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Newtown Township Anticipates More Than $1.3 Million Budget Shortfall Due to #COVID19

Newtown Township Anticipates More Than $1.3 Million Budget Shortfall Due to #COVID19 | Newtown News of Interest |


Newtown Township supervisors established an Economic Development Committee Wednesday, as they try to find ways to deal with the loss of earned income tax (EIT; definition) funds and other revenue sources due to the coronavirus pandemic.


With community members out of work or working reduced hours, the township anticipates a more than $748,000 shortfall in its collection of the earned income tax this year, as well as another $567,000 shortfall in other income, including a $400,000 loss in revenue from its summer camps programs that cannot take place (read “Newtown Township Scraps Plan to Open Summer Camps”).


The losses have created a $1.292 million deficit in the township’s $12.16 general fund budget, even with corrective actions having been taken to reduce expenses.


Dan Connelly, director of Econsult Solutions Inc., said during a Zoom meeting Wednesday that township’s finances are changing weekly, depending on the work situations of residents and others who work in the township and pay the earned income tax. The consulting firm is evaluating the township finances and developing a five-year financial plan.


“It’s turned the projections upside down,” Connelly said.


Even before the pandemic, Newtown Township had seen a decline in its projected income from its earned income tax since Lockheed Martin closed its facility in the township five years ago.


The township also has been impacted by other townships enacting their own EITs.


At a meeting of the township’s Finance Committee Tuesday, members talked of ways to improve EIT collection and some pointed out the importance of having residents shop and dine in the township, so that local businesses will generate more income and contribute more in taxes. [Read “Newtown Township Finance Committee Discusses Ideas For Launching a Business Reopening Initiative”]


Committee members also discussed turning to the Lower Bucks Chamber of Commerce for help and to its own Newtown Business Association members who could design online promotions to help get the word out to “buy local.”


One resident pointed out that by shopping and dining in the township, residents were saving on their own tax contributions. “I’m sort of putting money back in my own pocket,” one caller said.


Connelly said he plans to have the completed financial plan report to the township by August and suggested there be a public hearing on it so that residents can comment, though that might wait until residents can meet together when social distancing guidelines are eased.

johnmacknewtown's insight:

UPDATE (9/8/20): At the August 31, 2020, [Act32Bucks] Bucks County Tax Collection Committee meeting, Joseph W. Lazzaro, who represented Keystone, which collects EIT,  reported that for Bucks County as a whole EIT collections are down by only $13,000 compared to 2019 which was a banner year. Mr. Lazzaro anticipates that by end of that today all this and more will be collected. 


Obviously, results depend on local residents. Mr. Lazzaro pointed out that if a collector area (e.g., school district or township) has a lot of employees who work in the restaurant industry then EIT will be impacted more than if residents worked in healthcare and the pharma industry (which is more like Newtown). He even suggested that the latter type of employee may be making more money this year than last year and thus be paying more EIT offsetting any loses from other more vulnerable employees.


“Corrective Actions” that Newtown Township Might Take in 2020


  • Reduce General Fund transfer to Capital Projects Fund: Save $93,000
  • Divert Road program funds to General Fund: Save $290,000 (already done; read 2020 Road Program Falls Victim to COVID-19)
  • Leave retired police Lt. position vacant: Save $60,000
  • Eliminate plans to hire new police officer: Save $46,569
  • Leave Parks and Recreation Director position vacant: Save $87,000
  • Reduce part-time staff for mowing: Save $41,000
  • Eliminate summer camp: Save $120,000
  • Achieve savings from change in electric provider: Save $30,000


TOTAL = $760,000

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