Borough Starts Climbing a $27 Million Mountain

The borough is getting started on setting aside money each year to cover a whopping $27 million obligation to pay for medical and other benefit costs for current and future police retirees.

Wednesday night, council was briefed on the proposal to set aside $250,000 per year for what the council agenda labeled opaquely as "OPEB," which, according to Borough Manager Mark Flanders, stands for "other post employment benefits."

The official vote will occur at Monday night's council meeting, which begins at 7 p.m. and is the meeting at which the public is allowed to comment.

Mark Flanders says it will not take 108 years to fund the
$27 million 

police retirement health cost liability.

These potential costs are not retirement payments, but rather for medical benefits for retirees, both current and future.

Getting a handle on the total potential cost of obligation itself is no easy task, said Flanders.

"This is a moving target that fluctuates; based on actual retirements (as opposed to people leaving before retirement) and mortality rates," he wrote in an e-mail replying to a Mercury query.

According to Finance Director Janice Lee, the amount of an individual retiree's medical costs "varies according to what contract the employee retired under" as well as what medical benefits are actually sought.

For example, a retiree who needs treatments for cancer will cost more than one who requires less expensive medical services.

"It's not the same for all," Lee wrote in an e-mail response to The Mercury.

Even the $27 million liability is an estimate at best, based on actuarial estimates for the variables mentioned.

As a result, the administration demurred to give an estimate for how long the borough will need to set the $250,000 aside annually before the liability is considered funded.

Pottstown Borough Hall

However, Flanders agreed that an estimate of 108 years -- which is the time it would take when $250,000 is divided evenly into $27 million -- is "certainly not" accurate.

Nevertheless, the obligation is nothing to sneeze at when one considers that it is just under half the size of the $40 million 2013 budget.

Funding this obligation, or "liability," depending on what terminology you use, "was part of the EIP recommendations," said Borough Council President Stephen Toroney.

He was referring to the state-funded consultant report in 2008 that outlined measures the borough needed to take to remain financially solvent.

The 141-page report was written by an Ohio consulting firm named Management Partners funded partly through the state's Early Intervention Program for municipalities in financial trouble.

It contained the startling prediction that unless Pottstown radically changed the way its borough and authority government is run, that borough property taxes would jump by 75 percent; water rates by 25 percent and sewer rates by 19 percent in the next five years.

The report was cited as the reason for the lay-off of 13 employees in late 2008 and the 10 percent

property tax hike which accompanied it.

The report highlighted a number of looming problems, not the least of which has been the steady drop in Pottstown’s total assessed property values.

The report contained 122 recommendations designed to save $370,000 a year.

Not all of the recommendations were undertaken, but many were and, as a result, there no tax hike for the current budget year.

However, one recommendation which council and the administration had yet to address was this outstanding obligation.

At the same meeting, council reviewed the action necessary to fund this obligation, members also reviewed the obligations with which they have kept pace -- the borough's two pension funds.

The minimum obligation needed this year to fund the police pension plan is $865,432 and the minimum needed this year to fund the pensions for non-uniformed employees is $186,497, according to Borough Solicitor Charles D. Garner Jr.

However, not all of that money comes from borough coffers as the state also kicks in part of that cost.

Toroney: Report Paved the Way to No Tax Hike

Borough Council President Stephen Toroney credited a 2009 consultant report on the borough’s finances for starting Pottstown down the road to what he considers a landmark achievement, that was made official Monday with the adoption of a $38.5 million that does not raise borough taxes for the first time in recent memory.

Councilman Mark Gibson, who, as a paid driver for the Empire Fire Company could be said to benefit financially by voting for the budget, which makes contributions to the fire companies, abstained from the vote.

But the budget, officially balanced at $38,530,729, otherwise received unanimous support from the remainder of council.

Also adopted with Gibson’s abstention, was the tax rate ordinance.

It is broken down as follows:
• General fund — 6.71500 mills;
• Debt fund — .55000 mills;
• Library fund — .19700 mills;
• Street light fund — .33700 mills;
• Parks and Recreation fund — .90600 mills;
• Fire house maintenance fund — 1.50700 mills;

Council President Stephen Toroney

This leaves the 2013 total real estate millage in the borough at 10.212 mills, the same as 2012.

For the average residential property in the borough — which is assessed at around $75,000 — that works out to an annual bill of $765.90.

Toroney thanked Finance Director Janice Lee for her hard work.
“It’s an early Christmas present for the citizens and taxpayers of our town,” he said.

“We’ve been working toward this since 2010,” said Councilman Dan
Weand, who chairs council’s finance and administration committee.

“It took many years to dig ourselves out of the hole we were in,” Toroney said, which prompted Borough Manager Mark Flanders to remark, “we’re not out of it yet.”

Lee declined to take all the credit. “It’s just evidence of everybody working together,” she said. “It was a team effort.”

