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Hatboro Facing Budget Deficit

Officials hope to have a revised draft by Monday's meeting.

Hatboro officials are working to balance the roughly $4 million 2012 budget, which currently has a more than $350,000 shortfall.

During the council’s second budget work session Wednesday night, the governing body directed borough manager Steven Plaugher to meet with department heads to review line items and determine what cuts could be made.

Republicans Vincent LaSorsa and John Zygmont, both CPAs, said it was up to the finance committee - comprised of Democrats Marianne Reymer and Patty Fleming - to find solutions to the deficit.

"Come back to us with some recommendations of ways to reduce the deficit to zero," LaSorsa said. "That’s the finance department’s function."

"Really? Because there’s seve people on this council," Reymer fired back. "All ideas are appreciated."

The divided council, after agreeing to disagree on which elected officials were responsible to find budget-balancing solutions, conceded to send any and all money-saving suggestions to Plaugher through this week.

From there, Plaugher said he’d revise the draft budget to reflect the changes and present a new draft spending plan to the council during Monday’s meeting.

“The expenditures exceed the revenues,” Plaugher said after the meeting. “We have fixed costs that go up.”

Chief among them are fixed raises for union employees; and skyrocketing health insurance costs, which according to the 22-page budget, is expected to increase, on average, by 12.5 percent from its current rate.

The governing body has roughly seven weeks to adopt a balanced budget by the Dec. 31 deadline.

“Perhaps we are behind just a bit,” Plaugher said. “It’s a work in progress.”

And that work could continue to be revised even after the Dec. 31 deadline, he said. Because will take the helm in January - switching control from 4-3 Democrat to 6-1 Republican - Plaugher said the incoming council could have a say in the final 2012 budget.

"The new council can reopen the budget in January and make any adjustments," Plaugher said.

Ultimately, Plaugher said it would be up to the council to decide if borough services should be cut, or if a tax increase should be put in place. Since 2004, the municipal tax rate has been 7.358 mills, which for the owner of a home assessed at $125,000 amounts to $920 in borough taxes.

Also up to the council is whether the six nonprofit organizations – Visiting Nurse Association, , , , the and – that pleaded their cases for financial assistance warrant new or increased line items in next year’s budget.

The largest request over last year’s budget came from Main Street Hatboro President Bob Johnston, who asked that the borough’s current Main Street Manager, Stephen Barth, be retained full-time for 2012 at a salary of $62,400, up from the $37,500 currently budgeted.

Johnston credited Barth with helping to up the downtown area’s occupancy rate by 20 percent and, in doing so, create 150 jobs. He also commended Barth for assisting two borough businesses – Extreme Midyears LLC and the – in obtaining $50,000 from the county. The county commissioners approved the loans, which come with a maximum 3.25 interest rate, during Thursday’s meeting.

Johnston also brought with him to Wednesday’s meeting, two “success stories” in the form of co-owner Bob Quigley, as well as George and Paul Hazakis, who transformed the on York Road into the .

Quigley, whose following excessive flood damage stemming from Hurricane Irene, said if it had not been for borough employees and Barth in particular, his family would have either closed for good, or relocated outside of Hatboro. Instead, they are planning to open at the former Dunkin’ Donuts soon.

“After we wiped away the tears that Sunday morning, there was a person standing next to me, on my shoulder, telling my daughter and myself ‘I will help you. You don’t need to call me.’ That person was Steve Barth,” Quigley said. “He came up with ideas to help us get to the new place.”

Other nonprofit funding requests include:

