Lower Merion Debates Use of Unexpected $6.9 Million

The Lower Merion Board of Commissioners Finance Committee on Wednesday night voted unanimously to recommend that the full board amend the proposed 2012 budget in order to recognize an estimated $6.9 million in additional General Fund revenue from outstanding business taxes.

However, when it came to discussing what should be done with the $6.9 million, commissioners disagreed along political party lines, with Republicans proposing to give the some or all of the money back to taxpayers, and Democrats saying the money should not be refunded and instead be used for other purposes, such as paying down township debt.

In its vote, the Finance Committee recommended that the 2012 Proposed Budget be amended to increase the 2012 Beginning General Fund (GF) undesignated fund balance from $10,604,476 to $17,504,476 and therefore the 2012 Ending GF undesignated fund balance from $9,157,865 to $16,057,865.

Township Manager Douglas Cleland recommended the change because unexpected and unbudgeted additional estimated 2011 General Fund business tax revenue of $6,900,000 resulted from some outstanding disputed tax obligations being resolved since the proposed 2012 Budget was submitted on October 21, 2011.

If the full board approves Cleland’s recommendation, the amendment will change:

• the Estimated Actual 2011 GF undesignated ending fund balance as a percentage of the Estimated Actual 2011 GF expenditures (from approximately 19.7 percent) to approximately 32.5 percent

• the proposed 2012 GF undesignated ending fund balance as a percentage of Proposed 2012 GF expenditures (from approximately 16.5%) to approximately 28.9%.

The change to the Proposed 2012 GF undesignated ending fund balance would trigger the township’s fund balance reserve policy which calls for Cleland to work with the chair and vice chairs of the Finance Committee in order to come up with a plan to reduce the fund balance to 15 to 18 percent., Cleland said.  The township’s maximum fund policy goal is 18 percent.

While it is not clear is what will be done with the $6.9 million in additional General Fund Revenue, it is not likely to make it back to tax payers in the form of a rebate.

The Finance Committee voted 11-3 against recommending that the full board approve

Republican Commissioner Jenny Brown’s proposal that the $6.9 million should be divided up and returned to taxpayers in the form of a dollar amount credit upon the 2012 Real Estate Taxes (RET) billed in January and February 2012, representing the equivalent of 0.9 mills of taxable assessment.

Republican Commissioners Brown, Lewis Gould Jr. and Philip Rosenzweig voted yes.

“It’s not ours, folks,” Gould said.  “It belongs to our taxpayers.”

Democratic Commissioner Brian Gordon said Brown’s proposal was a “curious motion but a perplexing one as well … We’re not talking about a surplus here.”

Gordon said at a meeting about six months ago, Gould had said “’enemy number one is debt” so he thought the first thing Gould would want to do with the $6.9 million is pay down debt.

Democrat Daniel Bernheim said the commissioners should carefully explore its options, which include paying down debt or adding money to the equipment fund.  Last year, the equipment fund was only funded at 50 percent and in the future is in danger of being depleted, which would result in future borrowing, Bernheim said.

Bernheim said debt reduction is “far more beneficial to the citizens of Lower Merion than a one-time reduction of their real estate taxes.”

Republican Commissioner Scott Zelov proposed an amendment to Brown’s proposal, but it failed.

Zelov’s amendment proposed having a tax credit of 0.4 mills of taxable assessment.  Zelov said he would like the funds remaining after the rebate to go to be divided between the  

the fund balance in an effort to prevent a real estate tax increase in 2013; and the capital fund to delay future borrowing, or to pay down debt.

Democratic Commissioner George Manos said he saw no reason to “rush to any particular decision here.”

Manos said residents have expressed concerns to him about losing library resources when the Bala Cynwyd Library closes for renovations, about potholes, street light repairs, public safety, comfort stations being closed at playgrounds, flooding, maintaining trees in the township’s right of way and reducing long-term debt.

“What I haven’t heard anyone say is lower my taxes,” Manos said.  “I hear, ‘I’m paying taxes.  Where are my services?’”

Disagreeing with Manos, Rosenzweig said, “What is you cell phone number?  I’ll give them to you.”

Helen Weary, who identified herself as a Lower Merion taxpayer for 42 years, told the commissioners, “I don’t want a (tax) credit back.  “I want to believe that you’re going to figure out what to do with that money in a responsible and thoughtful way.”

Weary, a library volunteer, said she hopes some of the money goes to the libraries.

When the Board of Commissioners on Wednesday night held its second of two public hearings about the proposed 2012 budget and the 2012-2017 Capital Improvement Plan, members of the North Ardmore Civic Association asked the commissioner to consider allocating some of the $6.9 million to study stormwater management problems.

Dr. James Wheeler, a member of the North Ardmore Civic, said the group is “very concerned about the strong water as it created damage to property, to bridges…”

Wheeler asked the township to “making North Ardmore Watershed the guineapig” to study how stormwater runoff problems can be ameliorated townshipwide.

Elissa Berardi, executive director of New Horizons Senior Center in Narberth, asked the commission to support New Horizons, which serves 600 plus people and 100 volunteers, with two thirds of those people residing in Lower Merion.

New Horizons helps seniors “stay in their homes as long as they can,” Berardi said.  “We do wills. We do taxes.”