Lower Merion Citizens for Responsible Budgeting

Fitch: U.S. Municipal Credit Continued to Improve in 2nd Quarter

August 15, 2007

NEW YORK--(BUSINESS WIRE)--July 30, 2007--

Fitch Ratings reports that credit ratings for U.S. Public Finance continued to improve through the second quarter of 2007, marking the fifth consecutive quarter in which upgrades exceeded downgrades. In the quarter, there were 41 upgrades, totaling $47.5 billion of par, and seven downgrades, totaling $1.4 billion of par. The ratio of par upgraded to par downgraded was 34.6:1.

SmartMoney.com complete article

July Consumer Price increase just 0.1%

August 15, 2007

U.S. CONSUMER PRICES ROSE just 0.1% last month on falling energy prices, but sharper gains for clothing and medical care helped keep the so-called core inflation rate near the high end of the Fed's comfort zone. 1:07 p.m.

• Economists React: Inflation Isn't the 'Beast'

Tax burden growing faster than other expense obligations (CRB)

August 14, 2007

According to the Wall Street Journal, the typical Family pays substantially more to the government than its combined mortgage, automobile and health insurance expenses.  The article compares the tax and expense burden of the typical 70's family with one income, to the typical two-income  2000's family.   Mr. Zywicki, the author of the article, continues with "Although income rose 75%, and expenditures for the mortgage, car and health insurance rose by even less than that, the tax bill increased by...... a whopping 140%" 

Although the article does not include property taxes, property taxes in general, have also been escalating much faster than core inflation. While municipal governments like to use a different price inflater (CPI-W )than is often cited for consumers, the problem persist that Lower Merion Township's expenses are growing faster than inflation and private sector wage increases.  If the Township's budget continues to grow 5%-6% per year, one thing Lower Merion residents can count on, is property taxes rising much faster than wage increases.

Township's Budget expected to out spend revenue (CRB)

August 10, 2007

After several discussions and presentations by LMT's staff, CRB is convinced that the township's expenses will outpace revenue growth in the 2008 budget. Although the Township Manager and head of Finance have not directly answered our questions about a 2008 tax increase (The official response to date is "It is too early to say."), we have received comments about the townships "Systemic" revenue problems. ( Township Managers complete email response, Monday, June 18, 2007 )

With a 2007 budget that increased 5.3% and a tax increase of 2%, will this increase and systemic problem with revenue be repeated in the 2008 budget?  Not likely.  The current model which includes a budget increase of 5-6% in 2008, would most likely result in a more substantial tax increase of 5-6% in the 2008 budget.

The Systemic spending problem, not the revenue problem, is what will continue to require large tax increases .  Without  incentives for our staff, or goals by our staff to control spending, and the lack of guidance by the leadership of the Board of Commissioners, we can only conclude that the township will recommend the easiest revenue enhancer available to the township.  That enhancer, is of course, a real estate tax increase. 

Real cost containment has not been realized from reduction in unneeded services nor have better business practices been encouraged to streamline existing services.  Although many options are available to a tax increase, the options have not been considered. Other than " rear yard" trash pickup, discussions about cost control have not been encouraged, and in the case of rear yard trash pickup, the conversation continues to return to increasing revenue.  

Inflation remains low, choose your index!

August 1, 2008

CONSUMER PRICE INDEX: JUNE 2007

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in June, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For more on this story, visit:

http://www.bls.gov/news.release/cpi.nr0.htm

Moody's raises NYC's GO bond rating

July 30, 2007

Moody's raised New York City's general obligation bond rating to "Aa3", marking a highpoint for the city after a 30-year comeback from default in the 1970s.  For more on this story, visit:

http://www.fmsbonds.com/com072707.html .

Lower Merion's Township Manager Response to CRB's question about future tax increases

June  29, 2007

On May 29th, CRB and other citizens meet with township staff.  At the beginning of the meeting, Mr. Cleland (Township Manger) stated that we could expect tax increases every year due to the nature of the revenue stream.  For Mr. Cleland's complete email response to our question for clearification, please read.......

Township Manager's complete email response, Monday, June 18th, 2007

Tax Debate, Letter to Main Line Life - January 2007 (CRB)

CRB consistently argued that a tax increase was not needed, and therefore, was not justified for the 2007 Budget. Ultimately, the vote on Commissioner Rogers’ motion to eliminate the tax increase was lost. Commissioner Rogers is the BOC’s only registered Independent, and CRB was hopeful that his motion would bridge the partisan gap that had developed ...

Read full article

Reserves and Credit Rating Letter to Main Line Times (CRB)

January 18, 2007

“The most useful tool for evaluating credit risk is through examining the way [these] four key areas interact” (The Determinants of Municipal Credit Quality Government Finance Review, December 1999). A Moody’s representative recently confirmed that the 1999 article still reflects Moody’s methodology. The level of reserve is only one financial statistic used to evaluate the finances of a municipality and financial factors are only one of the four key areas considered. Therefore, a fixation on the level of reserves can be misleading, and most certainly did mislead a majority of Commissioners in the 2007 Budget discussion.

Read full article

Funding Sources for Planned Capital Improvements (LMT)

December 2007

View PDF table of Lower Merion Planned Capital Improvements projects and funding sources.

Civic Express Article on Proposed Tax Increase (LMT)

November 2006

Proposed Budget to Include Recommendation for 2% Township Real Estate Tax Increase. The 2007 Proposed Budget, which was distributed to all Township libraries on November 10th and is available for review at the Township Administration Building, recommends a 2% Township Real Estate Tax increase. “This recommendation was expected and even discussed in the presentation of 2006 Budget last year,” stated Dean J. Dortone, Chief Financial Officer.

Read Full article (PDF)

CRB HIstory and Action Items

CRB was born during the 2007 budgeting process when systemic problems in Lower Merion’s budgeting process became apparent. Problems with process often lead to undesirable policy outcomes for taxpayers. This was the case with the 2007 Budget when a majority of Lower Merion Commissioners voted for a 2% real estate tax increase. At over 22%, the 2006 ending general fund balance (reserves) was quite strong and the tax increase was clearly not needed.

CRB calls for Lower Merion Township to:

1. Identify and implement the documented and well-established best practices for local government financial policy and     management.

2. Determine financial benchmarks for spending and measure progress on a regular basis throughout the year.

3. Develop strategies to reward for innovative financial management and spending restraint.

4. Advance the budget process to a point earlier in the year.

5. Prioritize public participation and develop approaches to increase public participation.

Additionally, the 2007 Budget hearings demonstarted a preference by a many of our current Commissioners to increase taxes incrementally each year. It is apparent that some commissioners believe taxpayers will not notice small increases, and that small tax increases are easier to effect than spending restraint.

CRB acknowledges its access to Township staff and the Board’s ad hoc Budget Committee, but notes that more is required than politely listening to the concerns of Township residents. Action is needed. Without action, the Lower Merion Board of Commissioners will indeed raise our taxes every year and excessive tax rates will ultimately threaten the quality of life for many in Lower Merion.

CRB’s goal is to increase public awareness of the budget process and to promote and influence the enactment of common sense fiscal policy in Lower Merion Township. CRB looks forward to working with other civic groups and Lower Merion Township to increase public participation in the budget process.