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The Mayor's 2007 Budget Veto

Written By: Clinton N. Godlesky
Story Date: December 28, 2006

The following was submitted by Chuck Pascal to the Leechburg Council:

Mayor Chuck Pascal

TO: Anthony J. Defilippi, President of Borough Council

Bernice Roberts, Borough Secretary

All Borough Council Members

DATE: December 26, 2006

RE: Veto of 2007 Budget Resolution and

Veto of Ordinance No. 6 of 2006


This is to notify Borough Council that, pursuant to my authority under the Borough Code,

I hereby veto the 2007 Budget Resolution, and Ordinance No. 6 of 2006 (the tax ordinance) adopted on December 18, 2006. Following is the rationale for these actions.

I. The Budget Resolution

A budget is an expression of priorities, aspirations and policy. It is my belief that the budget adopted by Council is based upon faulty assumptions, misplaced priorities and a lack of aspirational vision for the future. This Council, and this mayor, were elected on the promise of positive change and the premise of moving Leechburg forward. Unfortunately, in my opinion, this budget does not serve to place us in a position to progress as a community. In fact, in some aspects, the budget moves us backward. It is not merely a matter, though, that council’s priorities, as expressed in the budget document, differ from mine. It is my opinion that there are several serious problems with the budget resolution which deprive Borough residents of essential services, and place the Borough at risk of fiscal distress, either during the 2007 budget year or shortly thereafter. It is for these crucial and substantial reasons that I regretfully believe that I am forced to veto the budget.

A. Revenue

The revenue in the budget is vastly overestimated. The total assessed valuation for the Borough for 2007 tax purposes is $24,334,493. At a tax rate of 10.57 mills, the total real estate tax levied is $260,191.31. The estimated revenue in the 2007 budget from real estate taxation is $260,000, meaning that council has estimated 100% collection in 2007. This is simply absurd. The Borough traditionally collects approximately 86% of real estate taxes levied. In 2005, we collected approximately $230,000. In 2006, we are on track to collect about the same. There is no logical or identifiable reason that we should project that we will collect more than $230,000 in 2007. Therefore, the budget overestimates real estate tax revenue by $30,000.

In addition, the budget adopted by council has estimated collections from per capita taxes in the amount of $15,000. However, there are 1358 persons subject to the tax, which means that if 100% of the taxes were collected, we would collect $13,580. So, council has estimated, inexplicably, that we will collect 110% of taxes due. Based upon 2005 and 2006 numbers, we are likely to collect approximately $10,600 in per capita taxes. Therefore, the budget overestimates per capita tax revenue by $4,400.

Thus, the total overestimation of revenue in the 2006 budget is $34,400.

B. Expenditures

While the budget overestimates revenue, it concurrently underestimates expenditures. At the council meeting where the budget was adopted, I was assured that, despite the concerns I expressed, that there was sufficient funding to maintain 24 hour a day, 7 day a week police coverage. I have taken yet another look at the budget to attempt to verify that claim, and have re-done the calculations of the police budget, and have come to the conclusion that my original assessment was correct—this budget guarantees that the current level of police coverage cannot and WILL NOT be maintained.

Here are the calculations:

There are three 8-hour shifts per day, 7 days per week. This equals 21 shifts per week.

Currently, there are 2 full-time police officers. Together, they cover 10 shifts per week, leaving 11 remaining shifts. These 11 shifts are covered by part-time officers, who make $11 per hour. This is $88 per shift, multiplied by 11shifts per week, which equals $968 per week. There are 52 weeks in a year. $968 x 52 = $50,336. This is the amount required for part-time police wages to maintain one officer on duty at all times. Yet, council has budgeted $40,000. This is a shortfall of $10,336.

This does not take into account that the full-time police officers have time off in the form of vacation, personal, and sick leave totaling an additional 40 shifts per year, as well as another 20 shifts per year for holidays. These additional 60 shifts must be covered by part-time officers. This cost is an additional $5,280.

There are, therefore, 178 police shifts which are not funded in this budget—the equivalent of over 16 weeks of part-time police shifts, or 8.4 full weeks of police coverage.

The budget also does not take into account any extra time required of part-time officers for investigations, or the need for part-time officers to go to court. Experience in this regard is that there would be an average of 10 total hours per week for court time and/or investigations. This totals another $5,720.

Therefore, it is my conclusion, that an additional $21,336 is necessary to be budgeted for part-time police wages in order to maintain one police officer on duty at all times, and the current level of police protection for the citizens of the Borough.

C. Long-Term Considerations

It is important that all organizations, including the Borough, develop budgets with an eye to the long-term considerations and consequences of those budgets, projecting what the budget will mean to the fiscal health and stability of the organization over time.

The 2007 budget is being balanced, in part, on the back of the $50,000 in revenue from the sale of the Leechburg Pharmacy and related buildings. This is reflected on page 7 of the budget.

