Borough of Stroudsburg

BUDGET MESSAGE TO PROPOSED 2010 BUDGET

In the fall of 2005, the Stroudsburg Borough Council authorized the Pennsylvania Economy League (PEL) to undertake an analysis of the Borough’s financial condition. The primary purpose of the analysis was to determine the Borough’s current and future overall financial condition and to serve as a guide for financial planning. A hard copy may be viewed at the Borough Office.

In preparing the 2010 budget, the Finance Committee again consulted this study and has incorporated some of the guidelines and recommendations as set forth in the PEL report.

The following synopsis of significant changes is presented in order that there may be a better understanding of the various 2010 Budgets and the rationale for the decisions made by the Finance Committee:

General Fund - 01

The proposed 2010 Budget contains a 2.5 mill increase. In 2010, the Borough’s total assessed value of properties, as certified by the Monroe County Tax Assessors Office, has decreased in value by $456,190 with a total assessed value of $55,924,890 in 2010 as compared to $56,381,080 in 2009. With this change in value, the total amount of revenue generated from each mill has decreased by $456.11 as compared to 2009. It is estimated that $1,372,028 in revenue will be generated from the General Fund Real Estate Millage. General Real Estate Tax Millage is limited by the Borough Code to 30 mills. 

The 2010 Budget real estate tax collection projection is based on an estimate of a 93% collection rate or approximately $52,010 per mill (one mill = $55,924.89). A 100% collection rate is never achieved; instead, past due taxes are most likely collected when a property is sold from one person to another.

The General Fund Budget includes operating expenses such as Administration; Tax Collection; Municipal Building; Police Protection; Fire Protection; Code Enforcement; Health; Recycling; Streets including street cleaning, traffic signs and snow removal; Street Lighting; Parking Facilities; Flood Control; Shade Trees; Downtown; Insurance; and, Employee Benefits.

In 2010, estimated revenues are expected to be down. Some of those revenues include real estate transfer tax, earned income tax, local services tax and interest income. Expenses are expected to increase in 2010 which include the required contribution to the Stroud Area Regional Police Department, electric costs once rate caps are removed, property and liability insurance premium, and health insurance premiums among others.

In 2009, employees did not received pay increases. In 2010, 25 cents per hour increase is scheduled which equals between .8% to 1.6% increases based on the employee’s current rate of pay.

The proposed tax increase will make up a portion of the difference between revenues and expenses and we will use part of our fund balance (cash on hand) to offset the difference. It is estimated year-end cash balance is $278,100.

Street Fund - 03

Council has determined that funds from the 2010 Street Fund be used for expenses related to street and road construction.

The Street Fund, which represents proceeds from a 2005 Debt Refinancing and Pennsylvania Redevelopment Assistance Capital Program (RACP) Grant that included the parking deck, presently has a balance of approximately $990,000. The final cost for the parking deck needs to be determined therefore the entire $990,000 is not available for projects.

This fund does not have any real estate tax millage in 2010. However, with the year-end cash balance and approximately $500,000 of roadwork scheduled for next year, the cash on hand will cover these improvements. The Borough Code permits a real estate tax levy of up to five (5) mills for this type of fund. The estimated year-end cash balance is $990,000.

New Fire Apparatus Fund - 04

Revenue for the New Fire Apparatus Fund is generated through Special Real Estate Tax Millage specifically for new fire equipment and buildings.  Presently 1.5 Mills are dedicated to this fund.  It is limited by the Borough Code and cannot exceed 3 mills in Real Estate Taxes.  It is estimated that the 2010 New Fire Apparatus Fund will generate $78,015 during the 2010 Budget Year, adding to the current $748,935 now available.  

2010 Budget expenses for the New Fire Apparatus Fund include debt and interest payments for two (2) fire trucks for $14,500 (one financed in 1998 and one financed in 2006).

It is estimated that the Fire Department will need over $1,000,000 for a new aerial ladder truck as well as additional expense to house the truck due to the weight and size of a new aerial ladder truck. Unfortunately, a new truck will not fit in the existing building since the length of the truck has increased. The Borough is looking into other options for the fire department needs.

Capital Projects Fund – 05

The Capital Projects Fund represents funds available from the sale of the Water Authority to the Brodhead Regional Authority and is projected to provide revenue during the 2010 Budget year of $275,000. There is presently $793,386 available.

The Finance Committee recommends utilizing this fund only for capital expenditures with a long life. There is a small expense ($50,000) budgeted from this fund in 2010 for capital improvements to the bathhouse at our swimming pool. The Borough was awarded a matching grant from DCNR through the Stroud Region Open Space and Recreation Commission for the upgrade to the bathhouse. We expect to have the improvements to the building completed before the start of our 2010 season.

