the proposed 2012 budget and the 2012-2017 Capital Improvement Plan, members of the North Ardmore Civic Association asked the commissioner to consider allocating some of the $6.9 million to study stormwater management problems.

Dr. James Wheeler, a member of the North Ardmore Civic, said the group is “very concerned about the strong water as it created damage to property, to bridges…”

Wheeler asked the township to make “North Ardmore Watershed the guinea pig” in studying how stormwater runoff problems can be ameliorated township-wide.

***

Elissa Berardi, executive director of New Horizons Senior Center in Narberth, asked the commission to support the center, which serves 600-plus people and 100 volunteers, with two thirds of those people residing in Lower Merion.

New Horizons helps seniors “stay in their homes as long as they can,” Berardi said.  “We do wills. We do taxes.”