Whether or not to appeal to voters with a levy is one of the decisions that Pierce Township will have to face after a preliminary budget forecast shows the police department facing a devastating deficit by as early as next year.
The discovery came after the township created budget projections to see how finances would be several years down the road, but the unexpected consequence was to discover serious shortfalls beginning for the department almost immediately.
“Since becoming administrator, I’ve been working with each department to do strategic planning processes,” said Pierce Township Administrator David Elmer. “A part of that is a 10-year budget projection, to plan for necessary future expenses. We recently completed the police department budget, and it was evident that the current rate of revenue receipts versus expenditures meant that we would incur a deficit as early as next year. That was based on a very conservative estimate of revenue and liberal estimate of expenses.”
In all, the township could face a shortfall of a quarter of a million dollars next year, a figure which is only expected to grow, and grow fast.
By 2010, Elmer said that the yearly shortfall could be as high as $2.5 million, which doesn’t include shortfalls from preceding years. Even tinkering with the budget does little to help, said Elmer, who pointed out that even halting some programs and stopping departmental growth fails to dent the shortfall.
“That was presented to the trustees in July, and since then we’ve had a meeting to discuss the budget,” said Elmer. “I’ve come up with some scenarios that include things we can do to increase revenue or decrease expenses, but even with some of those scenarios, we’re looking at a deficit regardless.”
Pierce Township has a police department of 15 full-time employees, plus a few part-time employees. The department covers about 12,000 residents. Residents met with the trustees on Aug. 24 to discuss the issue, and several more special meetings are planned. Meeting dates are expected to be set at the Sept. 12 trustees meeting.
Causes for the shortfall could include the rising cost of insurance benefits, said Elmer, who noted a marked and unexpected jump in insurance costs over the past few years.
“With our budget, the largest expense is personnel, salaries, retirement packages and healthcare plans,” Elmer said. “I’d projected a linear 18 percent growth in health insurance costs, but we’ve actually experienced growth larger than that. We’ve reduced plan coverage for all employees and looking at other options, so in one scenario I capped it at 10 percent instead of 18, but you still go into a deficit.”
Other aspects of the budget, including salary and overtime expenses, were also capped in a fictional budget to gauge how they would effect the projected deficit.
“I’ve capped certain line items, but each time you cap a line item it impacts service delivery,” said Elmer. “Even then, we still face a deficit, and the immediate cause is the loss of tax revenue due to deregulation. The same thing happened to our fire department budget. We recently passed a levy for that. We also lose revenue from House Bill 66 reduction. Those are two significant factors that contribute to this.”
Elmer said that the recent fire department levy was conceived for the same reasons. Budget projections revealed a serious shortfall in the near future that demanded voter action. That levy passed. Now, the township is trying to find a way to prevent voters from being faced with another levy, and failing that, finding a way to get voters to support another levy. With the township growing at a rapid rate, making sure that services such as fire and police support are available is vital, said Elmer.
“In fact, the police department budget has remained stagnate for five or 10 years,” said Elmer. “There hasn’t been a police levy on the ballot since 1996. Therefore, revenues have been stagnate. We haven’t added any new officers, the first draft of the budget included hiring two more, and that was eliminated to save costs. We don’t have any money budgeted for capital improvements to the facility, and this is a 10-year projection. Our township is growing and we will need to address additional staffing needs.”