At the November 18, 2021 Board of Supervisors meeting, the township gave a budget presentation for 2022. The actual budget was released to the public on Tuesday, November 23, 2021. We’ll give a summary of the budget and point out some items of note along the way.
First, as most people want to know, taxes for Warminster will increase by 4% in 2022. This is the second of three budgets considered by the current Board of Supervisors that have called for a tax increase. Despite what their 2021 campaign literature stated about not raising taxes, they were in fact increased by about 35% in 2020, and now an additional 4%. This is not an opinion. It’s a fact.
GENERAL FUND
The General Fund pays for the operational expenses of the township, including but not limited to Public Safety (Police, Fire, Zoning, L&I, Emergency Management, etc.), Administration, Finance, etc.
REVENUES
This chart shows the revenues from 2019 through 2022. The 2019 and 2020 figures are actual revenues. The 2021 are the projected revenues for the year and the 2022 are the budgeted revenues for the coming year.
Some of the reasons for the wild fluctuations over the past several years can be attributed to several things. In 2020 there was a 35% overall tax increase for the township, including a 26% increase in the taxes that are collected for the General Fund. In addition, another $1.5 million was reported for a Tax Anticipation Note (TAN) to cover expenses early in the year until taxes are collected. In 2021, there was a spike in revenues. This was mainly due to the $6 million in proceeds from the sale of the Storm Water System to the WMA, as well as another $1.5 million TAN. For 2022, without the large infusions of cash in the General Fund, the revenues leveled off.
Revenue Highlights for 2022
- $460,430 for SAFER Grant (Pays for paid firefighters for 3 years)
- Expectation of lower Act 511 Taxes. These taxes include business taxes, real estate transfer tax and EIT.
- $150,000 from the Golf course
- No TAN for 2022.
EXPENDITURES
As stated above, the General Fund pays the operational expenses of the township. The chart below shows exactly where that money goes. Some of the departments have been combined for simplicity sake.
Like with the revenues, the General Fund expenditures grew a little in 2020, spiked in 2021 and are expected to level off in 2022. The big increases over the past couple of years was mostly due to interfund transfers in 2020 and 2021.
In 2020, there was a $1.5 million transfer to Debt Service. This was used to pay back the TAN, which is a short-term loan. In 2021, the additional $6 million from the sale of the Storm Water went to things like Debt Service ($3 million), Capital Reserves ($2 million) and the OPEB Trust ($1.5 million). Of the $3 million to the Debt Service Fund, $1.5 million was to pay back the $1.5 million 2021 TAN, and another $1.5 for general debt. Keep in mind that the taxes for the Deb Service Fund were increased by 169% in 2020. The OPEB Trust Fund, if the Supervisors vote for it, will create a fund to pay the "Other Post-Employment Benefits" (OPEB), which is the cost of medical insurance for retirees and their families until the retiree reaches age 65. As the revenues leveled off for 2022, so will the expenditures.
Expenditure Highlights for 2022.
- Finance Department expenses projected to increase by 32% in 2022.
- Fire Services expenses will grow by 10 times in 2022, from $45,000 in 2021 to nearly $486,000 in 2022. This is with the expectation of hiring 4 firefighters in the coming year. This will be funded by the SAFER grant for the first 3 years. Keep in mind that this grant, which was awarded in 2020, was supposed to pay for 5 professional fire firefighters for 3 years. The Board of Supervisors felt that we can't afford all 5 after that 3 year period, so it was decided to only hire 4.
- The Police Department shrunk by 1 officer in 2021 as 3 officers retired and were replaced with 2 newly sworn officers.
- Public Works expenditures are expected to be virtually the same as 2021, but significantly less than 2019 and 2020. Much of this is due to the fact that we now seem to finance road paving and outsource that work using the Capital Reserves fund, or debt, as we did in 2021.
- A new expense for Storm Water Fee of $40,000 is added for 2022. This is not the only place this expense will show. It will also be included in the Library and Parks and Rec budget. In total, the township is expecting to pay in the neighborhood of $130,000 for this fee. You'll also pay for this in your monthly or quarterly water bill and indirectly through your school taxes.
