Upper Gwynedd’s 2024 Budget has First Sewer Rate Hike Since 2017

Dan Sokil | The Reporter•

A creek runs past the entrance to the Upper Gwynedd Wastewater Treatment Plant on Friday, Oct. 15, 2021.

2024 will bring mixed news for residents of Upper Gwynedd.

Township officials have voted ahead a budget that keeps taxes level next year, but includes the first township sewer rate hike in nearly a decade.

"We don’t want to have to raise rates every single year. And sometimes that’s fine, as long as you’re able to replenish that revenue through time. But unfortunately, that’s not the case, with the expenses and the projects that we have planned,” said Township Manager Sandra Brookley Zadell.

"With no increase since 2017, in this fund, we have absorbed the cost of inflationary increases, major repairs at the plant for the flood, as well as increased spending with no rate increase. Unfortunately, at this time I do need to present the board a budget that includes that $75 annual increase,” she said.

Last year, the township’s commissioners approved a 2023 budget with revenues and expenses of $18.7 million and taxes kept even at 2021 levels of a 2.041 mill tax rate and $30,000 homestead exemption, with a warning that the board would need to consider a sewer rate increase in the following year, to keep up with cost increases and capital expenses needed at the township’s treatment plant. During the board’s Nov. 13 meeting, Zadell led with the good news, before outlining the township’s accomplishments over the past year.

"We currently have a balanced budget, that we’re proposing — in fact, there’s a surplus in the budget — with no tax increase for 2024,” she said, prompting a request from board President Denise Hull: "I’m sorry, can you repeat that one more time?”

Over the past year, the manager told the board, the township’s general fund spending is tracking roughly $3.6 million under budget, but that gap is largely due to timing issues and delayed grant expenditures for large capital projects like replacement of a bridge on Sumneytown Pike and stormwater upgrades along Haines Run near the township’s wastewater plant.

Based on year-to-date projections, total township revenues are trending at roughly $1.3 million over budget, thanks in part to higher-than projected revenues by roughly $62,000 in local services taxes, roughly $43,000 in earned income taxes, and roughly $20,000 in the real estate transfer tax category. Staff are also recommending a transfer of roughly $750,000 from that surplus to the township’s capital reserve fund, up from an early projection of roughly $315,000 for that transfer.

"We’re going to be able to do better than that, which I’m very proud of, because we do have a very aggressive capital program,” Zadell said.

Township revenues are projected to be roughly $17.8 million in 2024, up slightly from the prior year, and the manager showed a series of bar charts depicting the various tax funds, grant revenues, and transfers tracked year-by-year from 2021 through 2024, with the largest portion being earned income tax revenue, which has climbed steadily to just over $7 million.

"The main point is that our revenue doesn’t change that much, year to year. Our real estate taxes, the past four years, are pretty stable. Real estate transfer taxes, those were very strong in 2022, but in the other three years they’re stable. EIT is our largest source of general fund revenue, and thankfully it experiences wonderful growth. We are the home to the largest employer in Montgomery County,” she said.

Expenses have also remained largely stable, with one spike noted in public works due to grant-funded infrastructure projects, according to the manager. General fund projects included in the 2024 budget include safety upgrades to the township administration building, increased police costs due to contractually required salary increases, and the addition of one more fulltime officer, bringing the department’s count of sworn officers to 23.

The budget also includes nearly $1 million in pipeline repairs and stormwater inlet fixes, continued work on a township parks plan, and one notable personnel move anticipated: a new full-time employee to replace the township’s outside consultant who acts as zoning officer.

"We sadly have to hire someone to replace someone that might be retiring in the upcoming year, so we have a new FTE to replace a consultant. I don’t think that we would ever get another consultant that would give Upper Gwynedd the same level of service that that current consultant provides to us,” she said.

The 2024 budget also includes a new line item: a $100,000 allocation to the Volunteer Medical Service Corps, the Hatfield-based ambulance and paramedic organization that made the case this summer to several local municipalities for regular taxpayer funding.

"They visited a few months ago to give a presentation as to why they need this funding, and personally I’m proud that Upper Gwynedd is able to provide this funding, for that important resource in our community,” she said.

Total township reserve funds are currently at roughly $12.2 million and projected to increase to roughly $13.1 million in 2024, the manager added, up from a 2022 low of roughly $10.7 million due to a onetime borrowing for emergency work at the wastewater plant which will be paid back in 2024.

