North Huntingdon's odd problem: 'too much money'
In North Huntingdon, a rosy — perhaps enviable — financial picture has emerged: Township leaders are considering cutting taxes, paying off debt and paving more roads.
“We just have too much money,” said township Commissioner Lee Moffatt, president of the board, referring to the $7 million in reserve. The township's proposed budget for 2013 is about $14 million.
Moffatt last month called for a 1-mill property tax cut, a seldom-heard proposal at municipal meetings.
“(A tax cut) is pretty rare,” said Yvonne Hayes, director of Westmoreland County's tax office. “They usually don't cut ever, and there's very few that did. And if they do, it's probably a half-mill or a mill.”
During the past five years in Westmoreland County, 62 tax increases and six decreases were recorded, among 65 total municipalities, according to county data.
In five of those six instances — in Murrysville, Allegheny Township, Manor and twice in Trafford — cuts amounted to a half-mill or less. In the other, Monessen, officials cut taxes by 2.2 mills in 2010, but the city clerk attributed that to normalizing figures after officials petitioned the court the year before for a one-year tax hike.
“I know it's unusual,” Moffatt said about the proposed cut, “but I think it's just time.”
He's cited concerns about “building up this reserve fund on the backs of (taxpayers)” and said the township could cut taxes and still balance the budget.
Commissioners will discuss the budget during their November meeting. If they approve the 1-mill cut, real estate taxes would drop to 11.55 mills, saving the average homeowner $25 to $30 on a home assessment between $25,000 and $30,000.
In North Huntingdon, 1 mill in property tax generates $350,000.
“This is good financial management, stewardship. It's planning ahead,” Michael Foreman, a local government policy specialist in the Pittsburgh office of the Center for Local Government Services, said about paring taxes. The center is part of the state Department of Community and Economic Development.
“They've got a growing tax base,” Foreman said, “It's exemplary when a municipality is in a position to cut any tax rate.”
Residential development has boosted transfer tax and real estate transaction fees to North Huntingdon, Moffatt said. In addition, the township is collecting more delinquent taxes than expected and spending less than anticipated.
“When we do our budget, it's usually you underestimate the revenue and overestimate your expenses just to make sure you're OK,” Moffatt said. “It's the prudent way to do it.”
But the township has more money coming in and less going out.
“You kind of see it on both ends — on the revenue end and on the expenditure side,” township manager John Shepherd said. The money has been “building up over the years,” he said.
The reserve fund amounts to more than half the general operating budget, Moffatt said.
“Traditionally … you have ‘X' amount coming, and you're spending ‘X' amount,” he said. “The budget essentially is supposed to be balanced and be as close as you can.”
He said he does not want to spend down the reserve just to clear the money.
“It seems like the more money you have … the more money you spend, and once you get used to spending a certain level, whether it's a municipality, a government or a person, it's hard to go backward — extremely hard,” Moffatt said. “So that's what I'm trying to avoid.”
Industry standards dictate maintaining a reserve fund of 5 percent to 10 percent of the total operating budget, Foreman said.
North Huntingdon officials have talked about instating guidelines for the surplus, Moffatt said, noting that the township could keep 25 percent to 35 percent in reserve.
Foreman said municipal elections are approaching, and the public may enjoy a tax cut.
Moffatt said the tax cut proposal has nothing to do with re-election and that the numbers “speak for themselves.”
“It'll play out to prove that I am not doing this to get re-elected,” he said. “I'm just doing this to do what's right. There's no political considerations in this at all.”
Rossilynne Skena is a staff writerfor Trib Total Media. She can be reached at 724-836-6646 or [email protected].