PARKS AND RECREATION FUND
The Parks and Recreation Fund revenues come mostly from the Parks and Rec portion of your property taxes. About 14.5% of all of the property tax you pay to Warminster goes to Parks and Rec. Prior to 2020, only 11.7% of your taxes went to Parks and Rec. Taxes were increased in 2020 with the assumption that with the park build out, along with the purchase of Shenandoah Woods, more personnel would be needed to tend to the parks in the township. As the chart below shows, the delay in getting the Community Park upgrades completed, along with the pandemic, not as much money was needed for Parks and Rec as was expected. For the years, 2020 and 2021, revenues far outpaced expenditures. Even in 2022, revenues are expected to exceed expenditures, but not by as wide of a margin as the previous two years.
REVENUES
Just about the only thing that can said for the Parks and Rec revenues is that this fund has banked almost $900,000 in the past 2 years due to less activity and the increased tax that was implemented in 2020.
Revenue Highlights in 2022
- $50,000 from the Golf Course
EXPENDITURES
As mentioned above, the expenditures for Parks and Rec were down significantly over the past 2 years, mostly due to the pandemic. In 2022, the expectation is that Parks and Rec will not only return to 2019 spending, but actually increase over that year by about 9%. But, as mentioned above, much of this is due to the additional costs associated with the new facilities in the Community Park as well as the additional responsibility of maintaining the additional property formerly known as Shenandoah Woods.
DEBT SERVICE FUND
This fund is set up to pay for any/all debts of the township. Currently, about 8.5% of your township taxes go to debt. This tax was increased by 169% in 2020 in anticipation of the nearly $15 million General Obligation Note (GON) that was taken out in 2021. In 2022, this tax is expected to generate about $675,000 in revenue for this fund. This GON retired some old debt that was scheduled to expire in a couple of year, pay for the 20 miles of road paving over the last year, as well as the Community Park upgrades. The Golf Course debt, which was incurred a few years back to upgrade the course irrigation system was also rolled into this debt. The funds from the Golf Course will pay their portion of this debt, which at the end of 2020 was about $2.2 million.
For 2022 and 2023, it's expected that the total combined expense for this debt for 2022 and 2023 will be about $1.7 million, of which the Golf Course will pay about $830,000. The township will pay the remaining $930,000 over the next two years, in payments of about $470,000 in 2022 and $460,000 in 2023.
At first glance, if you see that we're contributing $675,000 to a fund that will only pay out about $465,000 over the next 2 years, you might ask if we're not paying too much for this tax. Looking even further, you'll see that the Debt Service Fund took in about $2 million more in revenue than was spent on the debt. It's projected that this fund will net an additional $220,000 in 2022. This begs the question "Are we paying too much for this tax?" That would be a fair question, but the answer is probably "No". You see, after 2023, the township's portion of this debt increases to nearly $760,000 per year. This means that the $675,000 that is currently raised through taxes will not cover the annual payments. Having a fund balance will help offset this future expense. It's an expense that will not be paid off until 2041. By the way, at the time of this loan, it was said that this was virtually "free money". Over the life of this debt, this "free money" will cost us over $84,000 per year, or nearly $1.7 million over the life of this loan.
CAPITAL RESERVE FUND
The Capital Reserve Fund is set up to pay for capital expenditures in the township. This includes things like the recent upgrades to the Community Park, the purchase of Shenandoah Woods, new police vehicles, Project Engineering, etc. What has been slid into this fund is maintenance of the roads. The street paving has been moved out of the Public Works budget and lumped into this budget. We're not sure why maintenance is now considered a capital expense.
REVENUES
The revenues for Capital Reserves comes from a mix of sources and varies from year to year. For example, in 2022 it's expected that two-thirds of the revenue for this fund will come from state grants, including the grants for the Community Park upgrade. Since those upgrades were completed using the debt mentioned above, this money will now be used for projects in 2022. In 2021, the bulk of the revenue for this fund (about 90%) came from the $12 million debt that we incurred, as well as money from the General fund that was left over from the sale of the Storm Water system to the WMA.
Revenue Highlights for 2022
- $500,000 in Federal Covid money
- $1.8 million from State Grants for the Community Park
EXPENDITURES
As mentioned above, the expenditures for the Capital Reserve Fund is generally used to purchase actual capital items, but for 2021 and 2022, as mentioned above, street maintenance has suddenly become a capital expense.
