Lower Merion Citizens for Responsible Budgeting
Moving Forward
Sept. 4th , 2008
To the Editor, Mainline Life:
Lower Merion Township’s Board of Commissioners is preparing for its non-public budget “workshop” on September 24 and for public budget hearings later in the fall. At this critical time, it is important to review recent budget history and support a common sense approach for the 2009 budget.
For 2007 and 2008, a divided Board increased real estate taxes, continuing a trend of tax increases which started in 2002 and received only brief respite in 2006. The trend demonstrates the preference of a majority of Commissioners to increase taxes, rather than restrain the growth rate of spending to correct what some Commissioners have called the Township’s “systemic spending problem.”
Although the spending problem remains unresolved, the Board has appropriately implemented a number of policy changes for which CRB has advocated:
1. The Board has updated its general fund reserve policy from a 12% minimum (which provided no guidance as to an upper limit of the reserve and allowed the Board to raise taxes even when unnecessary) to a policy with an upper limit which targets the balance at 15-18%. General fund reserves currently exceed 21%; but, given the policy update, it will be difficult for the Board to continue to over-reserve and will ultimately result in leaving the taxpayers’ money with the taxpayers to either save or spend as they see fit.
2. The Board now makes public its long-term financial projections which had previously been provided only to the Commissioners. The current projections clearly show that significant tax increases will be required to fuel the current growth rate in spending. This new fiscal transparency is welcomed. With the looming tax consequences of unrestrained spending now fully disclosed, there can be no excuse for Board inaction.
3. The Board implemented a new Business Tax enforcement program which included the hiring of specialized tax counsel and a new employee to ensure that business taxes are being properly collected. Reports confirm that the program has already exceeded both the added expenses to operate the program and its budgeted revenue. Making sure everyone pays the correct amount of existing taxes before raising tax rates is a common sense fiscal policy outcome.
CRB congratulates the Board on these measures, but cautions that the systemic spending problem remains a significant threat to our community’s quality of life and the Board must adopt a clear and common sense plan to address it.
Prior to the August recess, two groups of Commissioners submitted opinion pieces discussing fiscal policy and the 2009 budget. The submissions offer competing approaches to spending and taxing.
Nine of the fourteen Commissioners (the majority) stated their fiscal approach as: “[We] believe that our duty is to deliver the highest level of government service at the least possible cost.” This approach is not comprehensible because it lacks clarity. What is the standard for “highest” and how is it measured? If they seek to deliver the “highest” level of government service, should we expect better roads, additional libraries, increased fire and police protection services, and trash collection twice per week? Or, if they seek the least possible cost, should we expect them to deliver current service levels at lower costs? If so, how do they plan to do it? We suspect some in the majority will continue to call any efforts to examine spending “a fool’s errand”, but hope others will work to restrain spending. In fairness, however, we do not know what they will do because their stated approach is unclear.
Five Commissioners (the minority) proposed the following agenda:
“Identify options for significant spending reduction; implementing those savings where practical, while still maintaining a high quality level of service; and balancing the 2009 budget by drawing down reserves to the 15 percent level and by reducing the growth rate of spending, NOT by increasing real estate taxes.”
Aiming for “a high quality level of service” is a more reasonable standard than “the highest level of government service”. And while a “high quality level of service” still lacks complete definition, the agenda is, at least, a coherent fiscal policy. Balancing the 2009 budget by drawdown of reserves and reducing the growth rate of spending, rather than by increasing the real estate tax rate, is a transparent and disciplined goal. The minority approach will address the systemic spending problem.
In both opinion pieces the Commissioners state that they are committed to working together. The question is to what end - spending restraint or more of the same on spending and taxing? The financial projections demonstrate the looming consequences of inaction and should motivate all fourteen Commissioners to finally address the spending problem. We look to a future where a bi-partisan consensus will break through the majority/minority division and adopt a common sense fiscal policy that eliminates the threat to our quality of life posed by excessive spending and real estate taxation.
David O’Connell
Citizens for Responsible Budgeting
www.lmcrb.org