This is, of course, a one-time revenue source. It is bad fiscal practice to balance a budget with a one-time revenue source, because doing so creates negative consequences in the ensuing budget years.

In addition, the sale of the building means that the annual $18,000 in rent received from the building will not be forthcoming. Thus, in 2008, there is a $68,000 revenue deficit ($50,000 + $18,000) related to the buildings which must be addressed. This fact, coupled with the $34,400 overestimate of revenue previously identified means that, should no changes be made in the budget, planning for the 2008 budget will begin with the question of how to find $102,400 in revenue just to maintain the status quo. This, coupled with the underfunding of the police budget to the tune of $21,336 creates a scenario under which we will begin planning the 2008 budget with a projected $123,736 revenue shortfall for FY 2008.

D. Conclusion

When I ran for Mayor, one of my pledges was to do whatever possible to maintain the current level of police protection for the Borough; that being, 24 hour a day, 7 day a week local police coverage. I have never heard any member of council disagree with that policy or premise. Yet, the budget as adopted will require that there be no local police coverage whatsoever for a total of 178 shifts. This is a total of over 8 weeks of coverage, or over 16 weeks of having one shift per day and all weekend shifts uncovered.

This is totally unacceptable to me, and to the people of the Borough. Council is, in effect, making a policy determination to no longer have full police coverage, but disguising it as a budget appropriation decision, never taking a vote on the issue of police coverage itself. Should this be Council’s wish, then this matter should be brought up and defined clearly—with total disclosure to the people of the Borough—be openly debated and the subject of a separate and distinct vote.

Drastically cutting police coverage while providing “entitlement” status to other priorities

(e.g., council’s separate and distinct resolution guaranteeing the fire company a $30,000 per year appropriation, regardless of the fiscal realities experienced by the Borough) is inappropriate. While I support the continued appropriation to the fire company (a separate corporation which we do not govern), to elevate one aspect of the public safety budget to “sacred cow” status while gutting the police department (which is a department of the Borough which we do govern) does not seem to be in the best interests of our residents or of public safety.

It is my sincere belief and fear that the budget, as adopted, places the Borough on a trajectory toward fiscal and social disaster. For reasons already discussed, the 2007 budget IS NOT BALANCED. The long-term implication of this budget foretells a day in the not too distant future when Council will be forced to either significantly raise taxes, eliminate the police department, or both; or, in the alternative, face distressed municipality status and turn over fiscal control of the Borough to outside agencies. None of these is a viable option or solution which I am willing to accept.

For all of the reasons herein stated, I cannot, and will not, therefore, allow the 2007 budget as adopted to become effective with my signature or with my tacit and silent approval by doing nothing. I have no option other than to veto the budget. It is my strong recommendation that these considerations be addressed by revising the 2007 budget to address the concerns which I have raised in this veto message.

E. Other items and recommendations

In addition, I would like to point out a few other items that deserve attention, but which would not have caused me to veto the budget.

Council has discussed its desire, and the need, to do a comprehensive rewrite of the zoning ordinance. In preparation for that task, and to make it easier for the Borough to receive grants, there is a need to fund the creation of a “Comprehensive Plan.” These two items are expensive, and some funding should have been provided in the budget to begin this process. There are no funds appropriated for these tasks, which council has identified as important. (Please note that there is $2,400 budgeted for recodification of ordinances, but this is NOT the same thing as a rewrite of the zoning ordinance; it is a completely different and distinct task.)

Concurrent with this concern is the fact that there are no funds allocated to the planning commission, and there is no line item in the budget to fund the expenses of the Zoning Hearing Board. It should be noted that council must pay for the solicitor of the ZHB, as the solicitor may not be paid out of the deposit of an applicant pursuant to the provisions of the Pennsylvania Municipalities Planning Code.

We have also discussed the need to fund the activities of the Shade Tree Commission. However, the budget does not provide any funding for these activities.

As a final recommendation, Council should seriously look at undertaking public relations activities in support of increasing the participation of Borough residents in the recycling program, with the goal of increasing the volume of recycling. Increasing the volume of recycling could increase revenues coming into the Borough. Recycling is one of the few “non-tax” sources of revenue of which the Borough may take advantage. Rather than being seen as a burden, the recycling program should be seen as an opportunity for the Borough to increase revenue while being good environmental stewards.

II. Ordinance No. 6 of 2006—(Tax Ordinance)

I have also vetoed Ordinance No. 6 of 2006, the 2007 Tax Ordinance. I have done so only to give council the option and the flexibility of modifying the tax ordinance if you find it necessary to do so when dealing with the other issues which I have raised. By vetoing this ordinance, I am not thereby advocating an increase in taxes.

Respectfully submitted,

Date:________________ ___________________________________

Mayor Chuck Pascal

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