Local government finance

If you are starting to think about your 2021 budget, you might like to know a way to get a little more money. The Department of Local Government Finance provides Form 4b, which allows you to calculate the funds available for the coming year. One item you must take into account is the current year unspent appropriations (Line 2 on the old Form 4b and Line 5 on this year’s new Form 4b). That makes sense. Usually, if the money is appropriated to be spent this year, you should not use it for next year’s budget. However, most years, your township does not actually expend its full budget.  Now that we are half way through the 2020 budget year, you […]

Townships often do not receive the full amount of property tax revenue that was approved in the original budget. Always compare the amount received to the amount in the budget. You will often it is less. Some of the differences may be due to circuit breaker credits and delinquencies by taxpayers. There is not much you can do about those. But there are other causes, and your township may be able to recover the shortfalls. Property tax billing is not an exact science.  At the time property tax is billed in the spring, the County does not yet know the exact amount of assessed value.  That is in part because taxpayer appeals and other adjustments may occur after the billing. […]

Local Income Tax (LIT) can be deposited into any fund.  Most townships determine at the time of the annual budget how much LIT to allocate to each fund.  However, the trustee can change the allocation at any time.  Unlike property tax, which has to be deposited into the fund for which it was levied, LIT can be deposited into any fund at any time. If a fund is running short of cash, the trustee is empowered to begin depositing more LIT into that fund, and less into funds that don’t need it. We don’t recommend changing past LIT deposits that have already been recorded.  It is better to change the current month deposit and any future LIT deposits going forward. […]

Trustees often wish they could shift money from one fund to another, but usually they are told they can’t. However, your township may have a way around that. If a fund receives a property tax levy, it may also be charged rate cap credits (circuit breaker credits).  Rate cap credits reduce the net revenue to the fund. The levy collections must be deposited into the fund for which they were raised.  However, the  rate cap credits can be allocated to almost any fund.  By reallocating the rate cap credits, the trustee can shift some revenue between funds. Example: Suppose your township has extra money in a cumulative fire building and equipment fund, and the money is needed in the township […]

Your township may be allowed to raise extra tax money to pay for firefighting apparatus and equipment.  That includes fire buildings. Even though township property taxes are limited by state law, the limit does not always apply to money raised for debt payments. Debt can be used to buy firefighting apparatus and equipment, and an additional tax can be levied to make the payments. Issuing bonds is expensive, but there is a cheaper way to finance firefighting apparatus and equipment. A special rule allows a township to obtain a relatively simple, cheap, loan or lease through a bank.  The term must be six years or less.  There are still a few legal hoops to jump through, including board approval, and […]