November 07, 2012 - Despite continued dropping property values, Independence Township's general fund is projected to have a surplus to add to its fund balance in 2013.
The budget disclosed at a public hearing on Oct. 20, shows a general fund surplus of $105,407. This is $145,468 less than 2012's surplus of $250,875.
According to Budget Analyst Rick Yeager, the difference in the township's surpluses from 2012 and 2013 is mainly due to decreased revenues.
The majority of revenues are acquired through property taxes and state revenue sharing, but this year property values and state tax revenue sharing are projected to decrease. The township's elimination of administrative fees, which amounted to approximately $250,000 in 2012, also contributes to the smaller general fund surplus.
On the other hand, the 2013 projected ending fund balance of $4,403,776 is up $105,407 compared to 2012, which ended with a $4,298,369 fund balance. The township intends to draw from the general fund to pay for capital improvements. Each department contributed to development of the Capital Improvement Plan (CIP), a 10-year outline of projects, their costs, and sources of funding.
Along with the general fund, Yeager presented each department's budget. Most departments intend to end 2013 in the black, but Safety Paths, Water, and Sewer are expecting deficits.
Although voters approved a .59 mill rate in August, the fire department will only take the .45 mills approved by the board, which increases their revenue to $5,634,648. The fire department is projected to end 2013 with a $157,245 surplus and hire three part time employees.
Revenues for the police are down $60,587 from 2012, but their budget shows they'll end 2013 with a surplus of $183,789. The smaller amount of incoming funds for police results from lower property values, a lack of grant money from schools to support liaison officers, and rising fees from Oakland County, said Yeager.
Cable TV's operating budget is projected to zero out. Because operating funds for Cable TV come from the township's general fund, they do not accumulate a fund balance.
In 2013, $135,695 will be supplied to Cable TV from the township's general fund, an increase of $37,712 from 2012.
The Cable TV's PEG (Public, Educational, Governmental) budget is funded from PEG fees, however. Each year, Cable TV accumulates about $200,000 from PEG fees, and the township board sets these rates.
Funds in the PEG budget can only be used for remodeling or equipment expenditures.
In 2013, equipment costs funded by PEG fees have been reduced to $50,000, a difference of $226,000 from 2012.
Cable TV will end 2013 having accumulated a $517,720 fund balance from PEG fees.
Around this time next year, departments in the red will include Safety Paths, Water, and Sewer.
Dropping property values are to blame for the decreasing revenues in the Safety Paths department, which will see a deficit of $310,117. Last year's deficit was $276,661.
To cover the negative amount, Safety Path's will draw from their fund balance, leaving them with $640,163 by the end of 2013.
Even though Water works estimates 125 additional new homes to service in 2013, a $110,846 deficit is anticipated.
This shortfall is partially caused by unavailable grant funds, which made up $16,000 of the 2012 budget. Revenue from usage fees will decline by 10 percent or $260,747 in 2013 as well.
Like the Safety Path's department, Water will cover their deficit by pulling monies from their net assets, leaving them with $26,309,681 of net assets at the end of the year.
Despite the increased revenues from the 4 percent sewer rate increase, the 2013 Sewer budget anticipates spending $2,269,361 more than the $4,044,485 it will take in.
The deficit expected is due in part to $376,406 in operating and $306,500 in capitol cost increases. Other contributors to the deficit include the $155,086 charged by Detroit for sewage treatment service and $50,000 maintenance costs budgeted for sewer relining repairs.
Thanks to the net assets Sewer has accumulated, the department's deficit will be covered and will end the year with $23,079,648.
Citizens can view the 2013 Budget Presentation, Narrative, and CIP online at www.twp.independence.mi.us.
Clarkston News reporter