Warminster Faces Inevitable Water/Sewer System Sale or Bankruptcy
WARMINSTER -- Push is finally coming to shove.
While the decision has been delayed and discussed over the last couple of years extensively, the township is finally faced with one two choices -- sell the municipal Water and Sewer authority or deal with bankruptcy.
Township Manager Gregg Schuster presented a draft of the upcoming 2020 proposed budget at a township meeting, Nov. 7.
The municipality will likely end 2019 with a $1.3 million deficit, Shuster said. Some savings from the general fund balance -- $2.5 million to be exact -- are available to cover the shortage. They will also help with the upcoming expenditures of 2020.
“We do have the cash flow to get through 2020,” Shuster said. “It's going to be tight in 2021.”
The optimism about next year's budget comes with conditions, however. One of them is a land development project that will bring the township $500,000 in revenue.
The other is a bit controversial as it involves selling the township water and sewer system to a third party. The sale can potentially bring as much as $90 million to Warminster.
At a supervisors meeting in August, residents and Water and Sewer Authority expressed their concerns about the future of water service in the township as well as possible loss of jobs for the people working at the currently municipality-owned agency.
Three of the five current members of the board of supervisors have expressed their support for the sale to bring the township out of its financial trouble. The board will, however, change as two newly elected board members will replace Supervisors Jason Croley and Daniel McPhillips in January.
If the township decides not to pursue the sale of the authority it will come to the end of its funds in 2020, Shuster said during the most recent meeting. The township will then have to enter a state assistance program, Act 47, which is the Commonwealth version of a bankruptcy management program.
The budget proposal Shuster presented to the board was based on the assumption of sale of the water and sewer system, he said. Proceeds from the sale would cover the underfunded pension fund the township currently has as well as other expenses.
While the sale will certainly help, it will not solve all of the townships' financial problems as by 2021 the municipal fund balance will diminish significantly.
Shuster also warned that by 2025 19 of the township police officers and six non-uniformed employees will be eligible for post-retirement healthcare if they choose to retire at that time.
“That's another bubble that is going to explode on us in the next few years,” he said.
In case the sale does not happen in 2020 or is delayed, Shuster recommended raising the municipal taxes to the maximum allowed 19 mills. The current tax rate is set at 17.07 mils.
“We're running out of money and every second we wait the situation is getting worse,” Shuster said. “There is a massive deficit in 2020 if no action is taken on sewer and water system. It's pure math. Bare in mind it is not a permanent solution.”
In 2020 the township will have to purchase five new police vehicles, a purchase that is long overdue, it was noted.
“We're doing the right thing by replenishing that fleet because it costs us by not doing that,” said Supervisor Mark McKee.
After more review, the supervisors will approve a budget plan in December.