This… Budget… Won’t… BUDGE!

On November 8, 2011 (that’s Election Day), 3 Upper Makefield supervisor seats will be up for vote.

A hot issue, I suspect, will be the township’s finances.  There was a one mil tax increase in 2009 for 2010, which was voted on and passed by the supervisors.  There was a 3 mil tax increase proposed in 2010 for 2011, but that one failed, mostly because residents turned out en masse to protest.  Instead, it was agreed that the cable fund (something over $700K) would be transferred to the General Fund.

I believe that the 2009 tax increase, and the proposed 2010 increase, fueled the Republican primary upset in May, putting Larry Breeden, Ernest Sasso, and Guy Polhemus on the Republican ballot.

I’m glad.

(It also caused RATtigan to get into a major snit and take his toys over to the Dems.  And it caused KC Christian to flutter to the left, cooing “I loooooove me some Democrats”).

Anyway, I think the time has come to take a closer look at the township budgets, and attempt to answer these questions:

Questions

  1. How have the supervisors done with the budgeting over the last few years?
  2. How have the supervisors managed deficits over the last few years?
  3. How have the supervisors done controlling expenses over the last few years?

Answers

  1. Suck-y
  2. Suck-y
  3. Double-plus suck-y

Now for the part where I back this up.

My premises are two, and they are simple.

First, how you perform against your budget means nothing if your budget is crap.

Second, you’re not cutting expenses if your expenses remain about the same every year.

On the township website is the ‘final 2011’ proposed budget in .pdf form.  You can get it here, but I wouldn’t bother.  The final 2010 actuals are not filled in, and the beginning and ending cash balances are all weird and wrong.

The documents I’ll be referring to are the preliminary 2011 budget that was available to residents last fall (and you can get it here); the 2008 budget vs. actuals document from the township (available here); the 2009 budget vs. actuals document from the township (available here); and the 2010 budget vs. actuals document from the township (available here).

The reason I go back to 2007 is because 2007 is the last year that Upper Makefield had a balanced budget.  So let’s start there.

But first, let me say this.  The 2007, 2008, and 2009 General Fund budgets contain 2 expense line items and 1 revenue line item that I strongly feel do not belong there.  These belong to the Gateway grant for the Washington Crossing Streetscape project.  This is a multi-year grant with a fixed purpose, and that purpose is not to fund the township’s operating costs.  These line items obscure some relevant patterns of expense.  So I removed these from the revenue and expense totals.

In 2007, adjusting both totals down by $100,000 for the Gateway grant, actual incoming revenues for the township’s General Fund totalled about 5.8 million, and actual expenses totalled about 5.8 million.

Yay!

Now let’s look at 2008.  In that year, total budgeted expenses were just over 10 million dollars (adjusting down $2 million for the Gateway grant).

You read that right.  In 2008 the supervisors actually thought expenses would increase more than 4 million dollars – more than 70%! – over what was actually spent in 2007.

And what did they end up spending in 2008?  About 5.6 million (adjusting down $1.8 million for the Gateway grant).

2009: total budgeted expense, adjusting down $217,000 for the grant, was about 7.8 million, almost a 40% increase over 2008 actuals.  Actual 2009 expense, adjusting down $200,000 for the grant, was about 5.6 million.

There’s that number again!

2010: total budgeted expense (the grant is now gone) was about 6 million, pretty close to the 2007 budget (but without the 2007 revenue).  Actual 2010 expenditures… wait for it… about 5.6 million.

What is it with that number???

Why doesn’t it ever move?

Lets compare actual revenues to expenses for the years 2007 – 2010 (adjusted for the streetscape grant):

2007 revenues 5.8 million vs 2008 revenues 4.6 million: down 20.6%

2007 expenses 5.8 million vs 2008 expenses 5.6 million: down 3.5%

2008 revenues 4.6 million vs 2009 revenues 4.4 million: down 4.3%

2008 expenses 5.6 million vs 2009 expenses 5.6 million: no change

2009 revenues 4.4 million vs 2010 revenues 5 million: up 13.6% (and don’t forget that includes the 2010 tax increase!)

2009 expenses 5.6 million vs 2010 expenses 5.6 million: no change

Since 2007, township General Fund revenues have dropped nearly 14 percent.  Expenses since 2008: no change at all.

If you’re serious about cutting expenses, your budget will be something less than the actual expenses of the prior year, barring known one-time experiences or upcoming events.  This hasn’t been happening in Upper Makefield since 2008.  Budgets have been wildly out of line with prior years, and with the actual experience.

And expenses, in total, haven’t moved an inch.

Why would someone propose such bizarre budgets?  I have 3 ideas:

  1. They don’t know what they’re doing
  2. They want to push for a tax increase
  3. They want to look like they’re holding the line at costs, so they inflate anticipated costs

In 2008, the deficit looked like it would be nearly 5.3 million.  In fact it was about 863,000.

In 2009 the deficit looked like it would be nearly 2.8 million.  In fact it was about 764,000.

In 2010, the year of the one mil tax increase, the deficit looked like it would be nearly 1.3 million.  In fact it was about 682,000.

That’s just sick.

And how does 2011 look?  Budgeted expenses totalling nearly 5.9 million, pretty close to the actual experience of 2007 (albeit with some $300,000 less in expected revenue, even with the Cable Fund money).  Anticipated deficit of nearly 382,000.

Let’s hope the final actual expense number for 2011 is somewhere south of 5.6 million.

I think I’ve made my case.

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3 responses to this post.

  1. […] salary & bonus is nearly the price I paid for my house.  Didn’t she help preside over those daffy budgets and killer deficits?  Hmmm… exactly what are we paying her […]

    Reply

  2. […] About « This… Budget… Won’t… BUDGE! […]

    Reply

    • Posted by Celesta on November 8, 2011 at 8:48 am

      Regardless of revenue, the Township still has to pay its regular bills. The fact that expenditures haven’t gone up in spite of inflation speaks well of holding the line on expenses. The budget estimating baffles me a little. I suppose you need to build in provision for inflation, even if you plan to do everything you can to keep expenses down.

      Reply

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