They aren’t likely to budget for a DeLorean and flux capacitor, but the people in Lansdale Borough’s Finance Department and members of the borough Administration and Finance Committee are aware they have to fix the future soon.
Lansdale administration’s Gantt chart – a bar chart showing highly-prioritized project schedules and their complementary estimates – is like one big tarot card, at present, predicting about $2.2 million left in the borough’s $31 million capital reserves fund, should Lansdale spend its money on all of the $29.5 million in Gantt chart projects by the end of 2018 and not buttress the base fund. The $31 million includes a recent $10 million bond borrowing, as well as the balance of another existing bond.
“The Gantt chart … shows $30 million (in projects) out through the end of 2018,” said Councilman Denton Burnell, during his Administration and Finance Committee report to council last week. “When you take into account the total capital reserves of $31 million, if we spent all the money today, it leaves over $2 million in capital reserves.”
In that worst-case scenario, the $2 million would mean the borough is $5 million short of the industry-standard for capital reserve fund balance, which is 10 percent of existing assets. The borough has about $77 million in assets, which means, per industry standards, the fund should not dip below $7 million at any one time.
“It’s something for us to be aware of and plan for,” he said. “We could have negative impacts to our credit rating if we fall below that $7 million number.”
Forget about the future – this situation may have the borough repeating the past.
“If we did nothing in the next two years, we’d be in the position again where we were four to five years ago when council spent the capital reserves almost down to nothing,” Burnell said. “It’s reminding us that we have to be responsible to protect that bottom line.”
After the meeting, Burnell said it was a “hypothetical and plan-for-the-future now” situation. The Gantt chart, he said, can be ever-changing.
“One question I had for (Finance Director Brian) Shapiro was, when do we fall off the cliff if we did nothing? He told us early 2016, and that implies we spend everything outlined here and it costs exactly what’s here, and we don’t lose anything on the list or spend more,” he said. “Let’s make sure we are looking at our revenue forecast for the next couple of years, and see where we’re going to be and what we need to do to make sure we are putting money back in the bank.”
Meanwhile, borough departments continue to work toward a draft 2015 budget, to be approved as a final budget by council, by law, by Dec. 31, 2014.
Burnell said a draft of borough expenses should be completed by the end of August. A review will follow in September, and revenues will be factored in in November. By the November council business meeting, there should be a complete preliminary budget.
“We are showing where we are headed as early as September. That’s when we’ll have an early and full-featured look at where the budget is headed for 2015,” Burnell said.