Milling and paving costs for 2024 are slightly below average due to delays in paving Church Road, the manager said, before diving into the public works goals and explaining the increases in supply costs, roughly $110,000 in new engineering costs to plan capital upgrades, inflation in utilities including power and water, and added insurance and staff training costs.

As she spoke, the manager showed a chart depicting the township’s public works capital spending from 2007 through 2024, with small spikes between zero and $500,000 in years through 2015, a onetime increase to $1 million in 2016, then dips below the $500,000 level through 2021, followed by a massive jump starting in 2022.

"In previous years, we don’t see a ton of investment in stormwater and public works capital infrastructure. If you don’t spend a lot of money, from 2007 to basically over a 12 to 15 year periods, eventually we have to pay the piper, with mainly those corrugated metal pipes that are plaguing the residents” in private communities doing similar repairs and replacements, Zadell said.

2023 also brought a sharp increase in the funding allocated for maintenance of existing stormwater pipes, up to roughly $600,000 from near zero in years prior, and 2024 is projected to see a similar spending level. The township’s current five-year capital plan calls for just shy of $30 million in spending in over 150 projects across all departments, with a total of $1.47 million already secured in grants for the Haines Run streambank restoration work slated for construction in 2024.

The Sumneytown Pike bridge repair is estimated to cost $2.5 million, to replace a concrete span built in 1927 just east of West Point Pike, and tentative plans are to complete pre-engineering work in 2024 and start construction depending on the availability of grant funding, the manager said. Other capital projects on the to-do list for 2024 include two new police vehicles and two for public works; a new pole barn to store parks and recreation equipment; drainage improvements on West Prospect Avenue; purchase of a drone to be used for fire inspections, parks and police functions; new air packs for emergency responders; curb repairs on several streets, and a new roof, HVAC repairs and a new backup generator for the shared administration and police building.

For the wastewater plant, Zadell said, the projects on the books for 2024 include $99,000 for new gates that control flow in the plant and let operators isolate certain equipment; $95,000 for evaluation of groundwater infiltration into a storage tank; $85,000 for new tank skimmers; a $46,000 upgraded influent screen; a $10,000 study of the bridge that is the only access route into and out of the plant’s main entrance; $35,000 to develop specifications for replacements and upgrades to obsolete sludge pumps tentatively slated for 2025; just shy of $10,000 for upgrades to effluent pumps currently operated manually; $70,000 for engineering on new influent distribution boxes that will be automated and should help prevent overflows; $10,000 to evaluate aeration systems and the same amount to evaluate and automate chemical feeds; and $45,000 to plan upgrades to the aeration systems for sludge.

"You’re hearing my theme: automation, efficiency, look at processes and procedures, upgrade the equipment so that we can be more efficient, and in the future save some money,” she said.

Raising the township’s current sewer rate by $75 to $482 per year would generate just over $1 million in new revenue for that department, and "will completely fund all of the capital upgrades I just went over” in the list and presentation, with roughly $300,000 extra to replenish the plant’s capital fund.

Compared to the rest of the municipalities in Montgomery County, Upper Gwynedd has the 13th-lowest municipal tax rate, down from 17th the prior year, and the sewer rate residents pay now is currently the third-lowest among neighboring municipalities, a rank the plant would retain even with the rate hike.

"If the Towamencin sale goes through and the (Towamencin sewer) rates increase, we will become the second-cheapest,” she said.

Commissioner Katherine Carter asked why the plant’s budget had been operating at a structural deficit in prior years, and Zadell compared doing so to "taking a withdrawal from your savings account” to cover annual operating expenses.

"You could say, at the last time we raised rates, we should’ve raised them more. But at the time we raised rates, we didn’t know what the future held as far as permitting, we didn’t know about the I & I,” or infiltration and inflow repairs needed for deteriorating pipelines throughout the township, Zadell said.

"We don’t want to be raising rates on our customers every single year. We may want to be able to float that out a little longer, and raise rates — like we are now — seven years past our last rate increase,” she said.

During the Nov. 13 meeting, the commissioners voted unanimously to authorize staff to advertise the 2024 tax rate ordinance and the budget itself, and a separate vote on Nov. 21 gave similar permission to advertise the sewer rate ordinance and the requested increase.

Upper Gwynedd’s commissioners next meet at 7 p.m. on Dec. 11 at the township administration building, 1 Parkside Place. For more information visit www.UpperGwynedd.org.

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