Expenditure Highlights for 2022
- $163,500 for "Parks and Recreation Project"
- $500,000 for a roof on the Ben Wilson Center
- $850,000 for street paving and curb ramps
- $328,365 for the Green Light Go Project. This is a state program that is designed to improve the efficiency and operation of existing traffic signals. This is a 20% match grant, which means the township will pick up $65,673 of the cost of this program. The state will provide the other $262,692 in the form of a grant.
FIRE FUND
The fire fund is used to fund the Warminster and Hartsville Volunteer Fire Companies. The revenues for this fund come from a dedicated portion of our real estate taxes as well as a small percentage of the Local Services Tax (LST) that is collected from people who work in the township.
REVENUES
The revenues for the Fire Fund are expected to be nearly double what they were in 2019. This is due to two separate tax hikes for this fund. In 2019, the Fire Fund portion of our real estate taxes accounted for about 7.3% of our total township taxes. In 2020, as part of the overall 35% tax increase, the Fire Fund Tax was doubled, but the Fire Fund portion of our taxes only accounted for 6.5% of our total local taxes. For 2022, that tax will again increase by 67% and will now account for a little over 10% of our local taxes.
EXPENDITURES
Normally, the Fire fund sends most of the tax dollars collected for Fire to the local Fire Companies. In the future, this fund will be used to pay the salary and benefits of paid firefighters. For the next three years, the Federal SAFER grant will cover the cost of these firefighters. After that three years, this fund will be expected to pay those salaries and benefits. The problem here is that the state law only allows the township to use up to half of the fire taxes collected to be used for salary and benefits, but that is capped at 1 mill (1 mill = $1 for every $1,000 of assessed value of a property). The expectation is that this 1 mill of taxes for the fire fund will not be able to fully pay the salary and benefits of the professional firefighters, so for the next three years, while the SAFER grant is paying those salaries/benefits, the fire fund will be accumulating a fund balance to offset those future expenses. Even with these accumulated funds, this fund will not be able to sustain those payments after about 8 years. At that point, the difference will need to be made up by the General Fund.
Golf Fund
The Golf Fund is used for the operation of Five Ponds Golf Course. It is funded exclusively from revenue generated from the operations of the course. That means there are no taxes going toward the operation of the golf course. When the golf course needs money for things like a new irrigation system, the township includes that in their overall debt, but the golf course pays that portion of the debt. In 2020, the golf course netted $609,000. This was after paying back their loans. In 2021, it's projected that the golf course will net about $1.4 million, and it's budgeted for 2022 that it will net about $400,000. In 2022, the course will send $150,000 to the township General Fund and another $50,000 to Parks and Recreation. The Golf Fund has a healthy balance that will allow it to use it's own funds for future capital improvements as well as any emergency expenditures that may come up over time. This will also allow the golf course to begin funding other operations in the township.
Library Fund
The Library Fund pays for the operations of the Warminster Library. Over 80% of the revenue is generated from a dedicated tax that is included in your municipal tax bill. The remainder of the revenues comes from State money (almost 14%), and the remainder is from Library operations (book sales, fines, printing, etc). Currently, the Library portion of your real estate taxes account for about 7.7% of your real estate taxes. The Library portion of our taxes is one of the few areas that was not increased during the 2020 tax hike. As you can see in the chart below, both revenues and expenses are budgeted to be similar to 2019. During 2020 and 2021, expenses were down significantly due mainly to the pandemic.
We are not looking at the Ambulance fund as that is mostly a pass-thru fund. Less than 1% of our municipal taxes go to the Ambulance Fund, and most of that is passed on to the local Ambulance Corp that covers Warminster.
In summary, the first three budgets of the current Board of Supervisors have included a 35% tax hike in 2020, a $12 million in new debt in 2021, a reduction of the police department by 1 officer and the expectation that we'll only be hiring 4 firefighters instead of the originally promised 5. To pay for these firefighters in the future, the Fire Tax will be increased for the second time in 3 years in 2022. In 2021, 17 miles of township roads were paved, along with about 4 or 5 miles of state roads and other township roads that were dug up by the WMA. The WMA will pay $300,000 to cover the cost of those roads, but we suspect the township is kicking in some of that cost using your tax dollars.
Finally, the Sale of the Storm Water System will be felt by all of us in the following ways in the coming years, first as a fee on your monthly or quarterly water bill (expect a monthly fee of somewhere between $8 - $14 dollars), as well as indirectly through your taxes. With the Township and School District being the township's largest property owners, these bills will be significant, and either result in even higher taxes or less services by both entities.
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