Lansdale could see budget scenarios Nov. 20

 Budget season is well underway, and borough council could see a full preview of the borough’s 2025 budget later this month.

“On November 20th, we’ll be presenting the budget to council and the public. From what I understand, there’ll be a few options for council to decide, about how we’re going to deal with our pending deficit,” said councilwoman Carrie Oglesby.

“We could have a tax increase, it could be cutting future projects. Staff is going to make a few recommendations to us, and then we’ll have time until December to figure out how we want to address this,” she said.

Last December, council approved a 2024 budget with revenues and expenses balanced at just over $59.1 million, down from the roughly $63 million 2023 budget due to the removal of road repair and repaving projects, and with taxes held at 7.25 mills, the level set after a one-mill increase in 2022 for ’23. That group had previously approved a sewer rate increase that September, said an electric rate study was underway to look at whether rate increase could be needed after ’24, and had discussed a bond borrowing that could help pay for capital projects like road repairs, sewer infrastructure, and other needed long-term expenses.

Since then, the town has heard presentations about several other possible big-ticket items, including major repairs and renovations to the town's two pools, increased costs for transmission of electricity the town resells to residents, and a series of signs, stripes and speed bumps that could address speeding and safety concerns in several neighborhoods — all while integrating a new finance director after a departure this summer.

All of those will be factors, Oglesby told council on Wednesday night, after the administration and finance committee she chairs heard the latest update from staff on preparations for that budget presentation.

"Department heads are still working on their budgets, and their capital projects. Hopefully, in the next two weeks, we'll have a better idea as council as to what the plan is going to be," she said.

During budget talks last year, staff asked council to consider a .125 mill tax increase for 2024, which would raise the town's millage rate to 7.375, would generate roughly $101,000 in new revenue, and would raise the average resident’s tax bill from $780 per year to $795, or from $60 per month to $66.25 per month, based on an average assessed property value of $120,000, staff said at that time.

Similar scenarios could be presented to full council and the public later this month, Oglesby told the committee, after council members hold one-on-one meetings with staff over the next two weeks.

"We're getting options at the next business meeting, and then council will have time to discuss it, you (residents) can hear it, and give us your two cents before we vote in December," she said.

Borough Manager John Ernst said staff were requesting the admin and finance committee to vote ahead two requests for full council, to authorize staff to prepare and advertise the ordinances needed to adopt the budget and the 2025 tax millage in time to meet all state requirements for the length of time they must be publicly posted.

"We'll work with Patrick (Hitchens, borough solicitor) to give us some flexibility, because in two weeks we may not know what the option is going to be," he said.

Resident Nancy Frei asked if the borough has any upper limit to the tax increase they could authorize, similar to the state's Act 1 of 2006 that requires school districts to stay below a percentage level set by the state or seek approval from voters via referendum. Oglesby said there's no formal rule council has to follow, but those who want a low or no tax increase should keep in mind the tradeoffs needed to do so.

"It's council's decision. So if we decide not to (increase), then we'll just say it's 7.25 (mills), and then we cut projects," she said.

Council President Mary Fuller agreed: "Most people are going to think 'I don't want any new taxes,' of course. But if that's the stance, then bring solutions or ideas, because we're going to need X amount of dollars," she said.

Resident Carole Farrell asked if the budget talks and formal vote were being held later in 2024 than in prior years, and Ernst said they were, largely because of the transition to the new finance director. Farrell then questioned whether the town would need to advertise and approve an ordinance if the tax level remains unchanged, and Fuller and Ernst said they would.

One more question from Farrell, who asked if the town had any update on a reported general fund surplus identified earlier this summer, and Finance Director Jim Lathrop said he's still working to identify if or where those funds are assigned or obligated elsewhere.

"It's not that we found money. It's that you have more money than is required in your fund balance," Lathrop said.

"That's one of the discussions that we've had within the budget, is: because our fund balance is so high, that maybe we use some of that money to keep any tax increase to a minimum," he said.

In the 2024 budget, the town's total expenses and revenue of roughly $59 million across all funds included roughly $21 million from the electric fund, $6.4 million from the sewer fund, $7 million from the capital fund, and smaller enterprise funds. The general fund revenues and expenses were balanced at $19.6 million, and that number includes roughly $6 million in interfund transfers using $5 million in revenues from the electric department, and $1 million more from the sewer fund for general fund expenses, with roughly $11 million left in the unassigned fund balance.

"It wasn't that there's an account we didn't know about. It's just that we had so many accounts, and once I started to look at them as a whole, it was much more than the best practice of how much you should have. You should have about 45 percent of your budget (unallocated), and you were actually at about 60 percent," he said.

Staff have been working to consolidate or eliminate unneeded accounts, to simplify and add transparency to the budget process, Lathrop said: "There were 38 accounts over eight different banks" before that process began.

"Some were small accounts, some had several thousand dollars, some had much more. We're just trying to get our house in order, so we can provide better reporting to council, so you can make decisions like this: before we go to a tax increase, what other resources do we have?" he said.

Once council members meet with staff to go over the budget and the Nov. 20 presentation is made, Fuller said, residents will be able to share feedback through the council committee meetings on Dec. 4, with a final budget vote possible on Dec. 18 ahead of the state's Dec. 31 deadline.

"Each one of them has a voice as to what they think should happen, and that's where you all come in. That's where you can reach out to us and say, 'This is what I think,'" she said.

One potential headwind in the budget talks: Electric committee chairman Andrew Carroll reported that updated info has come in on the town's electricity transmission costs, with projections that the cost will grow by roughly $1.4 million next year.

"This is not going away, and it looks like it will only increase as time goes on," he said.

Lathrop also gave updates on two other budget-related topics that could impact the 2025 finances: the possible bond borrowing is "something we're considering" to help address long-term capital needs, but "we'll probably wait until after the budget is passed" until early 2025 to do so.

And earlier this summer, Lathrop reported on another possible asset that could help fix the budget gap: roughly $160,000 in stock with financial company Prudential that the borough has held since the late 1980s. Since a vote from council in August to do so, staff have begun the process of selling that stock, and the end of the sale "probably won't happen until February of next year," he said.

Lansdale's borough council next meets at 7 p.m. on Nov. 20 and the administration and finance committee next meets at 6:30 p.m. on Dec. 4, both at the borough municipal building, 1 Vine Street. For more information visit www.Lansdale.org

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