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2012 BudgetThe Manager's budget message begins below. Use the following links to jump to a section:
Manager’s Budget Message - October 26, 2011Hatfield Township Board of Commissioners, The Hatfield Township 2012 Draft Budget is respectfully submitted to the Board of Commissioners and citizens of Hatfield Township. As prepared through the detailed and open budget process, the following budget 'holds the line' on spending in consideration to address contractual obligations and unfunded municipal mandates. Without a Pennsylvania Supreme Court Ruling on the Warrington Flat Tax Model, the 2012 Draft Budget maintains funding through known revenue sources. The budget process of 2009 and 2010 represented challenging analysis on the future and has resulted in the closest balanced budget Hatfield Township has seen in over five to ten years (see Exhibit "A"). Though the process provided non-traditional budget processes compared to past years, it did push the boundaries of timelines for approval, and those decisions have made successful changes to financial fabric of the township. With that said, staff does not desire to lose traction from that success and continues to work with the Board to tackle the financial future for the community, while at the same time, provide the level of service the community has come to expect. The preparation for the new fiscal year budget commences each July, with Department Heads reviewing their current budget and developing operating and capital budgets for the next year. By August, each Department Head has met with the Finance Director and Township Manager to review their proposed operating budget and capital budget as well. After working with the various department heads, the Finance Director and the Township Manager create a draft budget for each department for review by the various Hatfield Township committees. Below you will find a list of the dates when the committees convened and discussed future projects, staffing, initiatives, and fees for the proposed 2012 Draft Budget.
Comments from each committee are incorporated into the budget by means of future capital projects, new initiatives or amendments to the proposed operating and capital budgets. The committee process allows for citizens, commissioners and staff to discuss the budget, but furthermore, the opportunity for public input is invaluable to the process to assist with the budget process. After the committee review process, the Township Manager works with the Finance Director and other staff members to develop the 2012 Draft Budget for presentation. Upon presentation, I submit to the Board of Commissioners the following schedule to be followed to formally adopt the 2012 Draft Budget:
After adoption, the budget serves as a guideline for spending for the coming year. Even though the creation and adoption of the budget is complete by December, the implementation of the budget continues through into the next year. The Board of Commissioners review expenditure reports at their monthly meetings, and the Finance Committee meets quarterly to gauge the budget compared to actual revenues and expenses. A total of $12,824,006 in revenues is anticipated in 2012 with $11,717,320 proposed in expenditures over all nine funds, leaving a total fund balance of $1,106,686. The breakdown of revenues and expenditures is listed below. Click a fund name to view details.
*Data may not add up to 100% due to rounding As the economy has shifted, and based on past revenue foundations, Hatfield Township has seen a reduction in its fund balances. Staff again reiterates that a community should maintain a healthy fund balance to ensure services, but also to meet its fiduciary obligations for disaster relief. Future planning should take strides to maintain at minimum a 10% General Fund Balance, based on operating expenses. Other fund balances should be assessed on projected need, and a "rain day" fund for extreme need should be incorporated into the Capital Budget. The 2012 Draft Budget holds flat improvements made over the past two years, however it does not provide additional, predictable revenues to enhance fund balances and plan for the future. Staff recommends that future budgets should begin planning for fund balance growth. To provide a breakdown of the major revenues, the following demonstrates the source and percentage of the General Revenues Fund:
*Data may not add up to 100% due to rounding The 2010 adoption of the Homestead Credit, Act 50 of 1998 facilitated the first step in restructuring of the Real Estate tax and equity among taxpayers. The $70,000 Homestead Act Credit approved for 2011 is recommended in 2012, while maintain the existing set of millages. The following represents the proposed millage rate for 2012: The Real Estate Tax of 4.385 is broken down as follows [NOTE: Final approved 2012 Budget Real Estate millage was 4.345)
As of the budget presentation, Montgomery County has yet to update the Median Assessed Value home in Hatfield Township, therefore the 2011 assessment of $148,465 will be utilized in calculations for the 2012 Draft Budget. Applying the $70,000 Homestead credit towards the assessed value of the median home, along with the rate of 4.385mils, the median assessed value translates into a $344.07 local tax liability. When viewing the total Real Estate Tax liability for a Hatfield Township homeowner, the local township portion of the tax bill is approximately 9.5% of the total real estate tax. Montgomery County and North Penn School District translate to 10.1% and 80.3% respectively based on 2011 data. The diligent work from 2009 and 2010 budget years have paid dividends to the General Fund and providing predictable revenues for expected level of services. Maintaining fiscally sound revenue sources has been a focus for the past two years, and by demonstration of the 2012 Draft Budget, fundamental changes are not required to maintain the quality of life known in Hatfield Township. The only substantive change to the millage rate in the 2012 Draft Budget is an increase to the Fire Fund. Hatfield Volunteer Fire Company and the Colmar Volunteer Fire Company respectively protect over 95% of the community. Through deliberate and methodical meetings, spanning the past two years, the companies have identified areas of shortfalls that they feel should be met to maintain the level and type of protection employed today. The millage increase for the Fire Fund goes from 0.31 in 2011 to a proposed 0.62 in 2012 Draft Budget. This funding increase provides the necessary resources, as noted by the fire companies, to address operations and small equipment needs. This does not provide funding for major capital expenditures, which needs to be resolved for future budgetary considerations. Hatfield Township receives 0.50% of the 1.0% Earned Income Tax that the residents pay each year. This revenue source is expected to generate $2,245,000 in 2012. Other TaxesReal Estate Transfer Tax The Real Estate Transfer Tax is levied at 0.50% of 2.0% of the value of all real estate that transfers within Hatfield Township. The 2011 Budget for Transfer Tax was exceeded, however staff views the revenue as a one-time windfall and cannot budget the same amount in 2012. Market indicators have not provided strong reports for real property, therefore we provide a marginal growth in revenue at $170,000 in the 2012 Draft Budget. Local Services Tax This tax is levied on all individuals that work within a municipality and employers spread the withholding of this tax over the entire year, rather than collecting the full amount during the first pay period of the year. Anticipated total revenue for 2012 is $600,000, of which $100,000 from the Prior Year. The following breakdown demonstrates the major expenses in the 2012 Draft Budget and the percentage of the budget each area represents.
*Last column represents change from 2011 Draft Budget
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