Franconia Township

20/20
A five-year vision and plan for fiscal sustainability
To put Franconia Township on a path of
long-term fiscal sustainability
Franconia Township
Franconia Township is a Second Class Township in the
Commonwealth of Pennsylvania. It has a population of
approximately 13,064 (2010 Census). Organized in 1732,
Franconia has a long and proud tradition for being an
outstanding community for both residents and businesses.
Located in Montgomery County, PA, in the Indian Valley,
Franconia is approximately 14 sq. miles in size. There are
over 4100 households, with over 4700 taxable properties.
The current 2014 real estate millage rate is 1.5475. The
2014 total assessed valuation is over $827,573,846.
Like many municipalities throughout the Commonwealth of Pennsylvania,
increasing costs and flat revenue have created a structural imbalance
for Franconia Township. Operating Expenditures have outpaced
Operating Revenues.
Health Care Costs have risen from $550,000 in 2008 to $815,000 in 2013
(increase of 33%).
Pension Costs have risen from $273,000 in 2008 to $400,000 in 2013
(increase of 32%).
Professional services have risen from $175,000 in 2008 to $240,000 in
2013 (increase of 27%).
Revenues have remained relatively stagnant at an average growth of 1%.
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
2008 2009 2010 2011 2012 2013
Over the past five years
Revenues Expenses
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Projected to 2020
Revenues Expenses
Doing Nothing Is not A Solution.
The current 2015 budget shows an operating deficit. The
budget committee and staff will continue to work on a
variety of options for the Board of Supervisors to consider.
Simply addressing this deficit through a real estate tax
increase would be short-sighted. A combination of
revenue enhancements and reductions in expenditures,
township-wide, will be analyzed over the next several
weeks.
A multifaceted problem will take a
multifaceted solution.
Municipalities throughout Pennsylvania have been faced with
the same fiscal challenges that we are currently facing.
There will need to be a combination of solutions to remedy
the fiscal imbalance, including revenue enhancements,
reductions in expenditures, increased efficiencies,
additional reliance on technology, and new ways of
thinking about local government.
There is no simple solution to the problem.
Our Current Revenues
Pennsylvania Act 511, the Local Tax Enabling Act, controls
a municipalitys ability to garner new revenues. There are
very few options for municipalities to increase revenues,
outside of the real estate tax millage.
Currently, the bulk of our revenues are derived from real
estate taxes, earned income taxes, state allocations, and
user fees (permits, sub-division and land development
fees, rents, etc).
Township-wide, employee salary and benefits make up over 77% of the
overall township operating budget, up from 69% in 2008.
77%
7%
5%
4%
4%
3%
Township Expenses in 2013
Total
Salaries/benefits
Admin other
Police other
Public Works other
Professional
Services
69%
12%
6%
6%
4%
3%
Township Expenses in 2008
Total
Salaries/benefits
Admin other
Police other
Public Works
other
Professional
Services
Breakdown of Expenditures
The police comprise 59% of those salaries/benefits, up from 55% in 2008.
Salary/Benefit breakdown by department
Admin
25%
Police
55%
Public
Works
20%
Admin
21%
Police
59%
Public
Works
20%
Our Current Expenditures
Currently, the Police Department makes up over 50% of the general fund
operating budget.
FSA
10%
Adminstration
19%
Police
53%
Public Works
15%
Professional
Services
3%
2013
Solutions
We must address our structural imbalance with a long-
term plan in mind. One year band-aids will only put us in
the same situation next year.
The solution must be comprehensive, must address all
aspects of township operations, and must be sustainable
into the future.
But, how do we do this? When
Approximately 22% of Franconias real estate assessed value is Tax
Exempt, which include regional assets such as churches, schools, and
non-profits.
This 22% ranks Franconia amongst the highest rate of non-profit
assessments county-wide, and highest amongst our neighboring
municipalities:
Franconia 22%
Lower Salford 7%
Towamencin 14%
Hatfield Township 15%
Souderton Borough 10%
As a residential community, the burden falls on homeowners to pay for
municipal services.
And, our overall for-profit assessment is
comparatively low.
Franconias 2013 Assessed Valuation was $826,663,806,
compared to similarly sized (similar population, sq.
milage, etc.) Lower Salfords Assessed Valuation of
$1,059,742,520.
While Franconia enjoys wonderful amenities, excellent
quality of life, and vast amounts of green space, our
taxable assessment values lag compared to similar-sized
adjacent municipalities.
Franconias tax rates have remained much
lower than surrounding, comparable
municipalities
1.5475
2.6065
5.7375
5.3875
5.2220
3.8080
2.8680
2.7270
3.4870
Total Millage
Real Estate Tax Revenue
(dollars per taxable property)
Note: Salford and Upper Salford Townships do not have police departments, but
their per property contributions are greater than Franconia Township.
Approximately 58% of PA townships with populations between 10,000 and 15,000
do not have their own police departments.
209
503
705
621
932
536
211
232
367
357
0
100
200
300
400
500
600
700
800
900
1,000
Tax revenue per taxable property
Summary
Like other municipalities statewide, Franconia Township is
faced with rising expenditures that are outpacing
revenues.
This structural imbalance must be addressed immediately,
or the problem will only grow.
Solutions will come from a combination of new revenues,
increased efficiencies, reducing expenditures, leveraging
technologies, and new ways of thinking about how local
government operates.
Over the next several weeks, the township budget
committee and staff will work on several options that will
help put Franconia Township on a path to long term fiscal
sustainability.