Peters Township manager: No dire financial outlook in wake of COVID-19
Despite an inevitable financial hit caused by COVID-19, Peters Township manager Paul Lauer expressed some degree of optimism about the municipality’s ability to weather the crisis.
Although the potential effect on revenues and expenditures is unknown at this point, Lauer informed township council about some of the items in the 2020 budget that can help mitigate the impact.
For example, the township has a longstanding policy of maintaining a fund balance, or budgetary surplus of at least 15% of revenues.
“And in practice, our balances far exceed that 15%, which is designed in part to provide a cushion for normal operations and provide cash flow while you’re waiting for tax revenues to come in,” Lauer said during Monday’s council meeting, which is now available to view online. “But it’s also designed to provide some cushion when you have something either in terms of expenditures or revenues that was not anticipated.”
Another source of money, he said, is an unappropriated $1 million inside the township’s Capital Improvement Program fund.
“That truly set aside for unanticipated disruptions of revenues with a need for emergency expenditures,” he said. “And we have, in the past, relied upon that to be able to do some projects that we could not have anticipated.”
In addition, the township has a $725,600 certificate of deposit for the purpose of funding post-retirement employee benefits.
“We certainly don’t want to tap that money for a different purpose, but it sits there and can be reprogrammed if needed,” Lauer said.
He also told council the township’s cable television fund had a $1 million balance at the end of the year.
“When you combine those three balances,” he said, “that represents nearly 12% of the total budget for 2020.”
Regarding the overall financial picture, he expressed the opinion:
“There will be an impact, and we’re going to know exactly what that impact is by the middle of July. But I don’t think it’s going to create a dire situation in terms of our finances.”
On the revenue side, the most notable impact looks to be on earned income taxes, but Lauer said the makeup of Peters’ workforce could work in the township’s favor, as a larger percentage of residents have the ability to continue their jobs at home compared with other communities.
Decreases in commissions and bonuses, though, are likely to produce a corresponding drop in tax revenue.
Another substantial source of money for the township’s coffers is the deed transfer tax, which added up to nearly $2.8 million last year. But because the amount is unpredictable for any given year, Lauer said, the 2020 budget includes a more conservative figure of $1.6 million.
“It would seem to be that we should be able to meet that budgeted number,” he said. “We are still seeing a fair number of lien letter requests. We have a fair number of building permits sitting downstairs that have been processed and are waiting to be issued.”
Along with sharing some positives, Lauer also advised township officials to proceed with caution in some areas.
“What I would suggest is that we ought to seriously consider deferring a whole series of capital projects, not eliminating them, but deferring them until at such point in time we have a better idea of what our revenues will be for the year,” he said, with some exceptions.
“We ought to go ahead with our road paving program. We ought to go ahead with our storm sewer repair program,” Lauer told council. “When we don’t pay attention to that, it gets more costly in future years.”
Council later in the meeting voted unanimously to award the 2020 road paving program contract to Independent Enterprises of Collier Township for $1,538,367.50, the lowest of six bids received.