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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session


Posted: May 8, 2013 01:37 PM
From: Senator Bob Mensch
To: All Senate members
Subject: Increasing the cap on operating reserve funds of Second Class Townships
I will introduce legislation to amend the Second Class Township Code to increase the cap on township operating reserves from 5% to 25%.

Forty-four percent of Pennsylvanians live in a second class township. Currently, these townships are permitted to annually appropriate up to 5% of the estimated revenues of the township’s general fund into a separate operating reserve fund. This fund is to minimize future revenue shortfalls and deficits; provide greater continuity and predictability in funding vital to township services; minimize the need to increase taxes to balance the budget in times of fiscal distress; provide the capacity to undertake long-range financial planning and develop fiscal resources to meet long-term needs.

Despite setting aside monies in reserves, many second class townships have struggled with budgetary matters due to significant costs associated with weather-related events over the past few years, particularly in the southeast. Also, bond rating companies have viewed lower reserve funds as less than favorable, downgrading townships due to operating deficits resulting in significantly weakened reserve levels and taxpayers end up paying higher interest rates. Increasing the cap on township operating reserves will help in both regards.

If you have any questions, please contact Geri Sarfert at 787-1640 or gsarfert@pasen.gov.

Introduced as SB1046