As many of you have likely read, we are deep into 2024 budget planning season and the first draft of the budget was, as is very usual, in need of some retooling to be seriously considered for adoption. However, what is unusual about this year’s budget is the addition of a new loan to help infuse the borough with immediate cash to fund capital improvements that we know are desperately needed over the next several years.
As with all budget discussions, council and I try to balance the need for growth, improvement, and investment in our community while also mitigating and minimizing increases to taxes and fees which fund all the needed infrastructure improvements that our community values. Part of what has made this challenging in 2024 is the cost of executing projects has gone up dramatically. The replacement parts for an electrical substation that cost $400,000 in 2019 is now over a million, the cost of asphalt and pavement has gone up well over 20% in the last year alone, and labor costs are on a similar trajectory and prices are going to continue to rise.
However, despite these headwinds, we feel there is a viable path forward that does not require a tax increase.
First, we must square with the reality that a loan is necessary to accomplish significant improvement and investment in the borough. Over the last five years, we have invested large sums of money in the redevelopment of our infrastructure — most notably, roadwork. It is undeniable that the investment in our roads has made our community a better place to live, work, and play. However, our yearly capital funds do not have the level of investment to take on the amount of work necessary and piecemealing projects end up costing more in the long run. To meet the demands of the borough and maintain our infrastructure, a capital loan will be necessary.
To take a loan, we must identify how we will pay for the debt service that is required to meet the pay back requirements. For a $10 million bond, we will need to find around $250,000 in 2024 and 2025 to fund our debt service. Obviously, we could just increase taxes and call it day, but that is not the route we are taking currently.
After the initial draft of the budget was revealed at council last week, borough staff, members of council, and I shut ourselves in a room and committed ourselves to finding a way to build a budget that, in a fiscally responsible way, funded the borough’s operating budget completely, invested in needed and necessary infrastructure improvements, decreased operating expenses that could be reallocated, and built new revenue streams that could help alleviate the need for a tax increase this year and help decrease tax increases in future years, though admittedly, nothing lasts forever.
Most of the fees are related to title work, vacancy registration, electric re-sale fees, and other non-monthly expenses that are not related to a resident’s monthly considerations as they navigate their monthly expenses and costs of living. This approach is best because it allows us to maintain a community that is as affordable as possible while also properly funding our operating expenses.
The development of a second draft of the budget is still underway in advance of the November work session meeting. Between now and then this same group will be tackling how to best invest the bond in capital improvements that will decrease operational expenses while also funding comprehensive road, sewer, and electric infrastructure improvements that will last for the next 20 years or more.
These decisions are never easy, however, I am confident that we are building a budget that truly propels the borough forward in way that makes it financially stronger than it has ever been before while also expanding our investment in our community so that it can keep moving forward together.
(Mayoral Musings is a weekly op-ed column submitted to North Penn Now, courtesy of Lansdale Borough Mayor Garry Herbert. The views expressed are his own and are not representative of North Penn Now or Lansdale Borough.)
See also:
Mayoral Musings: Thirst for Accessibility
Mayoral Musings: Preserving Lansdale’s History Via Historic District Zoning
Mayoral Musings: A ‘Sign’ of Opportunity for Downtown Lansdale
Mayoral Musings: Strengthen the Community by Supporting Fairmount Fire Company
