2021 Budget Process Driven by Long-Range Solutions

The Lower Providence Township Board of Supervisors adopted the 2021 budget at its December 3, 2020 public meeting. The overriding factor in the budgeting process was determining long-term solutions to address challenging shortfalls created by reduced revenues and ever-increasing costs. To that end, the budget includes a real estate tax increase of .22 mills in the General Fund budget which covers the general operating expenses of the Township.

The increase will generate $350,000 and equates to about a $37 increase annually for the average residential homeowner. It is important to note that the Per Capita Tax was eliminated in 2020, saving residents $15 per person annually. Additionally, the General Fund millage rate had not been increased since 2004 and prior to that it had been the same for eight years.

The shortfalls in the General Fund continue to be driven by personnel costs that are outpacing revenue growth. Although it appears that recent large developments in the township have positively affected the Township’s assessed value, revenues have not appreciatively increased. Typically, property values will naturally increase through development and improvements, thus generating additional revenue without increasing the tax millage rate. Unfortunately, since 2007, the Township has only experienced an average of .44% per year increase in assessed value.

A subcommittee began meeting in the first half of 2020 reviewing options for a sustainable path for the Township’s operating and capital budget needs for the next 5 to 10 years. Much of the work has focused on addressing the structural deficiencies of the General Fund seeking changes that will improve revenues on a recurring basis rather than one-time revenue enhancements.

With the tax increase, the 2021 General Operating budget includes total revenues of $10,699,086 and total expenditures of $11,096,463, representing operation at a deficit of $397,377.  A portion of the General Fund Reserves of $4.3 million will be used to balance the 2021 budget.   The Township also utilized a transfer of $40,000 from the Debt Service Fund to help balance the General Fund.  This transfer was possible because of excess revenues in the Debt Service Fund resulting from recent debt being retired.

The majority of expenditures in the 2021 budget remain consistent from last year with the exception of the normal annual personnel cost increases including salaries, pension and benefits. While these represent a large portion of the General Fund, the Township is at a point where it is difficult to make cuts in this area without compromising services. A copy of the 2021 budget is available on the Finance Department webpage. 

As mentioned, long-term solutions were discussed which included an analysis of revenue trends and any impact from the pandemic for future years.  The Township will continue to analyze the Debt Service Fund in future years and consider transferring additional funds to the General Fund due to the debt retirement schedule.  In 2022 and 2023, the Township will consider additional Real estate Tax increases in addition to utilizing General Fund Reserves to continue to address the structural deficiencies of the General Fund.  It was discussed that the Township will also utilize General Fund Reserves to fund the Capital purchases in 2022 and 2023.  After 2023, the Township will have to review at that time options to fund the capital purchases moving forward.  Finally, there was an understanding that some of the General Fund Reserves should also be held for future MS4 stormwater obligations.  These are stormwater management requirements and costs being imposed by DEP and the EPA to municipalities.

The following is a summary of the adopted 2021 budget: