[Previous entry: "Notes and Comments"] [Next entry: "VOTE tomorrow -- but bring a pencil!"]

11/03/2003: "How do we pay for electric rate increases in Perkasie?"

The big debate in preparing the 2004 budget in Perkasie Borough Council right now is over how to handle the increased electric costs resulting from the new electric contract. As everyone knows, electric rates have increased substantially over the last several years across the country. Perkasie was successful at negotiating a very good, new five-year contract for our electric needs over the next five years, but it still means a substantial increase -- approximately 25% -- over what we paid during the previous contract. To maintain the current revenue stream from electricity sales under the new contract, it means the current retail electric rates would need to increase about 17% (numbers here are approximate). The proposed budget presented by borough staff reduced that increase to about 9% by cutting capital budget projects and trimming the operating budget a bit where possible. But the 9%, while giving us a balanced budget, is still a big pill to swallow.

Perkasie has a very healthy amount of money in the bank -- $4.1 million -- thanks to very responsible fiscal management over the last eight years (it has grown from 1.8 million in 1996). My original proposal to Council was to limit the increase in electric rates to a more palatable 5%, and take $200,000 from reserves to balance the budget. Other proposals have included taking as much as $1 million from reserves so there is no increase in rates for 2004, or cutting services and capital expenditures by as much as $700,000 to avoid any electric rate increases (but they won't say what services or capital expenditures they're going to cut, and I don't see how it's possible without a LOT of pain for citizens in the form of greatly increased costs in other areas).

What do you think? Click the "Comments" link below and add your thougths to the debate. What are you willing to do without to cover the increased costs? Or are you ready to bite the bullet and pay the increase? How much should Perkasie keep in reserves -- do we have enough at $4.1 million? Too much? Not enough? It's your money!

Replies: 4 comments

What right does the council have in holding over $4 million of taxpayer money? It's OUR money, not theirs. I think most of us could find good uses of OUR tax money refunded to OUR homes and OUR families. Trust the taxpayers;put the money where it belongs instead of dreaming ways to use it!

David, I don't disagree with you ... but let's get a little more specific. The 2004 budget is roughly $8 million, and current reserves roughly $4 million. What amount in the reserves are you comfortable with? We learned how important it is to have significant reserves after the Great Fire of 1988. But I would agree $4 million is more than we need. $3 million? $2 million? Personally, I'm more comfortable with a number somewhere around $3 million or slightly less -- a number representing about one-third of our annual budget.

And how do you suggest we give it back to taxpayers/ratepayers? Believe it or not, it would be illegal for us just to write a check to borough residents because the sources of that fund are mixed -- some from electric revenues, some from taxes, and no way to divvy it up fairly. But applying it toward budgeted expenses is legal, which is one of the reasons I proposed a 5% electric rate increase this year and the balance taken from reserves (orignally that would have been about $200,000, but has been reduced now to around $70,000 because of additional cuts Council has made in the proposed budget).

70K out of 4 million dollar being held does not seem very generous at all. Maybe not increasing electric rates would be best, we all use electricity in one way or another. I just look at all the capital improvements done by the borough, all the money spent, and I think this kind of surplus is not needed. I trust tax payers to spend their own money much more than I do government officials. I think the excessive captial overtures, lack of cooperation among council members, and this excessive reserve has caused the change of leadership & disatisfaction

The change of leadership was caused by a corrupt Republican endorsement policy; the lack of cooperation between council members is a gross exageration by young reporters looking for something to write about -- the only lack of cooperation has been primarily between two Council members (Hettel and Burke) who don't get along with the rest of Council (come to a few meetings and see how they work!!) -- the current Council has accomplished more for the long-term good of Perkasie than any Council in recent history; but that's off-topic for this post. As to the excessive reserve, for many years we've heard residents tell us in public forums and privately that they were very concerned about how little the Borough had in reserves in the bank, and Council heard the message and took care of that. It's just that now the pendulum has swung a little in the other direction.

In my opinion, not increasing electric rates (which would take about $700,000 out of the reserves every year for the next five years if all else was kept equal) is irresponsible and bad fiscal management. I presented a proposal in some detail this past Monday evening to Borough Council, which I believe is good fiscal management, and which Council has tentatively endorsed. I'll go into detail here in another post when I have a little more time -- hopefully later today.