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Budget & Finance

Welcome to the newly added budget & finance page. Here you can find detailed information about the Township's financial condition and the annual budget. The budget issues have become a major area of concern for many residents. In an effort to answer or provide information on some of these areas of concerns, we have added a question and answer section to this page. Please read through the information provided to gain a better understanding of the Township's financial condition. We have included historical information, budgetary slideshows, frequently asked questions, and other pertinent facts. 

 

5 Year Budget Projectionthe 2016 Budget, and the 2015 Budget to Actual are now available for review. 

NO MUNICIPAL REAL ESTATE TAX INCREASE PROJECTED FOR 2017. 

 Click here to view the propsed 2017 budget.

 

The Franconia Township 2015 Audit is now available. Click here to view the Franconia Township Audited Financial Report. 

 

 For Immediate Release: Strong Savings for Franconia Township with debt restructuring! 

 

Franconia Township Financial Background

Franconia Township is a Second Class Township with a population of approximately 13,064 residents. The Township is 14 square miles with 4100 households and 4700 taxable properties. The 2014 assessed valuation is over $827,573,846.00. Approximately 22% of the properties located in the  Township fall under the tax-exempt status. As permitted by section 3201 of the Second Class Township Code, the Township's fiscal year begins on the first day of January and ends on the 31st day of December. The budget is typically approved in the beginning of December each year. 

The primary source of revenue for the Township is through the imposition of an Earned Income Tax (EIT) and Real Estate Taxes. Other revenue sources are comprised of a Local Services Tax, Real Estate Transfer Tax, permit fees, fines, intergovermental transfers, and franchise fees.  Each year the Board of Supervisors sets the annual millage rate for properties located within the Township and are not exempt. The millage rate for Franconia Township is currently set at  1.842. the EIT for Franconia Township is 1.0% with an additional .25% strictly dedicated to open space.  You can click here to view millage rates of different municipalities within Montgomery County. Franconia Township remains one  of the lowest taxed communities in the area. 

The General Fund Budget (operating) is broken down into revenue and expense categories. The items contained in each category pertain to that specific portion of the Township operations.  Under the revenues you will see a number of taxes, funds received from the State or similar entities, and then general funds that come in from things like building permit applications. Ultimately, we arrive at the total amount of anticipated revenues. Anticipated and actual are two very different things and under the Second Class Township Code a municipal budget must be balanced upon adoption. The more telling of the financial condition can then be found in the budget vs. actual reports prepared by the Finance Officer.

Property taxes are computed off of the millage rate set by the Board of Supervisors. They set this rate for the general fund, library, and fire.  This is all dictated through the Local Tax Enabling Act. Franconia Township has a set number of parcels that are not exempt from taxes. That number increases when development or subdivision occurs but for the most part the number of parcels is known and consistent when figuring out the projected revenues. The revenues collected are then distributed amongst the allocated expense items.

In the past when revenues have not been received in the amount estimated the shortfall was made up through fund transfers. Typically monies reserved in a capital budget, separate from the operating but not restricted, will be transferred into the operating account. For years the reserves were slowly depleted and expenses pushed into the next year in order to move forward. The economic downturn, development slow down, increased costs, contractual obligations, and severance payments have drained the reserves to the point that there is simply not enough revenues to cover expenses. It was years in the making but unless addressed systemically it would only reoccur in the near future. 

  

Open Space Tax

In November of 2001, in an effort to raise dedicated funds for the purchase of Open Space, the Board of Supervisors put the following question to the voters of Franconia Township: 

"Do you favor the imposition of an Earned Income Tax at the rate of .25% by Franconia Township to be used for financing the acquisition of open space; for the acquisition of agricultural conservation easements; for the acquisition of property development rights; and for the acquisition of recreation and/or historical lands?"

The referendum was approved by an overwhelming majority of voters. 

The tax, which is paid only by Township residents, is a dedicated tax in which funds can only be used as described above and cannot be comingled with operating funds. The revenue generated from this tax cannot be redirected or restributed for other purposes. The tax revenue is for the purchase and the financing of open space. Therefore, even if open space purchasing ceased, the revenues generated from the tax would be used for the debt service. 

The Franconia Township Open Space Plan that was adopted in 2005 clearly outlines the goals and objectives of the Township and the plan for preserving open space. The plan can be viewed by clicking here. Franconia Township is part of the Indian Valley Regional Planning Commission. As a region the six municipalities that make up the Indian Valley are in the process of updating the Indian Valley Regional Joint Comprehensive Plan. This plan indicates that, as a region, there is still an overall initiative to preserve open space and maintain and provide recreational outlets to residents. 

