Friday, June 8, 2012

Borough Budget Bright Side

Jason Bobst
It's starting to look like when Borough Manager Jason Bobst leaves the borough in August, he will be leaving it in pretty good financial shape.

He offered council a mid-year budget status report Wednesday that could be summed up as "most of the funds are going pretty well."

"Some lines," he said, "are cause for concern but overall, the borough's books are on a positive cash basis and we're projecting a $50,000 surplus at the end of the year, barring anything unexpected."

Given that as recently as 2009, the borough has ended the year with deficits this is good news and the result of hard work by Finance Director Janice Lee and her staff, Bobst said.
The main building of
MCCC's Pottstown
... connected by a pedestrian
underpass to the
North Hall campus.
The three budget lines which are in a cash negative basis are familiar: PCTV, the airport fund and the grant fund.

"The grant fund is a little misleading because we have to spend the money to get the reimbursement, but historically, that fund has been down by $300,000," said Bobst.

The reason for that is cost overruns on the project to build a tunnel under the freight rail line parallel to High Street which connects the two campuses of Montgomery County Community College.

The underpass
before construction...
...the underpass after
But Bobst said the borough has been plowing $75,000 per year over the past few years into that fund and they expect it to be in the black shortly.

The $31,000 deficit in the airport fund will disappear when the final loan payments on the new hangars are paid off, and then the rental payments for those hangars will begin to develop a positive cash flow for that fund, Bobst said.

As for the PCTV fund, which is $561,000 in the red, Bobst said the new contract the borough hopes to sign shortly with the new company managing PCTV, TellusTV, will erase much of that debt and the borough will no longer to liable for the payments on the new equipment the system purchased several years ago to keep up with changing technology.

Bobst told council Wednesday night that the new contract treats PCTV as a simple income line in the budget and is structured in a fashion similar to what the borough tried to set up with the previous operator, Maplewood Video.

On the plus side, the parking lot fund has enough cash to begin to upgrade some of the parking lots and "get rid of the antiquated metering system and put new meters in," said Bobst.

The mild winter was also easy on the liquid fuels fund, said Bobst.

The borough's salt pile is not this big, but you get the idea.
With plenty of salt and little to no over-time required of the road crews to clear snow, there is enough money for Public Works Director Doug Yerger to set up a schedule to do some paving this summer, Bobst said.

Excess cash in the parks and recreation, library, fire and street lights funds will also allow the borough to "retire some deficits we had in those funds as well," said Bobst.

And additional funds in the trash fund will allow the borough to set some cash aside for capital projects, primarily paying to replace the blue recycling bins as they reach the end of their useful life.

"This really shows how the EIP report continues to bear fruit and how much we've improved our cash position since 2009," Bobst said.

Careful accounting has put the
borough accounts in better shape.
He was referring to a state-sponsored Early Intervention Program report, issued by the Ohio-based Management Partners consulting company, which made a series of short and long-range financial and operational recommendations to keep the borough solvent in tough times.

Financial experts recommend a municipality keep 15 percent of its operating budget in reserve.

Lee told council that the borough authority is right at 15 percent and the borough is getting there, with currently eight to nine percent in reserve.

This improvement in the borough's finances was the reason Pottstown obtained a favorable interest rate on the money it recently borrowed for a number of capital projects, including a new borough garage, to replace the ramshackle exhibit on Beech Street.

"We got an informal credit rating of A," Bobst said. "We never could have obtained that before and it saved us money with such a favorable interest rate."

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