  • An increase from 2011 in the amount of $10,000 for a total of $60,000 for the Union Library of Hatboro
  • Hatboro Little League requested $11,500 to cover fencing and other upgrades totaling $13,298. The borough will receive $2,040 per month for a
  • Elm Street Hatboro requested that the borough pay its liability insurance in the amount of $1,700
  • Bux-Mont Meals on Wheels requested $3,000, as has been granted in previous years
  • The Visiting Nurse Association did not specify an amount requested, but $1,000 was granted in 2010 and 2011.
MJG November 11, 2011 at 07:53 PM
When was the revenue side of the budget done and by whom? Why was it not discussed at a public meeting?
Scott Johnson November 11, 2011 at 09:05 PM
If I remember correctly, the budget workshops are open to the public, once a budget is announced they bring it to the public meetings to be discussed and finally voted on. They are not at the point with the budget that it is discussed at their meetings. Though you can go to the workshops when they are held.
MJG November 11, 2011 at 09:28 PM
Thanks Scott but that did not answer my questions. Who prepared the income portion and why was it not discussed at either PUBLIC workshop meeting?
Scott Johnson November 11, 2011 at 09:36 PM
Ah, sorry, I thought you were asking why the budget wasn't being discussed during the normal meeting and not the workshops!.. Yea I don't know that answer ^_^
MJG November 11, 2011 at 10:10 PM
Fair enough Scott, this ones a little more difficult. According to Hatboro’s web site and the posted agenda for November 11th a $334,526.12 MMO payment is being discussed. The state recently sent municipalities an unexpected one-time windfall check. This amount can only be used to fund pensions, even if over funding is the result. Are any additional borough funds being used in conjunction with this?
Theresa Katalinas (Editor) November 11, 2011 at 10:20 PM
MJG: The borough manager prepares the budget in conjunction with the council. Also, the council held two public workshop meetings - on Nov. 2 and Nov. 9 - specifically for the budget.
MJG November 11, 2011 at 10:31 PM
Thanks Theresa, but with all due respect, that is common knowledge. I’m seeking answers to uncommon yet specific questions. Which due to a complete break down of the entire board it is impossible to get at public meeting. Surely someone knows the answers.
Bill Tompkins November 12, 2011 at 03:39 PM
At the October Committee Meeting, council discussed the 2011 MMO. The former manager had selected a state offered option to only fund 75% of the obligation, but council clearly rejected this last year. I believe that the $334,526.12 amount is the full amount of the 2011 MMO. The excess state collection amount was also discussed and I think it was the intent of council to use the amount as a one time pension contribution to improve the funding status of the pension. You can check the minutes of that meeting at http://www.hatborogov.com/_fileCabinet/minutes_-_2011_-_October_10_-_Committee_Meeting.pdf
Bill Tompkins November 12, 2011 at 03:43 PM
Not sure what specific questions you have, but Monday would be the time to ask them (privilege of the floor).
Bill Tompkins November 12, 2011 at 03:48 PM
Some income portions of the budget were discussed as they came up. Most are fixed or easy to arrive at numbers (real estate, based on current millage and the borough's half of the 1% EIT).
MJG November 12, 2011 at 04:29 PM
Thanks Bill, I plan on attending. Would the amount from the state fulfill the MMO for 2012?
MRNGAO November 12, 2011 at 05:23 PM
Come on people, this patch is the glorified National Enquirer of Hatboro. It is a place were people can log on under fictious names and spread nasty rumors and start trouble, it is just a tabloid. This is not real journalism or reporting. You won't see any of these people that comment most of the time on this patch at Council meetings because most of the time they are one in the same individual(s). Where have you been the people came out last week and they spoke, they are sick and tired, the incumbents screwed this town up, which is evident by many things including the MMO. Don't try and blame that on the Republicans, the chair of Public Safety, the finance committee, the administration committee all made up of incumbents. And also please take the pink signs down election is over. Should have known they would stay up all over town, it is typical of the incumbents they can never finish anything they start. And by the way get your incumbents to pay their bills and taxes, does anyone want to know more?
MJG November 12, 2011 at 05:42 PM
@MRNGAO Your post seems off topic and contradictory to say the least. If it makes you feel good “shooting a dead horse“ (pun) by all means have at it. Playing the blame game gets us nowhere. Nobody should be indignant facing a $350,000 deficit.
Theresa Katalinas (Editor) November 12, 2011 at 05:49 PM
MRNGAO: Some valid points. Anyone can log in and post under fictitious names - yourself included. My name, picture and contact information are at the top of the site. And I attend nearly every council meeting because it is necessary to the job I am tasked to do - report on the news in Hatboro and Horsham. Since, as you stated, Patch is lacking in its coverage and news reporting, I would like to hear from you about how it can be improved. I look forward to hearing more from you. And can be reached at 215-350-4833 or Theresa.Katalinas@Patch.com should you wish to offer constructive criticism.