 

Liquid Fuels

Another source of revenue that cannot be comingled with the general (operating) fund budget are Liquid Fuel Funds. Municipalities are allocated Liquid Fuel Funds from the State each year. These funds are allocated based on road mileage and are provided to assist municipalities with road construction projects, road maintenance, and road repair. The guidelines for Liquid Fuels are dictated through the Liquid Fuels Tax Act and are restrictive funds that have a dedicated purpose. Most of the road projects you see throughout the Township are funded through Liquid Fuels. This fund is audited annually by the Pennsylvania State Auditor General to ensure compliance with all regulations. 

 

Budget Questions & Answers

Q. Where are our tax dollars going?

A.  According to the Montgomery County Board of Assessments, the average residential assessment in Franconia Township is about $166,000.  The total millage rate is 32.7801, and the property tax bill for this homeowner would be $5,441.50.  One mill is equivalent to $1 in taxes per $1,000 in taxable value.  To calculate the tax due, the property value is multiplied by the millage rate, then divided by 1000 ($166,000 x 32.7801 / 1000).  These tax dollars are then allocated to Souderton School District, Montgomery County, and Franconia Township, according to each entity’s specific millage rate.    For 2014-2015, Souderton School District’s millage rate is 28.5376, equaling $4737.24.  The 2014 Montgomery County millage rate is 2.695, which equals $447.37 tax dollars.  And, the 2014 Franconia Township millage rate is 1.5475, or $256.89.  Further, Franconia Township’s tax millage is then broken down with allocations to the Library Fund and Fire Protection Fund of .2475 and .15 mills, respectively.  This means that of the $256.89 for Franconia Township, $41.09 goes to the Library Fund and $24.90 goes to the Fire Protection Fund, leaving $190.90 for the general fund real estate tax revenue.

The Earned Income Tax for Franconia Township is 1% with an additional .25% collected for Open Space as described above. The 1% is collected by Berkheimer Associates and is split between Franconia Township and the Souderton Area School District. The Local Services Tax of $52.00 a year is collected from any individual working within Franconia Township. People earning less than $12,000.00 annually do not pay this tax. In addition, there is a 2% Real Estate Transfer Tax charged every time real estate is transferred within the Township. The Township does not have a per capita tax or a business privilege tax. 

 

Real Estate Tax Millage Ex. Table (2014)

General Fund 1.15    
Library Support .150    
Fire Protection .248    
Total Twp Millage 1.548    
Total County Millage 3.152    
Total School Millage 28.5376    
Total 2014 Millages   33.24  

 

 

 

Q. Why do we maintain State roadways?

A.  The Township prides itself on having well maintained roadways. The Township receives liquid fuel funds from the State for road maintenance. The Township is often mandated to provide some level of maintenance on roadways and it is less restrictive to actually own the roadway. The roads are then better maintained perpetually mitigating the need for major repairs.  The Township also has a Winter Maintenance Agreement with the Pennsylvania Department of Transportation which covers the cost of snow removal from these roadways. 

 

Q. What is the cost of an average police officer?

A.  In 2015, the cost of our average patrol officer, at base pay with 5-9 years of experience, is $154,244.  Below is a chart with the breakdown:

Salary (base) $87,626     
Holiday Pay    5,000  
Uniform Allowance          700  
Longevity (5-9 years service)       800  
Overtime (average 70 hours/year/officer @$64.92)            4,544  
Total Salary   $98,670         
     
Health (family plan cost, less 6.5% contribution)   35,349  
Life       888  
Medical Reimbursement       800  
Total Benefits   $37,037
     
Pension (MMO-state aid/15 officers)  12,950  
Total Pension                 $12,950
     
Law enforcement liability insurance (per officer)       1,170  
General liability insurance (8.017/$1000 payroll)          702  
Workers comp insurance (4.24/$100 payroll)       3,715  
Total Other Insurance    $5,587
     
Total Cost Per Officer   $154,244

 

  

Q. What is holiday pay in the budget?

A.  Pursuant to the Collective Bargaining Agreement between the Township of Franconia and The Franconia Township Police Benevolent Association for the years 2013, 2014, and 2015, “the township will pay each full-time member of the Police Department a Holiday Paycheck in the amount of $5000 annually.  For 2015, the holiday pay line item is $55,000 ($5000 x 11 full-time police officers).