Berks County FY2006 Proposed Budget
The budget presented for consideration and adoption by the Board of Commissioners is a
culmination of not only an increasingly detailed budget process but a nearly two year
effort to accurately gather and analyze data, implement controls and plan strategies.
These strategies will impact not only FY 2006 but 2007, 2008 and beyond. The
Commissioners, who have provided guidance and involvement as we have dealt with
numerous fiscal issues and planned for the future, have led this process.
The proposed budget assures that our service needs are met but at the same time that we
do not live beyond our means. As we work to meet our service needs, the biggest
challenge we face is to contain the rate of budget growth, so that we do not outrun our
future projected revenues.
Current Fiscal Conditions
Although a balanced budget for FY05 was adopted due in most part to a one and three
quarter millage rate tax increase, this year’s budget situation is more critical then ever.
Significant budgetary challenges continue, exacerbated by such things as negligible
growth in assessed values and federal and state budget cuts
In the past budgets were adopted with an over reliance on fund balance which was used
to make up for expenditures exceeding revenues. Our fund balance is simply not enough
to withstand deficit spending, nor is deficit spending a practice that should be sustained
In future years, we will not have enough revenue growth to pay for the services we
provide right now. We have identified efficiencies, made cuts from existing budgets, and
projected increases that we can avoid. While the entire organization made a good effort
in redirecting savings to cover most cost increases, it is simply not enough to cover
projected cost trends.
We have few options for generating additional revenue. We are largely dependent on the
property tax as our primary source of revenue; therefore, generating additional revenue
above what we receive through normal growth means a tax increase. This is not an option
and so we must look to other strategies.
The challenge is to strike the balance between what is responsible, sustainable and
affordable. Our goal is to reduce or eliminate service costs to the level needed to balance
the budget at the current tax rate
Important points regarding the proposed FY06 budget include:
1. the budget utilizes the existing tax rate,
2. the budget is balanced, expenditures match revenues, so we are not deficit
spending and as a result,
3. no fund balance is used to balance the budget.
Revenues: The proposed revenues for FY 2006 budget total $403,342,135, an increase of
less than 1%. Real Estate Tax revenue increased only 2.13%, a continuation of marginal
growth, which was offset by reductions in other sources of revenue. This meant an
overall revenue increase of only .4%.
Expenditures: Expenditures proposed for FY 2006 total $397,525,879, and increase from
FY2005 of $4,354,440 or 1.1% which was curtailed as a result of cost cutting efforts.
Future Budgets: Forecasting expenditures and revenues for FY2007 and FY2008 (based
on current patterns) we find that if conditions are not modified the County will be faced
with a FY2007 deficit of $8.5M, equivalent of one-half mil. Projections for FY08 are
more dire with a deficit of $22M or one and one third mil.
Because of the continuous marginal growth of revenues, the uncertainty of federal and
state funding and the lackluster performance of the economy, the FY2006 Budget
contains a reserve to offset a downturn in any of these areas.
The following are highlights of the Proposed FY2006 Budget.
The FY2006 Budget reflects only a $209,000 increase in personnel costs. With total
personnel costs amounting to $126,448,300, this is a 1/10th of a percent increase. This is
due primarily to the voluntary severance program, elimination of vacancies, restructuring
and elimination of positions.
Even with little increase in personnel costs, the FY2006 budget includes a 2.5% increase
for wages, recognizing the increasing importance of remaining positions and the need for
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retention. As a reminder, last the employees received a lump sum payment not added to
their base pay.
Voluntary Severance Program: controlled personnel costs for FY2006 is due to a large
part to the very successful voluntary severance program offered in FY2005. Through
reorganizations involving vacancies and VSP positions, the County was able to eliminate
positions and meet the Commissioners’ challenge to affect 75% of the positions on the
Additional Positions: proposed in the FY2006 Budget is a net increase of 6 positions.