“I think the start was the EIP report,” Toroney said in reference to a report paid for partly through the state’s Early Intervention Program for municipalities in financial trouble.

The 141-page report was written by an Ohio consulting firm named Management Partners and contained the startling prediction that unless Pottstown radically changed the way its borough and authority government is run, that borough property taxes would jump by 75 percent; water rates by 25 percent and sewer rates by 19 percent in the next five years.

In addition to there being no tax hike in 2013, there will also be no increase in water and sewer rates.

The report highlighted a number of looming problems, not the least of which has been the steady drop in Pottstown’s total assessed property values.

The report contained 122 recommendations designed to save $370,000 a year and was cited as the primary reason for borough lay-offs that occurred subsequently.

Among the other recommendations was a suggestion to merge the public works department and the borough authority.

While that has not happened exactly, Flanders told council that in 2013 he intends to consolidate the maintenance of the water and sewer treatment plants into a single department “and make a stand-alone maintenance department called ‘Utility Maintenance’ that will do work on both plants on a work-order basis.”

He said that department will be overseen by Brent Wagner, the utilities coordinator.

“If we hadn’t had the EIP report, we wouldn’t have had a plan and we wouldn’t be here,” Toroney said.

“The EIP report gave us that blueprint.”

Halloween Parade's Fate May Rest with Council

Is Pottstown's Annual Halloween Parade doomed? A borough
council vote Monday may tell the tale.

Blogger's Note: A correction. The initial version of this post said the council meeting is Monday. That is incorrect. Monday is Columbus Day. The council meeting is Tuesday night.

A vote by borough council Tuesday night may determine whether or not Pottstown's Halloween Parade occurs this year.

The parade is scheduled for Wednesday, Oct. 24 from 6 to 8 p.m. and, as in past years, its organizers have asked council to waive the permit fees and costs that taxpayers will then have to shoulder.

Interim Borough Manager Mark Flanders told council Wednesday night that the overall cost to the organizers is more than $5,000.

The 2012 budget only allocated $3,000 for such parade and event waivers and it is already over-budget, council having waived roughly $5,000 in event fees already, Finance Director Janice Lee told council.

Making the decision even more difficult for council was Flanders' observation that "if council chooses not to waive the fees, I'm not sure there will be a Halloween parade."

"It was my understanding that we would have the same arrangement as in 2010 (our first year) and last year (which was rained out)," said P. Richard Frantz, who was speaking on behalf of the Pottstown Rotary Club which is staging the parade, along with the AMBUCS and Parks and Recreation Department as partners. 

"Since we were not planning on this scenario, we have not made an effort to contact additional sponsors. With the parade less that three weeks away, I don’t think we can come up with that kind of money." Frantz wrote in an e-mail to yours truly.

"Rotary and AMBUCS rescued the parade in 2010," said Frantz. "Personally, I don’t want to see it canceled. It has been a tradition for the kids in Pottstown since I was a kid (and that’s a long time ago)."

This is not the first time council has faced this question.

Last year's parade was rained out, so the event became moot. 

In the past, such requests have torn at council priorities; pitting the desire not to spend money not outlined in the budget against the desire to support borough organizations and events that bring people to town.

There is a funding spectre haunting Pottstown's
Annual Halloween Parade

But those events require police coverage, fire police closing streets and directing traffic away from High Street and set up and take-down of barriers, all of which costs money.

Last year, in an attempt to get a handle on it, council adopted a budget that set aside $3,000 for the waiver of such fees.


But various events that have already occurred, with the exception of the July 4th Parade, have already consumed that fund, and then some.

Council President Stephen Toroney said like the July 4th Parade, the Halloween Parade tends to bring people from surrounding townships but puts the cost solely on the backs of borough taxpayers.

"It's a Catch-22," said Councilman Travis Gery. "We are working to attract people into the borough, which is what we're trying to do, to sell ourselves and this is an excellent marketing tool."

Main Street Manager Sheila Dugan said "there is some revenue from the parade" for local merchants who stay open, but yes, I'd like to see more fundraising done because lots of people come, but if it falls on the taxpayers, that burden is an issue."

Is Pottstown's Halloween Parade a treasure to be preserved
or a sinking ship? Council will decide Monday night.

Nonetheless, she added, "it's not something PDIDA would like to see go away."

Lee confirmed that there is money in the borough's reserves, but added "its up to council to decide if this is something you want to dip into reserves to pay for."

Councilman Dan Weand, who heads council's finance committee, said "it is not in the reserves for this purpose."

Councilman Mark Gibson asked if perhaps council could waive part of the fee.

"It's up to council," replied Borough Solicitor Charles D. Garner Jr. "You can waive how ever much of the costs you want."

Toroney said the matter will be listed for a vote at Monday's council meeting, which begins at 7 p.m. and is the meeting at which the public is permitted to speak.