Debt Service Police Building – 07

The Police Building Debt Service Fund provides for payment of interest and principle on the Stroud Area Regional Police Building . Revenue for this fund is generated by one-and-a-half (1.5) mills on Real Estate. A total of $78,015 has been budgeted for the 2010 Fiscal year. The Borough Code permits annual real estate millage “sufficient to pay interest and principle on any indebtedness incurred” under the Local Government Unit Debt Act.  The PA Department of Community and Economic Development approve any debt.  It is limited though by the borrowing base certificate and debt statement of Borough’s revenue and expenses.  The Police Building Debt Service is a self-liquidating fund, one-third from each Stroud Township , East Stroudsburg , and Stroudsburg.

Recreation Fund – 10

This fund was created in 2008 and is used for all parks and recreation activities that had been in the General Fund. By moving the revenues and expenses to a dedicated fund they can only be used for the specific purpose of maintaining our parks, swimming pool, basketball courts, and creating new facilities if Council so chooses. All revenues and expenses along with 2.69 mills of tax are included in this fund.

Street Light Fund - 12

This fund was created in 2009. Early in 2008, the Borough purchased the cobra streetlights from PPL to upgrade them and qualify for a lower electric rate. Over a period of 30 years, it is estimated the Borough will realize substantial saving in our electric bills due to this purchase. This fund has been setup to pay the debt service from that purchase and to provide for any street lighting needs. Revenue for the Debt Service and maintenance is generated by a 1.4 mills on Real Estate. A total of $72,814 has been budgeted for the 2010 Fiscal year.

Highway Aid Fund - 35

Highway Aid Fund Revenue is generated from the Pennsylvania State Gasoline Tax and is reimbursement to the Borough by a formula based on population and street/road mileage. It is projected that $103,325 will be received in 2010. Expenditures are restricted by PennDOT rules and regulations to street and road related costs such as street maintenance, storm sewers, streetlights, and traffic signals.

General Obligation Debt Service - 85

The Debt Service (General Obligation) Fund provides payment of interest and principle on General Debt (Infrastructure and Equipment).  Revenue for the Debt Service (General Obligation) is generated by 5.33 mills on Real Estate. $277,214 has been budgeted for the 2010 Fiscal year. The Borough Code permits annual real estate millage “sufficient to pay interest and principle on any indebtedness incurred” under the Local Government Unit Debt Act.  The PA Department of Community and Economic Development approve any debt.  It is limited though by the borrowing base certificate and debt statement of Borough’s revenue and expenses.

Sewer Fund -08

Proposed Rate Increase

The Sewer Fund is a self-sustaining enterprise fund that generates revenue on a quarterly basis from sewer fees based on water consumption and a flat rate.  Revenue is used for operating the sewage treatment plant and collection system in Stroudsburg Borough.  Revenue is also generated through a payment from Stroud Township for treatment of effluent from Stroud Township residents.  Stroud Township maintains their sewer collection system.

Stroud Township has a 60% ownership in the sewage treatment plant.

It is estimated that sewer fees will generate $1,504,756 in 2010 from ratepayers ($1,100,000 sewer fees - Stroudsburg; $397,256 - Stroud Township ). Revenue is also generated from interest, sewer permits and tap-in fees.

The current sewer fees are based on a rate of $2.50 per 1,000 gallons of usage and a flat rate of $55 per quarter per residential unit, $65 per quarter per commercial/institutional unit, and $75 per quarter per industrial unit.

The Borough has recently entered into a Memorandum of Understanding with Stroud Township , Pocono Township , and Brodhead Creek Regional Authority to regionalize our wastewater treatment plant and upgrade the plant to accommodate Pocono Township ’s sewer needs. The Brodhead Creek Regional Authority will eventually own and manage the wastewater treatment plant located in Stroudsburg. The proposed plant will be able to treat up to 4.5 million gallons per day (MGD). Based on engineering estimates the probable project cost will be between $36,720,000 and $40,927,000 with costs being shared based on the amount of capacity each municipality will have in the new plant. Pocono will have 2.0 MGD equaling 44.45%, Stroud Township will have 1.5 MGD equaling 33.33%, and Stroudsburg will have 1.0 MGD equaling 22.22%

A Sinking Fund has been established for future Capital Projects such as the treatment plant upgrade.  A total of $664,993 has been transferred to this sinking fund. In 2010, another $220,000 is scheduled to be transferred to the Sinking Fund to help offset some of the cost of future upgrades.