Courts One Guardian Ad Litem position
Clerk of Courts Two Office Support II positions - temporary
Two Office Support II positions – permanent
One Courtroom Clerk position
(The OS II positions reflect the County’s attempt to
address the impact of the mandated statewide
Pension Obligation: The FY2006 budget reflects an annual ARC payment of $9.59M. A
borrowing could reduce this contribution, which is still under consideration by the Board
Health Insurance: In 2006 the County will embark on a self-insured health insurance
program with Capital Blue Cross as the third party administrator. Doing so allows the
County to maintain its FY2005 funding level. An important part of the program is
“wellness” support for employees, which will help manage our claims history. Provided
in the budget is a reserve for catastrophic loss. Savings realized in any given year will be
used to maintain this reserve.
Short Term/Long Term Disability: Also beginning in 2006, the County will be providing
short term and long-term disability for management/confidential employees. By
restructuring our sick leave policy and including this disability benefit, we believe that
we have developed a win/win benefit for both employees and employer in terms of cost
containment and meeting employee health needs.
Not for Profit/Outside Agencies
Recognizing the important efforts of not for profits and outside agencies, the FY2006
budget provides for a continuation of funding for a number of agencies with additional
investment in the following:
Library: additional funding in the amount of $250,000 will be provided to the
Library System to enable additional part time staffing at select branches,
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RACC: $200,000 will be provided for one-time capital expenses,
Berks Economic Partnership: BEP will receive an additional $150,000 from the
County, as well as an additional $100,000 from LEDA for a total amount of
$500,000. The County will match this amount for FY2007. For the FY2008
budget BEP is to provide performance information that demonstrates their
effectiveness and their collaborative efforts with other economic development
Agricultural Land Preservation & Open Space
The FY2006 Budget provides for debt service for $8,000,000 of a total$36,000,000
borrowing to continue the Ag Land preservation and open space efforts, which also
allows the obtainment of state matching funds. This second borrowing for this purpose
continues the successes realized in preserving the farming economy, farmland and open
Children & Youth Services
The County will be providing an additional $2M in subsidy to Children and Youth
Services to offset losses of state funding and continued demand for services.
The County will be contributing from the General Fund $2,995,557 toward FY2006
capital projects. Capital projects of note are:
Prison Expansion: Although the proposed prison expansion is not part of the FY2006
budget, the project will begin utilizing existing bond proceeds. The project is estimated
at $29 million. Completion is expected in 2008 and staff will develop and plan for any
additional operational costs in the FY2008 budget.
Community Corrections: As with the prison expansion, capital funding for this project
would be provided from existing bond proceeds. If the County proceeds with this
project, operational costs of $5M/$7.6M will have to be incorporated into the FY07
budget and beyond.
Elections: the County will be receiving Help America Vote Act (HAVA) funding in
excess of $1M, the majority of which will be used to purchase and upgrade voting
machines and improving accessibility to polling locations.
Parks and Recreation: Provided in the list of FY2006 Capital projects are:
Construction of 2 mile connector trail $377,242 $468,438
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Tulpehocken Creek Watershed $ 12,000 $ 6,004
Adaptive Recreation Area $186,000 $ 93,004
Berks Leisure Area $ 15,000
Kaercher Creek Park $ 19,000
Antietam Lake. Funding for this purchase, if it occurs will be provided by County
Growing Greener funds and a grant from DCNR. If the County acquires the
property, its intended use will be passive with annual maintenance costs to be
assumed by the Township. No funding for this contingency is provided in the
Facilities: Ongoing upgrades and improvements are and will be a continuous need for the
County. The Capital Plan funds important improvements to the wastewater treatment
plant and County buildings. Future capital decisions will include office space and storage
availability, which may include property acquisition and renovations to the former
nursing home facilities.
The results achieved regarding the FY2006 Budget are due to the collaborative effort of
staff, department heads and elected officials all led by the Board of County
Commissioners. The Commissioners’ investment in not only the budget process but in
the fiscal management of the County was and is the determining factor in the successes
we have realized.
The budget is presented today as the first step in the public review process. The proposed
budget will be available for public inspection from this day until the final adoption of the
budget, which is scheduled for Tuesday, December 20, 2005. The proposed budget is
available at the County Commissioners Office, Budget Office and is also available on our
County web site.
William E. Dennis
Robert J. Patrizio
Director of Budget & Finance
Date: November 17, 2005
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