North Huntingdon weighs putting less cash in reserve
North Huntingdon commissioners next week will consider a plan to dedicate 25 percent of their budget's general fund to a reserve fund.
That's a decrease from its current savings of about 60 percent to 75 percent, which officials said amounts to about $6.5 to $7 million.
Township manager John Shepherd pitched the idea to commissioners Thursday, following up on budget discussions during the fall when board members talked about establishing a fund balance policy.
The fund balance would insure against unanticipated events that would harm the township finances and jeopardize public services, the policy states. Among other provisions, the account would make sure the township could provide cash for daily financial needs and offset economic downturns or revenue shortfalls.
Shepherd recommended a fund balance of between 20 percent and 25 percent. Commissioners Zachary Haigis and Lee Moffatt endorsed a 25 percent amount.
“That's a big step for us,” said Moffatt, who noted that the board is used to setting aside more than that.
Even so, Shepherd said, 25 percent is still a conservative number.
He sought fund balance policies at a handful of area municipalities, finding that Murrysville is the only one with a formal policy, which indicates a 20 percent fund balance, Shepherd said.
The Government Finance Officers Association, a national group of finance officials suggests a minimum fund balance of 17 percent.
The township is not required to establish such a policy, Shepherd said, but he said he thinks it's a good idea. The township has never before had a formal fund balance policy, he said.
Spending down the current 60 percent to 75 percent to 25 percent likely won't happen in a year, Shepherd said.
“It's not going to happen overnight,” he said. “It may be a five-year period, maybe more roads are done.”
Plus, Moffatt said, there are other avenues to consider.
“There's other ways to spend it down,” Moffatt said. “Cutting a mill (in property taxes) saves you $350,000. You could use it for operating budget.”
When approving a budget for 2013, commissioners cut real estate taxes by 1 mill.
During the fall discussions of the $14 million budget, Moffatt referred to the township's $7 million in reserve saying, “We just have too much money.”
Officials have attributed the rosy situation to residential development, which has boosted transfer tax and real estate transaction fees. Plus, the township collected more delinquent taxes than expected and spent less than anticipated.
Rossilynne Skena is a staff writer for Trib Total Media.