Wednesday, February 20, 2019

Ways to Boost Pottstown's Fiscal Health Aired

Photos by Evan Brandt

This chart, part of Tuesday's presentation, shows how, if nothing changes, the borough's expenses will outpace its revenues and the fund balance surpluses will dwindle to deficits.

Despite finding that the borough is "doing pretty well" in terms of managing its expenses and trying to attract economic development, consultants looking for ways to make Pottstown's finances sustainable into the future said if nothing changes, million-dollar-deficits and tax hikes are on the way.

Those are the preliminary findings of a report on Pottstown's fiscal health undertaken as part of Pennsylvania's Early Intervention Program designed to keep municipalities out of fiscal distress.

The roughly 20-minute presentation Tuesday night was a broad overview of the findings that will be presented to borough council in detail on April 20 and provided the background for residents and taxpayers to ask questions or, more importantly, offer suggestions for improvement.
Kevin Brown suggested tax breaks for business.

Eight people did so.

It should be noted, however, that Tuesday night was not the only opportunity for input. An on-line survey of borough services -- which can be found here -- will be open until the end of the month.

Those suggestions offered up Tuesday night varied from selling the water and sewer systems, as Limerick Township did this summer for $75 million; to offering tax breaks to bring in businesses; to allowing people to work on their homes without requiring a licensed plumber or electrician; to fixing up the roads and alleys to make real estate in town more valuable.

"The median income in Pottstown is $45,000, less than the state and the country, the source of revenue cannot be the residents," said resident Kevin Brown.

He said offering more tax incentives to attract business would take some of the tax burden off residential property owners.

Brown also suggested a "profit and loss analysis" for each department. "I understand we own the airport. Are we making money on the airport?" he asked.

Property investor Chris Dailey said the borough makes it difficult for people to do renovation and improvement work on their own properties.
Property flipper and landlord Chris Dailey.

A former Pottstown resident who now lives in Royersford, Dailey said in Royersford and Lower
Pottsgrove, he can get a permit to do work on his own properties and the municipality inspects the work when it's done.

"I flip a lot of houses and I do my own work. It doesn't matter if a monkey does it, if it passes inspection it should be OK," said Dailey. But in Pottstown only licensed plumbers and electricians can do work on properties.

He said he purchased a house in Pottstown and wanted to fix it up to sell to another homeowner, but requiring him to use licensed electricians and plumbers meant it would not be cost-effective.

"So I went down to Norristown, I challenged the assessment and got it lowered and then rented it out to Section 8, which is exactly what the borough says they don't want," Dailey said.
Sheryl Miller is worried about funding for the fire companies.

Former council member Sheryl Miller said she agrees that new businesses are coming to Pottstown, "but it seems like for every new thing that comes in, we take three losses."

Miller also said she hopes the study now being undertaken by EConsult Solutions and SRW Strategies takes a look at the underfunding of Pottstown's four volunteer fire companies.

That was a concern also raised by firefighters with the North End Fire Company.

Noting that the consultants said health and retirement might need to be cut, North End fire Company President Andrew Stiteler said it is the benefits and not the pay that is keeping the professional drivers in their posts.
North End firefighter Dave Saylor.

Fire Brigade Commander Dave Saylor said he hopes the study looks at capital expenses for the fire companies as well. "The days of paying for a $1 million piece of equipment with pancake breakfasts is over," Saylor said.

When it comes to the police department, the largest single expense in the borough general fund, Brooke Queenan, a senior research analyst with EConsult Solutions, said the department is not over-staffed.

She said while calls for service continue to increase, the rate of serious crimes has actually continued to go down. And while "quality of life" crimes are on the rise, Queenan said that is often do to having a very active police department that makes arrests.

Pottstown's Police Department was compared to those in Easton and Williamsport and while they have lower crime rates, they also have larger police departments, she said.

And merging with another department does not offer much promise of savings because the kinds of services a regional department can offer for less cost, a detective bureau or advanced technology, are already in place in Pottstown.

"This is already the most robust police department in the area," Queenan said.

Daniel Connelly, a director at Philadelphia-based EConsult Solutions Inc., offered an overview of their findings of Pottstown's financial and operation situation so far.

Most socio-economic indicators in Pottstown are

below the state and Montgomery County median.
The borough's median home value, median income, per capita income and percentage of owner-occupied homes are all below the average for both Montgomery County and the state, the study found.

It's unemployment rate is higher than both and its percentage of individuals living below the poverty line is twice the state rate and more than three times Montgomery County's.

Connelly said the borough's water and sewer funds are financially healthy, due large to planned 5 percent rate hikes in each of the next three years.

David Unkovic, an attorney with McNear, Wallace and Nuric told a resident who suggested selling those systems that a policy decision like that must be made by borough council and that it has ups and downs. The cash infusion might help address certain problems, like roads and other infrastructure as was suggested, but the borough would also lose control of setting its own rates and customers would be at the mercy of a private company in terms of rates.

The example of Limerick selling its sewer system for $75 million could be counter-balanced, for example, by the fact that it may lead to rate hikes as high as 84 percent, The Mercury reported in September.

In this chart, the red line represents expenses, the blue line revenues.
The borough's financial position is currently "relatively healthy," Connelly said, because of tax increases and containing overtime and health insurance costs, "however, trends show challenges ahead."

Putting pressure on the expense side are "legacy costs," primarily pensions and "post-employment benefits," Connelly said. Borough Manager Justin Keller cited an unexpected $1 million increase in pension costs last year as one of the drivers of the 9.5 percent tax hike for 2019.

"The borough will experiences deficits and deterioration of fund balance unless new revenue sources or other corrective actions are taken," Connelly said.

Re-structuring retirement benefits, controlling health insurance costs and reducing overtime costs offer the best options for reducing the cost side of the borough's budget equation, said Queenan.

The study will also likely recommend working closely with the Pottstown Area Industrial Development Inc. to promote the Federal Opportunity Zones included in the tax reform bill passed by Congress last year and signed by President Donald Trump.

Another suggestion is to continue work on remediating blighted properties and seeking more financial support for those efforts.

And with that, here are the Tweets.

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