Board Approves No Tax Increase Budget, challenges ahead
On Thursday, I voted to approve and advertise the proposed township budget for the 2021 fiscal year. The total township budget for 2021, including all operating and capital funds, is $67,483,908. This is a decrease of $454,637 from 2020. This is a no tax increase budget which preserves current levels of township services. The final vote on the budget will occur on December 10. The budget is available here for your review.
While this headline is no doubt good news, the township is not immune from the stark financial reality caused by the Covid pandemic. In 2021, businesses operating in the township will pay their taxes based on profits they made in 2020 when profits were down substantially. Despite the cuts we have made to the 2021 budget, we anticipate revenues to be short by over $5 million. I am confident that there is no way to make up this shortfall through budget cuts alone without severely curtailing the level of township services. Indeed, most township employee salaries are slated to increase between 3% and 4.5% pursuant to our collective bargaining agreements. The fact that we were able to cut nearly half a million dollars from our budget in the face of rising costs was the result of months of hard work and very difficult decisions.
We have chosen to withdraw funds from the township rainy day fund to bridge the gap. As a result of our prudent and conservative financial policy, the township rainy day fund (also called the fund balance) is approximately $11 million. This substantial withdraw will have certain downstream impacts. The township uses portions of the fund balance to offset our pension obligations and pay for capital improvements. With the fund balance depleted to about $6 million, our pension payments and capital program will decrease unless we generate additional revenue. Also, if the pandemic's impact on local businesses continues into 2021, we will face the same fiscal challenges in 2022, and we will not be able to dip into the rainy day fund again while also maintaining the minimal reserves we are required to keep.
During my short tenure on the Board, I have been very cautious with our use of the rainy day fund. I have some concern about using the fund to balance next year's budget, but I could not support a tax increase in the midst of a pandemic. I also believe that we have been building the rainy day fund for just such an emergency. That said, absent assistance from the federal government, a property tax increase in 2022 appears unavoidable. The Board of Commissioners is keenly aware of our financial predicament and will be debating our fiscal policy and the 2022 budget throughout the coming year. I will keep you apprised of those discussion. If you have any questions, please do not hesitate to contact me.