Below is an article on how Germantown plans to balance it's budget. Personally, I think the administration in Germantown does a fantastic job year to year. Although our taxes have risen somewhat in the 14 years we have lived here, it has been reasonable and we haven't seen a decrease overall in our services.
Village saves for a rainy day by increasing reserves
Belt-tightening pays off; no layoffs anticipated
By Peter Bukowski
Posted: Oct. 12, 2010
Germantown - To avoid tax increases as the 2011 budget is being finalized, the Village Board re-worked this year's budget to increase its reserves. After incoming revenue failed to meet projections in 2009, the village was forced to lay off employees and reserve balances had to be used just to keep the village afloat.
Finance Director Kim Rath says officials have tried to add $167,000 to the reserves throughout the year.
"We don't want to increase fees, or take away a service if we don't have to," Rath says.
Maintaining rainy day funds could help Germantown avoid future layoffs and allow the city to return funding to things like Parks and Recreation after summer help was cut last year as the budget shortfall loomed.
Assessed values in Germantown have dropped drastically and have cut into the revenue stream from property taxes.
Taxes increases alone won't solve the problem as departments in the village will have to tighten their belts as well.
"It's kind of like running your household," Village Administrator David Schornack said. "You might make a little more money but you're also cutting expenses."
Rath says the 2010 and 2011 budgets are not burgeoning, but at least the village can put away their budget ax for the time being.
Revenue projections off in 2009
"It doesn't seem as dire, things don't seem as critical in 2009."
The problem last year was an overzealous projection of village revenue, leading to overspending and eventually the shortfall. Seventeen employees had to be laid off in 2009, although some of those workers were part-time and have since been rehired.
Officials seem confident that 2009 was simply an aberration, where optimistic projections met the brunt of economic downtown. Two building inspectors were part of those layoffs, due in large part to the fact that businesses were folding more often than they were opening.
This planned surplus is part of a process to prevent having to make such deep cuts if the economy sputters again, creating precarious budget gaps. Rath insists this savings is not an indication of significant economic improvement, but rather an effort to be prepared. Other departments had to take cuts in order to make this savings a reality.
The plan was approved and implemented by the board with the understanding that depleting the reserve balance, particularly in the midst of a sputtering economy, is a dangerous game that could lead to disaster down the line.
Reserve could boost rating
The village has already been given a 'negative outlook' by Moody's Investor Services, which could hurt Germantown's credit rating down the line. That borrowing power is extremely important to a village that doesn't generate a tremendous amount of money for capital projects like road improvements.
This year, Germantown had to borrow $1 million for road projects and expects to borrow another $1.3 million in 2011.
"We need to repair our roads and even a million dollars doesn't go a long way," Rath said. These kinds of capital projects weigh heavily on a budget, particularly when the Village doesn't have the money to pay for these improvements upfront.
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