MJG November 12, 2011 at 05:59 PM
Theresa. I apologize for MRNGAO. That was uncalled for and typical of the problems that plaque our town. Unfortunately, I think this destructive behavior will continue even after the new year. You do a fine job and your work is appreciated by many.
Theresa Katalinas (Editor) November 12, 2011 at 06:03 PM
Thanks MJG.
Bill Tompkins November 12, 2011 at 06:46 PM
No the amount from the state is about $190k, MMO for 2012 is about $338k. The $190k was 2011 state aid. If I remember correctly, the borough gets about half that amount normally (and expected for 2012)
Bill Tompkins November 12, 2011 at 06:52 PM
I think it is OK to be indignant about a $350,000 deficit, but it is not a big surprise. Too many one time transfers and manuevers last year to balance the 2011 budget with some hefty spending increases (about $400,000) left little manuever room for this years budget. It is up to the current make up of council to pass a balanced budget. If the new make up of council does not like it, they can re-open it in January and change it. So it is a problem for all.
MJG November 12, 2011 at 07:07 PM
Bill what contributes to the MMO? Is this payment amount normal or higher than usual? I disagree about being OK with indignity that only leads to dysfunction and that leads to failure.
Bill Tompkins November 12, 2011 at 09:35 PM
I believe the MMO consists of current pension funding and additional amounts to cover previous shortfall. It is determined by an actuary based on a state mandated formula. It appears to be $334,500 for 2012 and $338,150 for 2011. I believe it varies slightly with interest rates (for the invested funds), current demographics (of both the active and retired police officers) and the actuarial assumptions (life expectancy, etc.) The quicker the funding gets current, the less 'back interest' that accumulates. That would be the chief advantage of using the excess state collection and disbursement and applying it to the plan as a separate payment.
Bill Tompkins November 12, 2011 at 09:44 PM
maybe I am using a different base meaning for indignant. I take it as strongly displeased. I think we should all be strongly displeased that it is at the point where we are out of balance by so much. We have to (by law) end up with a balanced budget, and it is going to be very hard to get there. Does not in my mind have to lead to dysfunction, that only happens if someone chooses to take it there.
MJG November 12, 2011 at 11:26 PM
Thanks for explanation Bill, I can see why some are mentioning your name as a leader among the new council. So the MMO is used for the police pension and council decided to go with the full funding option instead of the 75% option. Starting to get clearer for me. What caused the previous “short fall” you mentioned? Does an actuarial report exist to address the under funding and why it occurred? Is the stock market to blame or did something else occur? Plan change or new type of pension? BTW the indignant comment was for the person intent on going backwards. My votes were split with 2 going to republican candidates and one democrat. That is as specific as I choose to get. Until now I kept that to myself. As you can see (MRNGAO) both sides are guilty of the dysfunction. Although you may not see it we do.
Bill Tompkins November 13, 2011 at 03:15 AM
The underfunding goes back a while. I think it is a combination of the state mandated police pension benefits (they changed them on municipalities like they changed the teachers pension system as well-the school board is also facing similar issues) combined with the low interest rates of recent years not compounding existing money in the plan. There is an actuary who reviews the plan and submits reports to the borough. When the economy got bad, the state allowed municipalities to select a 75% funding option, but this only pushes the money (with interest it should have made) into future years. You'd do better to ask these questions at a public meeting as one of the accountants on council can give you much more detail.
MJG November 13, 2011 at 03:56 AM
Seems very problematic that this pension fund is in need of so much financial assistance. Can’t help but wonder about the 75% option and why it was not considered. Freeing up $85,000 right about now does not sound like a bad thing. While the democrats may have dug us into a financial hole someone handed them the shovel.
Bill Tompkins November 13, 2011 at 11:55 AM
I think that that the 75% option only applies to the shortfall amount (about $200,000) so it is about a $50,000 dollar differance. It is not relief from funding that amount, just pushes it into future years.
MJG November 13, 2011 at 03:36 PM
Still $50,000 is a good start on deficit reduction. Furthermore, would it not be more advantageous to defer and let the market stabilize (yes it will get better) the fund instead of infusing tax dollars that are needed elsewhere? Still can’t grasp why the MMO is so much. Must be missing something?
Bill Tompkins November 14, 2011 at 02:26 AM
MMO is based on current pension liability and catch up for underfunding. The $50,000 is just payable as increased MMO in future years, not sure whether the short term savings are worth the long term goal. We can't put off forever. It is really more like borrowing the money from future budgets - looks good today, but comes due tomorrow.

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