One of the most important aspects of a municipal government is the flow of money into the budget coffers, referred to as the revenue stream. The timing of these various deposits into the municipal accounts dramatically affects the municipal operations – particularly during months with larger expenses.
For example, when I worked in local government, February was always a very lean month. We had numerous end-of-the-year payments out to employees and little in the way of new revenues. The council allowed unused vacation days to be carried over into the new year for additional wages. This was difficult to estimate, as the budget was set by the first of December, and you never knew for sure who was going to take additional time off in that month, on top of what they already had left to use up. If the snowplowing season was early, many were unable to utilize that vacation time, and thus it was due in the new year. Those are unexpected expenses that could significantly affect my general fund account.
By contrast, we often didn’t get our first major revenue stream until March, when the yearly liquid fuels distribution came from the state. As an aside, I highly recommend keeping this revenue in a separate account, in order to closely monitor all activities. PennDOT is very fussy about when and how this money is used, and I strongly encourage you to keep in close contact with your local PennDOT representative to ensure this money is used correctly and so that there is no interruption in this revenue stream.
Then, in April, we’d start seeing another major revenue stream – earned income tax payments. Some advice here: Take advantage of a professional service to manage earned income tax receipts. Not only does it ensure more consistent revenues, but it also saves man hours, which saves money.
The next revenue stream we relied upon was real estate taxes. The fiscal tax year typically starts in June of each year. However, you will see some residual money coming in from late payers or funds from transfers of property prior to the tax year. Many smaller townships and municipalities have a local real estate tax collector who funnels these funds to the municipality, the school district, and the county government.
Another potential revenue stream is grant funding for specific projects. You'll want to keep these dollars in a special account to keep a close eye on the movement of money. You can never be too careful with taxpayers’ money. Grants may be a few thousand to millions of dollars depending on the size of your operation, but even a $100 grant deserves your full attention.
The oversight of all revenue streams and expenses is a significant role of the typical municipal manager in Pennsylvania. It is crucial to good management to keep your supervisors or council members well informed of fund movement and balances. Loan and grant applications rely upon this information to determine eligibility, and poor oversight could jeopardize those opportunities.
When you're doing the yearly budget, be sure to note for each line item precisely what the revenues and expenses entail and any relevant information that might be helpful. Regular review of these notes will keep you on track for a well-planned budget based on the anticipated revenue stream and expenditures. Simply put, "fire this thing up," and make the revenue stream flow in the best interest of your residents and taxpayers.
About the Author
David L. Anthony is a member of the Keystone Municipal Solutions team of experts. He is a veteran of municipal government, having served more than 32 years in various positions of public service. Contact him at david@keystonemunicipalsolutions.com. To learn more about David and the Keystone Municipal Solutions team, click here.